Does Unemployment Count as Income for Health Insurance?

Losing your job is always tough. And while unemployment benefits can help with everyday needs, they might not be enough to cover all your expenses.

Plus, when your financial situation changes, so will your health insurance plan.

How can you keep your medical coverage if you’ve lost or job?

Which is the best health insurance for unemployed people?

What counts as income for Medicaid and Marketplace?

Does unemployment count as income for health insurance?

Find the answers to these questions below.

What Healthcare Options Do You Have if You’re Unemployed?

Health insurance is available for everyone, regardless of their employment status. After all, unemployment benefits count as income for all types of health insurance.

While that gives you the freedom of applying to any plan, it can also be a problem in certain instances.

Why?

Because some people make more money from unemployment compensations than they did while working.

And since health insurance payments depend on your annual income, this could change how much you're paying for your plan. Especially if you're getting coverage from the federal or state exchange instead of Medicaid or your employer.

Luckily, you might be able to get free health insurance thanks to the American Rescue Plan Act.

But before we go into more detail about that, let’s see what other options are available.

Public Healthcare

The main public healthcare options are Medicaid and Medicare. That said, eligibility for Medicare doesn't depend on your employment status. It is a government program for people over 65.

So, if you're unemployed, you can apply for Medicaid. This is a government program that helps low-income individuals and families pay for medical care.

What Is Counted as Income for Medicaid?

• Wage
• Self-employment income
• Tips
• Alimony payments
• Unemployment benefits
• Retirement and pension income
• Social Security Disability benefits
• Rental income
• Income from royalties, gambling winnings, interest
• Estate or trust income
• Severance pay
• Punitive damages
• IRA distributions
• Jury duty fees

Private Healthcare

The second option is private healthcare. This includes insurance plans offered through employers, unions, associations, or the federal or state marketplaces.

What Is Considered as Income for Marketplace Insurance?

• Wage
• Self-employment income
• Tips
• Alimony payments
• Unemployment benefits
• Retirement and pension income
• Social security income
• Social Security Disability benefits
• Rental and royalty income
• Capital gains
• Investments
• Foreign income

Note that the requirements might vary slightly depending on your state.

Nonetheless, the principle of calculating your annual household income is the same. Whether you’re applying for public or private insurance, you need your Modified Adjusted Gross Income (MAGI).

But what do you do if you don’t qualify for Medicaid, and Marketplace insurance is too expensive?

Luckily, you can get medical coverage for unemployed US citizens. Let’s see how that works.

Covid-19-Related Unemployment Health Insurance Aid

The US government passed several bills to help with unemployment and healthcare expenses during the pandemic.

Let’s see which ones are still in effect in 2022.

The CARES Act

The CARES Act was the first stimulus bill the US government passed to alleviate the consequences of the pandemic.

Most Covid-19 unemployment income compensations under the CARES Act are no longer provided in 2022. But there are some perks that are still available.

Initially, the bill allowed people to roll over unlimited FSA dollars to the following year. They could use them to cover various medical-related expenses, including insurance payments.

As of 2022, however, the CARES Act will provide limited health benefits. This will be the last year you can take advantage of your unlimited carry-over tax-free dollars. And you can roll over only up to $570 in 2023.

The bill also provides other ways to reduce your medical expenses. But what if you’re looking for free healthcare?

The American Rescue Plan

The American Rescue Plan Act (ARPA) is a $1.9 trillion stimulus bill. President Biden passed it in 2021 to help recover from the Covid-19 pandemic.

The Act includes multiple benefits for students, children, businesses, unemployed individuals, and so on.

Here, we focus only on the aspects related to the 100% premium coverage of the COBRA health insurance for unemployed individuals.

Luckily, the government extended the American Rescue Plan. Let’s see the conditions for getting free health insurance for unemployment in 2022.

What Does the Health Insurance Subsidy Include?

If you qualify for this benefit, you’ll get:

• Unemployment-based subsidies—These are premium subsidies that cover the full cost of the second-tier (Silver) marketplace plan.
• Additional cost-sharing reductions—These will decrease the cost and increase the actual value of the plan.

Who Is Eligible?

All individuals under the federal poverty level who have received unemployment income for at least one week in 2022 can apply for this subsidy.

For 2022, the federal poverty level is $13,590 for one person, $18,310 for a household of two, $23,030 for a three-member family, and so on.

In addition, the subsidy is available only for individuals and households who are not eligible for Medicaid or CHIP.

Plus, the full benefits are available if the taxpayer is receiving the unemployment compensation. If the compensation goes to the dependent, the family can apply for the cost-sharing reductions only.

Last but not least, note that all this applies to states that use the HealthCare.gov marketplace. The conditions might differ for other state health exchanges.

Wrap Up

Unemployment benefits count as income for health insurance. But often, this compensation isn’t enough to cover your expenses, let alone the insurance payments.

Luckily, there are options for people without a job to get affordable or even free health insurance. Above is everything you need to choose the best plan for you and apply.