How to Get Free or Low-Cost Health Insurance

If you’re new to health insurance in the United States, you’ll find it’s expensive. But cost isn’t the only problem for beginners trying to get health insurance. It’s also a complex system with multiple entry points.

Since you can potentially get health insurance from many different sources, such as the government, from your job or university, or from a private insurance company, it’s not always clear where you should start looking when shopping for low-cost health insurance.

Before exploring your options for free or low-cost health insurance, understand one thing: health insurance is never really free and is rarely truly low-cost. Health insurance that’s free or low-cost to you means one of two things:

  • Someone is subsidizing the monthly premiums so that you’re not paying the full cost yourself. If you qualify for this sort of subsidization—usually from an employer or the government—this is a great way to obtain health coverage that fits your budget.
  • The benefits have been reduced so the coverage you’re buying isn’t comprehensive health insurance; it’s less robust coverage. These types of coverage may be appealing at first glance, but they can leave you in the lurch if and when you have a significant medical claim.

Described below, you’ll find several options for free or low-cost health insurance, along with a description of who is eligible, how to apply, and what to expect.

1

Medicaid

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Medicaid is a social-welfare program that provides comprehensive government-based health insurance to low-income people. Medicaid is free health insurance for those who qualify. In most cases, there are no monthly premiums, and there is no or minimal cost-sharing in the form of deductibles or copayments.

Medicaid works slightly differently in each state, but to be eligible, you must meet low-income guidelines, which vary depending on factors such as age, pregnancy, and whether you're disabled. In many states, adults under the age of 65 will qualify for Medicaid if their household income is no more than 138% of the federal poverty level. Pregnant women and children can generally qualify for Medicaid with household incomes well above that level, but people age 65 and older generally need to have lower incomes as well as low asset levels in order to qualify for Medicaid.

However, some states have stricter eligibility criteria for adults under the age of 65. In those states, you must meet low-income guidelines and also be a member of a medically vulnerable group (people who are pregnant, parents/caretakers of a minor child, elderly, disabled, and children). In other words, there are some states (14 as of early 2021, although it will only be 12 as of mid-2021) where being low-income by itself will not make you eligible for Medicaid.

Medicaid may be available to immigrants who have been legally residing in the United States for five years or more if they meet eligibility requirements.

Medicaid isn’t usually available to undocumented immigrants, although there may be exceptions such as short-term limited Medicaid coverage in emergency situations, and emergency coverage for people who are pregnant. And again, Medicaid eligibility varies from state to state. California, for example, has chosen to extend Medicaid eligibility to undocumented children and young adults who otherwise meet the income criteria for eligibility.

Medicaid is paid for by federal and state taxes, and administered at the state level (which is why coverage and eligibility rules vary from one state to another). If you receive Medicaid, your friends, neighbors, and fellow citizens are paying for your health care with their tax dollars.

Although Medicaid is government health insurance, the vast majority of care provided to Medicaid recipients is provided by private businesses and healthcare providers. If you get Medicaid, you’ll likely be cared for at the same hospitals and by the same physicians as your neighbors with private health insurance.

And most states contract with private insurance companies to administer the coverage, which means your coverage ID card may display the name of a well-known private health insurer.

You can apply for Medicaid through your Affordable Care Act health insurance exchange or by contacting your state’s Medicaid program directly.

2

Affordable Care Act Subsidy

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The Affordable Care Act provides government subsidies to make buying health insurance less expensive for people with modest incomes, and to help make both buying and using health insurance less expensive for people with low incomes.

In both cases, these subsidies are designed to help people who buy their own health insurance. But this is a small percentage of the population—most people get their coverage from an employer or from the government (Medicare, Medicaid, CHIP) instead.

Normally, there is an income cap of 400% of the poverty level in order to qualify for the premium tax credit (premium subsidy). But for 2021 and 2022, as part of the American Rescue Plan to address the ongoing COVID pandemic, there is no income limit on premium subsidy eligibility.

Instead, for just those two years, the subsidies are designed to ensure that nobody who buys a plan in the marketplace/exchange has to pay more than 8.5% of their household income in premiums for the benchmark plan. Depending on where you live and how old you are, you may qualify for a premium subsidy in 2021 and/or 2022 even with an income well above 400% of the poverty level. But if the cost of the benchmark plan would already be no more than 8.5% of your income without a subsidy, you would not be eligible for a subsidy.

If you're eligible for a premium tax credit (and opt to have it paid to your insurer each month on your behalf, rather than claiming it all at once on your tax return after the year is over), the government pays part of your monthly health insurance premium, and you pay the rest of it.

This subsidy extends well into the middle class: Even before the American Rescue Plan eliminated the "subsidy cliff," 400% of the poverty level for a family of four amounted to $104,800 in 2021.

And with the American Rescue Plan in place, CMS notes that 80% of marketplace enrollees will have access to at least one plan that costs $10 or less in monthly premiums after the tax credits are applied. And more than half of enrollees will have access to a silver plan that costs $10 or less in monthly premiums.

If your income is between 100% and 250% of the federal poverty level, you’ll not only get government help to pay for health insurance, you may also get additional government help to pay your deductible, copays, and coinsurance when you use your health insurance. This is known as the cost-sharing reduction subsidy. (Note that the American Rescue Plan also provides cost-sharing reductions to anyone receiving unemployment compensation in 2021, as long as they enroll in a silver plan through the marketplace.)

These subsidies can only be used to buy Obamacare health insurance sold on the Affordable Care Act’s health insurance exchanges, also known as the Marketplace. They can’t be used to help pay for health insurance through your job or a health plan purchased outside the marketplace.

Obamacare subsidies aren’t available to undocumented immigrants. However, most legally-residing immigrants can apply. You can check HealthCare.gov for details.

If you’re a legal United States resident, you can apply for a health insurance subsidy and enroll in a health plan on the health insurance exchange run by your state or by the federal government. Locate your state’s health insurance exchange using the HealthCare.gov tool.

3

Short-Term Health Insurance

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Short-term health insurance frequently costs less than comprehensive health insurance. For this reason, it’s an attractive option to people looking for temporary coverage.

Short-term plans can be sold in some states with terms of up to 364 days of coverage, and in some cases, these plans can be renewed for up to a total of 36 months.

But some states do not allow short-term plans to be sold at all, and others place more restrictive limits on their duration. And even in states that don't limit short-term plans beyond the federal minimum requirements, insurers can choose to offer plans that are non-renewable or that have shorter durations.

Although short-term health insurance can be a low-cost health insurance option, it isn’t right for everyone. Short-term health insurance plans don’t have to follow the Affordable Care Act’s rules.

For example, a short-term health insurance policy can place a cap on benefits, limiting the insurer’s potential losses if you become seriously (and expensively) ill while you’re covered.

Short-term health insurance also doesn’t have to cover the essential health benefits. For example, most short-term plans do not cover maternity care or mental health care, and many exclude coverage for outpatient prescription drugs. Almost all short-term plans also exclude coverage for any pre-existing conditions.

You can even be turned down for coverage entirely if the insurer feels you’re too big of a risk to insure. However, if you’re young, healthy, and pose little risk of expensive claims for the insurer, short-term health insurance can be a surprisingly low-cost health insurance option.

You can buy a short-term health insurance policy directly from a health insurance company, use your own insurance agent, find a health insurance agent or broker at the National Association of Health Underwriters website, or use a non-governmental private online exchange such as ehealthinsurance.com.

Short-term health insurance is not sold on Affordable Care Act health insurance exchanges such as HealthCare.gov.

Short-term health plans are also not considered minimum essential coverage. If you experience a qualifying event that would otherwise trigger a special enrollment period to enroll in an ACA-compliant plan, you would not be able to do so if the rules require you to have had minimum essential coverage in place prior to the qualifying event.

For example, although involuntary loss of coverage is a qualifying event that normally allows a person to enroll in an ACA-compliant plan, loss of a short-term plan does not. And if you move from one area to another, your move will not trigger a special enrollment period if you had coverage under a short-term plan prior to the move (you must have had coverage under a plan that counts as minimum essential coverage prior to the move in order to qualify for a special enrollment period triggered by your move).

4

Job-Based Health Plan

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Many employers in the United States subsidize health insurance for their employees and their employees’ families as part of the employee’s benefits and compensation package. This is very common for full-time employees of large companies. It’s not as common for part-time employees or for employees of small businesses.

Here’s how it works. When you get a job that comes with health insurance benefits, your employer may offer only one health plan, or they might offer several options from which to choose.

You have a limited period of time to sign up for the health insurance your employer offers. If you don’t sign up before the deadline, you’ll have to wait until the next annual open enrollment period. There’s typically a short waiting period before your coverage begins. This is usually from 30 to 90 days.

When you have employer-sponsored health insurance, your employer usually pays part of the monthly premiums and you pay part of the monthly premiums. In most cases, the employer will pay the majority of the cost, although this varies from one employer to another. Your share of the premiums is deducted from your paycheck automatically so you don’t have to remember to pay each month.

In most cases, this payroll deduction is taken out of your paycheck before your income taxes are calculated; this way, you’re not paying income taxes on the money you spent on health insurance premiums.

With job-based health insurance, your employer doesn’t usually help you pay cost-sharing expenses like deductibles, copays, and coinsurance. However, employers may offer savings plans like Flexible Spending Accounts, Health Savings Accounts, or Health Reimbursement Arrangements to help make paying these expenses easier.

In most cases, when you quit or lose your job, you also lose your job-based health insurance coverage. However, you may be eligible to continue this coverage for 18 months through COBRA or state continuation if you’re willing to pay both your share of the premium and the part your employer had been paying. (Note that under the American Rescue Plan, the government will pay COBRA premiums from April through September 2021, allowing enrollees to have this coverage for free during that time).

5

Spouse's Health Plan

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If your spouse has job-based health insurance, you may be eligible for the same coverage. Most employers extend the offer of job-based health insurance to their employees’ spouses, children, and step-children. You can sign up for this coverage during the initial enrollment period when your spouse first gets the job.

If you miss this opportunity, you’ll have another opportunity during each annual open enrollment period. You'll also have an opportunity to join your spouse's plan if you experience a qualifying event, such as losing your own health plan or having a baby.

If your spouse’s employer offers the company health plan to you and your children, you’re not obligated to accept it. If you can find a better deal on health insurance coverage for you and the kids, it’s OK to let your spouse’s employer cover your spouse only, while you and the kids opt for other coverage.

But it's important to understand that if your spouse's employer offers family coverage and the coverage is considered affordable for just the employee (i.e., without taking into consideration how much gets payroll deducted for the rest of the family's coverage), nobody in the family is eligible for premium subsidies in the exchange.

This is known as the family glitch, and it leaves some families without a truly affordable health insurance option.

Although employers generally subsidize an employee’s job-based health insurance by paying a portion of the monthly premiums, the employer might not subsidize spousal or family coverage (most employers do subsidize family members' coverage, but overall, employers pay a smaller percentage of the total cost of family health insurance, versus employee-only coverage).

If your spouse’s employer offers health insurance to their family members, your share of the premium s will be deducted from your spouse’s paycheck automatically.

6

Parent's Health Plan

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If you’re less than 26 years old and your parent has an individual market plan (purchased on-exchange or off-exchange, or a grandmothered or grandfathered plan), or a job-based plan that offers coverage to dependents, you’re eligible for coverage under your parent’s health plan. This is true even if you’re not your parent’s tax dependent, you’re married, or you’re living on your own.

You may have to wait until the next open enrollment period with your parent’s health plan to be added to their health insurance coverage. However, if you’ve recently lost other comprehensive health insurance coverage, you might be able to enroll even before open enrollment if you meet the health plan’s requirements for a special enrollment period.

Some employers subsidize not only their employees’ health insurance but also health insurance coverage for employees’ families. Other employers pay a portion of their employees’ health insurance premiums but don’t subsidize the premiums for family members.

If your parent has job-based health insurance and his or her employer subsidizes family premiums, your health insurance premiums will be paid in part by your parent’s employer. The rest of the monthly premium will be taken out of your parent’s paycheck.

If your parent’s employer doesn’t subsidize family coverage, your entire monthly premium will be deducted from your parent’s paycheck.

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19 Sources
Verywell Health uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
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