How to Get Free or Low-Cost Health Insurance

You might be surprised by how expensive the cost of health insurance is in the United States is. However, the cost isn’t the only challenge for people navigating health insurance—it's also a complex system.

This article will explain what you need to know about obtaining affordable health insurance, even if your income is low.

Where to Get Health Insurance

In the U.S., you can potentially get health insurance through several different sources. Insurance can be provided by the government or by your job or university. You can also buy it from a private health insurance company, either through the exchange/marketplace or directly from the insurer.

If your health insurance is free or low-cost, it means that either:

  • The plan's monthly premiums are being partly or totally paid for by someone else. This is called subsidization. Usually, subsidies come from your job or the government. Having a subsidy means that you won't have to pay the full cost of the insurance yourself. If you qualify for subsidies, it's a great way to get health coverage that fits your budget. And most people do qualify for subsidies, either from the government (via the exchange, Medicare, Medicaid, etc.) or from an employer.
  • The plan's benefits have been reduced. In this case, the coverage that you’re buying does not cover very much. In other words, it's not comprehensive health insurance. Less comprehensive coverage can look appealing at first glance, but it might not be enough to help you if you have a significant medical claim.

Key Terms to Know

There are a few words that will frequently pop up when you're shopping for health insurance. It's important that you understand what they mean. This will help you make an informed choice about coverage.

  • Premium: This is how much your health care plan costs per month. You have to pay this amount every month in order to keep the plan in force, regardless of whether you need to use your health insurance or not. And even if you have medical claims that result in you meeting your plan's maximum out-of-pocket for the year, you'll still have to continue paying the premiums. But as noted above, premiums for most people are subsidized by the government or by an employer.
  • Deductible: This is how much you need to pay toward health care before your plan will start to pay for certain services.
  • Copay: This is how much you have to pay when you get a health care service that's not subject to the deductible. For example, if you go to your doctor's office, your plan might pay for some of the cost but you may have to pay a set amount when you have your appointment (e.g. you might have a $30 copay). Some plans only have a deductible, and don't have any services that are subject to copays instead.
  • Coinsurance: This is how much you will have to pay after you have met your deductible, but before you've met your maximum out-of-pocket. Your plan will pay some of the cost but you will also have to pay some. For example, you might have to pay 35% of the total cost for a test that you have.
  • Maximum out-of-pocket: This is the cap on how much you'll have to pay for medical treatments during the year. The cap varies from one plan to another, but the federal government imposes an upper limit for most plans, which varies from one year to another (for 2022, it's $8,700 for a single person; for 2023, it's $9,100). The maximum out-of-pocket only applies to in-network claims for covered essential health benefits, and you still have to follow your plan's rules for things like prior authorization and step therapy.

Here is an overview of several options for free or low-cost health insurance. You'll learn who is eligible, how to apply, and what to expect from each option.

1

Medicaid

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Medicaid is a social welfare program. It provides government-based health insurance to low-income people. The insurance covers a lot of services, which means that it's comprehensive.

In most cases, Medicaid is free health insurance for people who qualify. A few states charge small premiums for people on the higher end of the Medicaid-eligible income scale.

In addition to no premiums, there is no or minimal cost-sharing (for example, deductibles or copayments).

Who Qualifies?

Medicaid works slightly differently in each state. To be eligible, you must meet low-income guidelines.

These guidelines vary depending on several factors including your age, whether you're pregnant, and whether you're disabled.

As a result of the Affordable Care Act's expansion of Medicaid, here is an overview of who is covered in most states:

  • Adults under the age of 65 if their household income is no more than 138% of the federal poverty level (FPL)
  • Some states have stricter eligibility criteria for adults under the age of 65. To qualify for Medicaid in those states, you must meet low-income guidelines and be a member of a medically vulnerable group (e.g. people who are pregnant, the parents/caretakers of a minor child, the elderly, disabled people, and children).
  • Pregnant people and children (even if they have household incomes above the federal poverty level)
  • People age 65 and older with lower incomes and few assets

As of 2022, there are 11 states where being low-income by itself will not make you eligible for Medicaid.

Can Immigrants Qualify?

Medicaid is generally only available to immigrants (who meet the income eligibility requirements) if they've been legally residing in the U.S. for five years or more.

But lawfully-present immigrants can qualify for premium subsidies in the marketplace/exchange even if their income is below the poverty level. This ensures that low-income immigrants can still obtain affordable coverage while they wait five years to qualify for Medicaid.

Medicaid is not usually available to undocumented immigrants, but there can be exceptions. One example is short-term limited Medicaid coverage in an emergency or emergency coverage for people who are pregnant. (Note that undocumented immigrants cannot enroll in private plans through the marketplace, with or without premium subsidies.)

Again, Medicaid eligibility varies from state to state. For example, California has chosen to extend Medicaid eligibility to undocumented children and young adults who otherwise meet the income criteria for eligibility.

Who Pays for Medicaid?

Medicaid is paid for by federal and state taxes. It is administered at the state level. That's 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.

If you get Medicaid, you’ll likely be cared for at the same hospitals and by the same physicians as people who have private health insurance.

Even though Medicaid is government health insurance, most of the care provided to people who receive it comes from private businesses and healthcare providers. Most states contract with private insurance companies to administer coverage. On your ID card, you might the name and logo of a well-known insurance provider.

You can apply for Medicaid through your state's ACA health insurance exchange or by contacting your state’s Medicaid program directly.

Recap

Medicaid is free or low-cost insurance that is paid for federal and state taxes. You can get it if you have a low income and meet other eligibility requirements. That said, states have different rules about Medicaid.

2

Affordable Care Act Subsidy

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The Affordable Care Act (ACA) provides government subsidies to make health insurance affordable for people who buy their own health insurance through the exchange/marketplace. This coverage is also called Obamacare.

The law includes premium tax credits (premium subsidies) that offset some or all of the monthly premiums.

There are also cost-sharing reductions (CSR) that reduce the out-of-pocket costs that some enrollees have to pay when they need medical care.

How Subsidies Work

If you're eligible for a premium tax credit you can opt to have it paid to your insurer each month on your behalf.

That means you won't have to claim it all at once on your tax return at the end of the year (you'll still have to reconcile the amount on your tax return). The government pays part of your monthly insurance premium and you pay the rest.

Subsidies can only be used to buy Obamacare health insurance sold on the ACA's health insurance exchanges—also called the Marketplace. They cannot be used to help pay for health insurance through your job or a health plan purchased outside the marketplace.

COVID-19 Changes

Usually, there is an income cap of 400% of the poverty level to qualify for the premium tax credit.

During the COVID-19 pandemic, the American Rescue Plan changed the rules. And the Inflation Reduction Act has extended this through 2025. So for now, there is no income limit on premium subsidy eligibility.

That means that for at least five years (2021 through 2025), the subsidies will ensure that nobody who buys a plan in the marketplace/exchange pays more than 8.5% of their household income in premiums for a benchmark plan.

Who Qualifies for Subsidies?

Depending on where you live and how old you are, you may qualify for a premium subsidy even if your income is well above 400% of the poverty level. (This will be true through at least 2025, and Congress might decide to further extend that provision.)

However, 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.

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. So subsidy eligibility already extended well into the middle-class and upper-middle class, depending on where the family was located.

Obamacare subsidies are not available to undocumented immigrants. However, most legally-residing immigrants can apply.

(Note that subsidies are not available if you're eligible for employer-sponsored health coverage that's considered adequate, or if you're eligible for Medicaid or premium-free Medicare Part A.)

With American Rescue Plan, the Centers for Medicare and Medicaid Services (CMS) reports that:

  • Eighty percent of marketplace enrollees have access to at least one plan that costs $10 or less in monthly premiums after the tax credits are applied.
  • More than half of enrollees have access to a silver plan that costs $10 or less in monthly premiums.

Subsidies have made self-purchased health insurance much more affordable, but few people purchase their own coverage. Most people get health insurance from their employer or from the government (Medicare, Medicaid, CHIP).

Cost-Sharing Reductions

If your income is between 100% and 250% of the federal poverty level, you may get more help from the government to pay your deductible, copays, and coinsurance when you use your health insurance. This is known as a cost-sharing reduction subsidy.

How to Apply

If you’re a legal U.S. 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.

You can find your state’s health insurance exchange using the HealthCare.gov tool.

Recap

The ACA or "Obamacare" is health insurance you can purchase through the Marketplace. If you meet certain income criteria, you might be able to get help paying for some or nearly all of your monthly premium.

3

Short-term Health Insurance

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Short-term health insurance often costs less than more comprehensive plans. It's an attractive option to people looking for temporary coverage.

In some states, plans are sold in terms of up to 364 days of coverage. And some insurers allow their plans to be renewed for up to a total of 36 months. These are the upper limits allowed by the federal government.

But there are also states that place more restrictive limits on plan durations. Some states do not allow short-term plans to be sold at all.

Even in states that do not limit short-term plans beyond the federal minimum requirements, insurers can choose to offer plans that are non-renewable or that have shorter durations.

Is a Short-Term Plan Right for Me?

Although short-term health insurance can be a low-cost option, it isn’t right for everyone. You will need to understand what the plans will cover, and how long you will have that coverage.

It's important to know that short-term health insurance plans do not have to follow the ACA's rules.

For example, a short-term health insurance policy can place a cap on benefits. This limits the insurer’s potential losses if you get seriously ill while you're covered. If you get very sick and need a lot of medical care, that's expensive for the insurer.

Short-term plans also do not have to cover essential health benefits—that includes things like maternity care and mental health care. Many plans also do not include outpatient prescription drug coverage.

If you have a medical condition, you should know that almost all short-term plans do not provide coverage for any pre-existing conditions.

Who Qualifies?

If an insurer thinks that you're a risk to cover, they can turn you down. On the other hand, if you're young, healthy, and are not seen as a risk, you might be able to get short-term health insurance.

While it's a lower-cost option, you need to read all the fine print, understand how post-claims underwriting works, and know what the plan does and doesn't cover.

How to Buy a Short-term Plan

There are a few ways to buy a short-term health insurance plan:

Can I Buy a Short-term Plan on the Exchange?

Short-term health insurance is not sold on ACA health insurance exchanges such as HealthCare.gov.

Short-term health plans are not considered minimum essential coverage.

If you experience a qualifying event that would typically trigger a special enrollment period where you could get 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 before the qualifying event.

For example, even though the involuntary loss of coverage is a qualifying event that normally lets a person enroll in an ACA-compliant plan, the loss of a short-term plan does not.

Moving is another example. If you move from one area to another, it will not trigger a special enrollment period if you had coverage under a short-term plan before you moved.

You must have had coverage under a plan that counts as minimum essential coverage beforehand to qualify for a special enrollment period that's triggered by your move.

Recap

Short-term health insurance only covers you for a limited time. It also does not cover a lot of services, including some essential care.

The plans can be low-cost, but you might not be able to get covered. If a provider thinks that you have a high risk of needing health care services (which would cost them more money), they can turn you down or refuse to cover anything related to the medical conditions you have.

4

Job-based Health Plan

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Many employers in the U.S. subsidize health insurance for their employees and their employees’ families as part of the employee’s benefits and compensation package.

Health coverage is a common benefit for full-time employees of large companies, but it's less common for part-time employees and small businesses.

Who Qualifies?

When you get a job that comes with health insurance benefits, your employer may offer only one health plan. They may also offer several options and allow you to choose the one that best fits your needs and budget.

You have a limited 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. Employers set their own open enrollment periods, so the specific dates vary from one employer to another.

You may have a short waiting period before your coverage begins—usually 30 to 90 days. The ACA caps the waiting period at 90 days, and some employers don't have a waiting period at all. Once the coverage takes effect, pre-existing conditions are covered right away, with no additional waiting period.

Who Pays for Coverage?

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, your employer will pay most of the cost, though it varies. Your share of the premiums gets taken out of your paycheck automatically. That means you don’t have to remember to pay the bill each month.

The payroll deduction is usually made before your income taxes are calculated. That means you’re don't have to pay income taxes on the money that you spent on health insurance premiums.

With job-based health insurance, your employer usually doesn't help you pay cost-sharing expenses like deductibles, copays, and coinsurance.

However, some employers offer savings plans like Flexible Spending Accounts, Health Savings Accounts, or Health Reimbursement Arrangements.

What If I Quit or Lose My Job?

In most cases, when you quit or lose your job, you also lose your job-based health insurance coverage.

You might be eligible to temporarily continue your coverage with COBRA or state continuation.

However, you have to be able to pay both your share of the premium and the part your employer had been paying.

Recap

Your employer may offer a health insurance plan as part of your benefits package. They will pay for some of your insurance costs and the rest is taken out of your paycheck pre-tax.

If you lose your job, you will also lose your insurance. However, you might be able to continue it for a while through COBRA or state continuation.

5

Spouse's Health Plan

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If your spouse has job-based health insurance, you might be eligible for the same coverage. Most employers extend the offer of job-based health insurance to their employees’ spouses, children, and step-children.

How to Get Covered

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 chance during each annual open enrollment period that their employer offers.

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.

Can I Choose Different Coverage?

If your spouse’s employer offers the company health plan to you and your children, you don't have to accept it.

If you can find a better deal on health insurance coverage for you and the kids, you can let your spouse’s employer cover your spouse only. You and the kids can opt for other coverage.

However, before you make this move, you should know about something called the "family glitch."

If your spouse's employer offers family coverage, they will consider that coverage is affordable for the employee without taking into consideration how much gets taken out of their paycheck for the rest of the family's coverage.

That means that if your spouse's plan is considered affordable for them, then no one in the family is eligible for premium subsidies in the exchange.

But fortunately for some families, the IRS has proposed a rule change in 2022 that would partially fix the family glitch as of 2023. The new rules are expected to be in place by the time open enrollment for individual/family health coverage begins in November 2022.

Who Pays for Coverage?

Employers will generally subsidize an employee’s job-based health insurance by paying a portion of the monthly premiums. However, an employer may not subsidize spousal or family coverage.

Many employers do subsidize family members' coverage. The employer usually pays a smaller percentage of the total cost of family health insurance than for employee-only coverage.

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

Recap

If your spouse gets insurance through their employer, you might be able to be covered on it as well. However, you also have the option of looking elsewhere for coverage. You may want to do this if you could find a plan that would cost less.

6

Parent's Health Plan

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If you’re younger than 26 years old and your parent has a certain kind of health insurance plan, you might be able to get covered.

You can be covered as a dependent if your parent has:

You can still get covered even if you’re not your parent’s tax dependent, you’re married, or you’re living on your own.

How to Get Coverage

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 before open enrollment if you meet the health plan’s requirements for a special enrollment period.

Who Pays for Coverage?

Some employers subsidize their employees’ health insurance and health insurance coverage for employees’ families.

Other employers pay a portion of their employees’ health insurance premiums but do not subsidize premiums for family members.

If your parent has job-based health insurance and their employer subsidizes family premiums, then your health insurance premiums will be paid in part by your parent’s employer. The rest will be taken out of your parent’s paycheck.

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

If your parents buy their own health coverage, your premium will be added to theirs in order to get the new total monthly amount. Depending on the family's circumstances (and whether they purchase their coverage through the exchange/marketplace), they may qualify for a premium subsidy.

Assuming you're no longer a tax dependent, you'll each have to reconcile the premium subsidy on your own tax return, but you can choose to allocate your subsidy to your parents' return if they paid for your portion of the coverage during the year.

Recap

If you're 26 years old or younger, you might be able to get covered by your parent's health insurance plan. They don't have to claim you as a dependent for you to be covered. You could even be living on your own or married and still be eligible for coverage through their plan.

Summary

There are a variety of ways to access subsidized health coverage in the U.S. Some plans are free, including most Medicaid plans. Some employer-sponsored plans and marketplace plans can also be low-cost when an employer or government subsidies cover the full cost of coverage.

Other plans have small premiums. For example, most employer-sponsored health plans and many plans bought outside the marketplace are more costly.

There are also non-ACA-compliant plans, such as short-term medical insurance, that tend to have low premiums but also lower-quality benefits. These are not right for everyone and are generally a "last resort" for coverage.

A Word From Verywell

If you need health coverage, it can be overwhelming to look at your options. The first step is to think about how much you can afford to pay for coverage and what kind of coverage you need.

In most states, you may find that you're eligible for Medicaid, or that your kids are eligible for CHIP if your income is low.

If your employer or your spouse's employer offers coverage, these plans can be an affordable way to get high-quality coverage.

If you don't have insurance through your job or want to see if there's something more affordable, you can shop in the exchange/marketplace at HealthCare.gov.

17 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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  2. Centers for Medicare and Medicaid Services. Medicaid, Children's Health Insurance Program, & Basic Health Program Eligibility Levels.

  3. Shultz, Josh. medicareresource.org. Financial Help by State for Medicare Enrollees.

  4. KFF. State Health Facts. Status of State Action on the Medicaid Expansion Decision.

  5. HealthCare.gov. Coverage for lawfully present immigrants.

  6. Norris, Louise. healthinsurance.org. Undocumented Immigrant Children and Young Adults Are Eligible for Medi-Cal.

  7. Kaiser Family Foundation. Medicaid managed care market tracker.

  8. Medicaid.gov. Resources for states.

  9. Centers for Medicare and Medicaid Services (CMS). American Rescue Plan and the Marketplace.

  10. Kaiser Family Foundation. Health insurance coverage of the total population.

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  12. HealthCare.gov. Need health insurance?

  13. Healthinsurance.org. ‘So long’ to limits on short-term plans.

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  16. Norris, Louise. healthinsurance.org. Will the family glitch fix help my family? April 7, 2022.

  17. U.S. Department of Health & Human Services. Young adult coverage.

By Elizabeth Davis, RN
Elizabeth Davis, RN, is a health insurance expert and patient liaison. She's held board certifications in emergency nursing and infusion nursing.