What's the Best Health Insurance if You're Healthy + Not Subsidy-Eligible?

Jenifer Dorsey
2018-09-19 November 20th, 2017 |
Read time: 4 minutes

Open enrollment for Obamacare plans runs from Nov. 1, 2017, through Dec. 15, 2017. Even if you consider yourself healthy, not taking the time to compare options and select the right health plan can be costly.

Get to know the individual mandate

First, let’s talk about that penalty for skipping coverage altogether.

Although the Trump administration would like to repeal the ACA and do away with the individual mandate, it remains in effect for 2018 and the IRS plans to enforce it.1

For every month you go without ACA-compliant health insurance and are not exempt, you will owe 1/12th of the annual payment.2 The 2017 penalty for not purchasing minimum essential coverage is the higher of these amounts; the 2018 penalty will be adjusted for inflation:3

  1. 2.5% of your annual household income above the tax filing threshold to a cap of the national average bronze plan premium
  2. $695 per adult and $347.50 per child under 18 to a maximum penalty of $2,085 per family

What to do when the math doesn’t add up to buying major medical

If you find you are not eligible for a premium tax credits or cost-sharing reductions and are relatively healthy, you might argue that buying health insurance you won’t use is too expensive and you would prefer to pay the penalty.

Have you considered how you would pay for potentially large out-of-pocket expenses should you have an accident or unexpected illness?

The choices seem grim: pay the penalty or pay for a high premium major medical plan that you’ll never be able to afford to use. But what if there was a third option?

Your Physical Health + Your Financial Health – Finding the Balance

The challenges are many: finding benefits that strike a balance between a budget-friendly monthly premium and a deductible that you can realistically afford (even though it is an amount you may or may not have to pay), and being able to accurately predict what will happen in the future regarding your health and finances.

Here’s an example:4A 35-year-old male who lives in Indianapolis, let’s call him Frank, does not get a premium tax credit subsidy, and buys coverage through HealthCare.gov – his monthly premium is $308.78 for the lowest-cost bronze plan available to him in 2018.

This plan has a $7,250 deductible.

Let’s say this individual typically goes to the doctor for preventive care but is concerned about the financial implications if he has an accident or unexpected illness. He would like a lower deductible to help decrease his out-of-pocket expenses.

  • For $350.42 per month, he could purchase a silver plan with a $6,150 deductible.
  • He would pay $499.68 more per year ($41.64 per month) to lower his deductible by $1,100.

Between premium and deductible, he would potentially save a total of $600.32 with the silver plan. However, a $6,150 deductible is still fairly steep, especially if he has a major medical event.

Instead of spending more on a silver plan, someone in this situation may consider buying a bronze plan and adding supplemental coverage.

No subsidy? Supplemental + Obamacare may be an affordable option

It may seem counterintuitive, but purchasing additional health benefits could help you save money in the long run. How so?

Let’s take another look:5 Let’s go back to Frank from Indianapolis and compare a bronze plan paired with supplemental (“gap”) coverage to a silver plan to see how he could save just over $3,400 in annual out of pocket costs (table below).

Option A: Frank purchases the bronze plan with a $7,250 deductible and then shops www.healthedeals.com for Metal Gap Plan A, which includes a $3,500 accident benefit (after $250 deductible) and $7,500 critical illness benefit.

Option B: He purchases a silver plan with a $6,150 deductible.

The situation: In 2018, Frank injures his leg in a covered accident. He requires a trip to the ER and out-patient surgery. His covered medical bills amount to $3,750, which he must pay out of pocket toward his deductible.

These end up being Frank’s only medical bills for the year. The chart below shows the financial impact to Frank depending on his coverage option. Frank pays almost $8,000 out of pocket with an ACA Silver plan, and around $4,500 with an ACA Bronze plan with a supplemental medical gap policy.

A: ACA Bronze + Gap B: ACA Silver
Major Medical Monthly Premium $308.78 $350.42
Metal Gap Monthly Premium $27.30 NA
Total Frank pays for benefits $336.08/month ($4,032.96/year) $350.42/month ($4,205.04/year)
Total Medical Bills from Accident $3,750 $3,750
Metal Gap Deductible (what Frank pays) +$250 NA
Metal Gap Benefits (what Frank gets) -$3,500 NA
Total Frank pays out of pocket $500 $3,750
Total Annual Premium + out-of-pocket expenses for 2018 $4,532.96 $7,955.04

What about additional coverage for non-emergencies?

Not all unexpected medical events cost thousands of dollars. You may have concerns about paying for physician visits for those minor ailments that can sneak up on you from time to time—pink eye, sinus infections.

For as little as $12.50 per month, you can purchase a telemedicine benefit that provides low-cost telephone consultations with a licensed physician. Telemedicine can be used anywhere you are connected—24 hours a day, 365 days a year.

Can I skip Obamacare altogether?

Ultimately, the decision is up to you whether you pay the penalty or obtain qualified coverage.

Just remember that to keep your health and finances in-tact next year it may be worth thinking outside the box and considering supplemental and alternative health insurance options.

If you want help working out your own unique “Frank” scenario with a knowledgeable insurance advisor, give us a call!

The number at the top of your screen will connect you with a licensed health insurance producer who can help you find the right coverage combination for your situation.

 

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Originally Published On December 13th, 2015

Footnotes