Nearly half the U.S. population obtains health insurance coverage outside of an employer.1 If you don’t have health insurance through your job (or access to a spouse or parent’s employer-based coverage), then you need to find your own coverage. It’s a task that can seem daunting.
For starters, do you even need health insurance? And what can you do if you think can’t afford it? How do you strike a balance between a monthly premium that works with your budget and out-of-pocket costs (e.g., deductible, copay, coinsurance) that you can realistically afford if you need healthcare?
We’re here to help you navigate your options.
Is health insurance required in 2019?
First, let’s talk about the individual mandate.
The Affordable Care Act (ACA) has required most Americans to obtain health insurance or face a tax penalty known as the individual shared responsibility payment. That is no longer the case effective Jan. 1, 2019, when the federal tax penalty will be repealed.2
If you go without ACA-compliant health insurance for coverage year 2019, you will not owe a federal tax penalty (though some states may impose their own tax penalties).
Penalty or no, you may want to enroll in an ACA plan if:
You have pre-existing conditions – Major medical insurance is guaranteed issue under the Affordable Care Act. You cannot be denied coverage during open or special enrollment, and you cannot be charged more based on your health history; however, you can be penalized for tobacco use.
You want comprehensive coverage – The ACA requires major medical insurance to include:
- Certain preventive care services at no additional cost, and
- Healthcare services and products within 10 categories of essential health benefits.
You qualify for subsidies – When you purchase major medical insurance through HealthCare.gov or a state-based health insurance exchange, you may apply for one or both of the following income-based subsidies:
- Premium tax credits, which reduce your premium amount (monthly or annually)
- Cost-sharing reductions (CSR), which lessen what you pay out of pocket for medical care by lowering your policy deductible and other cost-sharing such as coinsurance, copayments and similar charges (CSRs only apply to silver plans)
You may want to explore alternative health insurance options if:
You don’t qualify for subsidies and don’t feel like you can afford an ACA policy – When looking for health benefits with a premium that fits your budget, you can apply for alternative health insurance.
Alternative health insurance may have lower monthly premium rates; however, you will receive limited benefits in return because alternative health insurance policies do not include all of the essential health benefits or meet ACA requirements for minimum essential coverage. Alternative health insurance doesn’t cover pre-existing conditions and may have additional limitations.
You are relatively healthy and need coverage for emergencies – Alternative health insurance options are not guaranteed issue, which means you could be denied coverage based on your health history.
You missed open enrollment – In most states, open enrollment takes place during November and December—however, there are some state-based exchanges that have extended open enrollment periods. If you miss open enrollment and don’t qualify for a special enrollment period, then you may want to look into alternative health insurance options while you are in between ACA-compliant policies.
Learn more about alternative health insurance options.
Estimate what you can afford to pay for coverage + healthcare
As you consider your options—ACA-compliant major medical insurance or alternative health insurance—you will also want to consider what your actual budget is for both your monthly premium payments and your annual out-of-pocket medical expenses.
- The more you pay in monthly premium for major medical insurance, the lower your annual out-of-pocket expenses will typically be.
- The less you pay in monthly premium for major medical insurance, the higher your annual out-of-pocket expenses will typically be.Subsidies, as mentioned earlier, can help lower your monthly premium and out-of-pocket medical expenses when you purchase major medical insurance from HealthCare.gov or a state-based exchange and qualify based on income.
See if you qualify for an ACA subsidy
As mentioned earlier, premium tax credit and cost-sharing reduction subsidies are available if you qualify and then enroll through HealthCare.gov or a state-based health insurance exchange. Before you rule out major medical insurance, you’ll want to check your subsidy eligibility.
When the math doesn’t add up and you can’t afford major medical
Affordability is subjective, of course. But no matter your financial situation, it can be challenging to find health insurance that strikes the right balance between a budget-friendly monthly premium and a deductible that you can realistically meet if you need to use your health insurance benefits.
Let’s look at three scenarios in which you might argue that buying health insurance is too expensive and consider some options that could help you with out-of-pocket medical expenses.
1. I qualify for a subsidy, but I can’t afford my ACA policy deductible.
If you qualify for a subsidy but consider your policy deductible to be too expensive, you may want to consider supplemental benefits to help with unexpected out-of-pocket medical expenses. Supplemental insurance may be used alongside major medical insurance.
Some supplemental options include:
Medical gap insurance – Benefits paid directly to you for covered expenses related to injuries and, in some cases, critical illnesses. You can use these benefits to pay for out-of-pocket expenses such as your health insurance deductible, copay or coinsurance.
Hospital indemnity insurance – Fixed benefits for medical services associated with hospitalization. Set benefit amounts are paid at specific intervals depending on the policy you purchase. Call 866-278-1464 to learn about supplemental hospital indemnity insurance.
Dental insurance – Benefits to help lessen what you pay for oral healthcare such as cleanings, exams and other dental work.
Get the facts about major medical insurance.
2. I need to enroll in an ACA policy, but I don’t qualify for a subsidy and I don’t think I can afford coverage.
Let’s say you typically require healthcare throughout the year. Maybe you have some pre-existing conditions. Maybe you’re prone to illness. Maybe you just like to know you’ve got comprehensive, ACA-compliant health insurance. You want to enroll in an ACA policy, but you have to pay your entire premium and are concerned about affordability.
Consider investigating what ACA-compliant major medical insurance is available in the private market. You may find additional options in the private market, including different health insurance carriers, plan designs, premiums and networks.
Once you’ve selected an ACA policy, as mentioned in the section above, you may want to add supplemental health insurance to help with unexpected out-of-pocket expenses throughout the year. Supplemental health insurance is only available to you in the private market, and you can apply year-round.
A licensed health insurance agent can help you find coverage and answer your questions.
3. I don’t qualify for a subsidy, and I want to find alternative health insurance.
If you don’t qualify for a subsidy, don’t feel like an ACA policy is affordable without one, and are okay with benefits that are less comprehensive, you may want to consider alternative health insurance such as:
Short term medical insurance – Temporary health insurance with a range of benefits for unexpected illnesses and injuries, short term medical (STM) policies are available for as few as 30 days—see policy duration limits by state.
Hospital indemnity insurance – Fixed benefits for medical services associated with hospitalization. Set benefit amounts are paid at specific intervals depending on the policy you purchase.
Health insurance packages – You can also apply for short term health insurance and hospital indemnity insurance to obtain more benefits.
You can’t buy alternative health insurance through HealthCare.gov or a state-based exchange. Currently, these options are only available to you in the private market, and you can apply year-round.
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. Or maybe you’d like some help paying for prescription drugs.
Health insurance add-ons are non-supplemental products that can be useful.
They may include:
Telemedicine – Access to low-cost telephone consultations with a licensed physician 24 hours a day, 365 days a year.
Discount prescription drug card – A discount drug card can help reduce what you pay out of pocket for brand name and generic drugs. Learn more about Rx discount cards.
Summary + next steps
Ultimately, whether you need health insurance or not—and then what kind is right for you—is a decision you’ll need to make for yourself.
If you want help finding the right coverage for your unique scenario, call us at 866-278-1464 to speak with a licensed and knowledgeable health insurance agent.
Gather quotes for supplemental and alternative health insurance on your own.