How has the Affordable Care Act (ACA), which is also known as Obamacare, impacted the cost of individual health insurance? Is it more affordable? Is it too expensive? The answer depends on whom you ask.
Some people find coverage under the ACA to be more affordable thanks to income-based subsidies that help lower monthly premium rates and annual out-of-pocket expenses. While others, particularly those in the middle class, feel that health insurance has become too costly1 under the law intended to provide all Americans with access to quality, affordable healthcare.2
If you’re among those who believe Obamacare policies are too expensive, there may be options that help make health insurance work within your budget.
Calculate your Obamacare premium subsidy
You’ll want to start by determining your subsidy eligibility. The ACA makes subsidies in the form of premium tax credits to those who: A) meet income criteria, and B) purchase coverage from the health insurance marketplace (i.e., HealthCare.gov or a state-based exchange). Furthermore, those who fulfill these two criteria and also purchase a silver plan may qualify for cost-sharing reductions that help lower out-of-pocket healthcare costs.
Do you qualify for a subsidy? Get an estimate now.
Yes, I qualify for an Obamacare subsidy in 2019.
If you qualify for a premium tax credit and cost-sharing subsidies, you will want to purchase coverage through the health insurance marketplace (i.e., HealthCare.gov or a state-based exchange).
No, I don’t qualify for a subsidy.
You may want to expand your search for health insurance coverage; explore your major medical (i.e., ACA or Obamacare) insurance options through HealthCare.gov or your state-based exchange as well as in the private market. You might consider supplemental insurance to help manage out-of-pocket healthcare expenses. If you still feel that Obamacare is too expensive, you might also explore alternative health insurance options.
No subsidy? What to do next
Just because you earn too much for a subsidy doesn’t mean you find major medical insurance premiums affordable or that you can pay out-of-pocket medical expenses with ease. So, what can you do?
1. Enroll in a major medical insurance policy + add supplemental insurance
There are many reasons you may prefer to enroll in major medical insurance, even if you don’t qualify for a subsidy. For starters, all major medical policies are the most comprehensive coverage you can buy because they must comply with the ACA, which means they are guaranteed issue (you qualify regardless of health history) and include the 10 essential health benefits.
It may seem counterintuitive to buy coverage in addition to your major medical policy, but it’s one way to help lessen what you pay out of pocket for healthcare expenses.
Here are some different possibilities and how they would work alongside your major medical insurance (keep in mind that a supplemental policy does not coordinate with your major medical policy):
+ Gap Insurance – A medical gap insurance policy provides benefits for covered injuries or illnesses. This lump-sum payment can be used to pay all or part of your major medical deductible or any other out-of-pocket expenses you incur while you’re recovering. Gap insurance is guaranteed issue. Learn more about gap health insurance.
+ Supplemental Hospital Insurance – Supplemental hospital insurance includes fixed indemnity benefit amounts for medical services such as hospital room and board, surgery, ambulance services, and inpatient physician’s visits when you are hospitalized due to an injury. Supplemental hospital insurance is not guaranteed issue. Call 866-278-1464 to learn more about supplemental hospital insurance.
+ Gap Insurance and Supplemental Hospital Insurance – If you buy both policies, you then have lump-sum benefits for covered injuries and illnesses as well as fixed indemnity benefits for covered hospital services. Find out what gap insurance costs. Call 866-278-1464 to get a supplemental hospital insurance quote.
2. Explore alternative health insurance options
You may decide that you are okay with fewer benefits if it means potentially paying less in monthly premium. If so, you might want to explore alternative health insurance options that are not ACA-compliant, which means they are neither guaranteed issue nor do they include the 10 essential health benefits.
Alternative health insurance options may include the following:
Short Term Health Insurance – Short term medical (STM) provides limited duration insurance coverage for 30 to 364 days, which may vary by state. Not all states allow for durations of 364 days. These temporary plans include benefits for unexpected, potentially high-dollar medical care and treatment resulting from injury or illness. Covered medical expenses may include hospital room and board, ambulance and surgical services, doctor visits and more. Learn about short term health insurance.
Hospital Insurance – Hospital insurance policies pay fixed indemnity benefit amounts for medical services such as hospital room and board, surgery, ambulance services, and inpatient physician’s visits when you are hospitalized due to an injury. Learn more about hospital insurance.
Hospital Insurance Packages – A hospital insurance package includes a hospital policy as well as a short term medical policy. It’s a way to obtain benefits for both high-dollar claims as well as fixed benefits paid at specified durations (e.g., per day, per visit). Learn more about health insurance packages.
A note about the ACA tax penalty
On Jan. 1, 2019 the individual mandate tax was repealed. That means you will no longer be subject to a federal tax penalty for going without minimum essential coverage.
Summary + next steps
If you believe Obamacare is too expensive:
- Calculate your subsidy to see if you qualify for premium tax credits or cost-sharing reductions that help lower your monthly payments and out-of-pocket medical expenses.
- Then, consider supplemental or alternative health insurance options based on your results.
Speak with an agent! Agents can assist you in finding the right benefits for your household. They’ve seen a number of different situations, understand health insurance and the ACA, and know the current market.
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Alternative health insurance and supplemental health insurance options are underwritten by Independence American Insurance Company, Madison National Life Insurance Company, Inc. and/or Standard Security Life Insurance Company of New York.