In 2020, approximately 11.4 million Americans purchased individual health insurance plans from the Affordable Care Act (ACA) public health insurance Exchange – comprised of state-based Exchanges and the federally-facilitated health insurance Marketplace (healthcare.gov).
But where should you get your health insurance this year?
Individual health insurance purchased away from the federal Marketplace includes major medical plans which meet the Affordable Care Act (ACA) guidelines for essential health benefits, as well as non-compliant coverage plans.
You can buy major medical plans from either the public Marketplace or directly from an insurance company. However, you will not find non-ACA compliant plans on the public Marketplace with the exception of optional dental coverage. Away from the ACA Marketplace you will find more health insurance options, including:
Short term health insurance – a limited-benefit plan that provides coverage for unexpected illnesses or injuries. If available in your state, this temporary plan can last between 30-364 days, depending on state laws.
Medical gap, accident insurance, critical illness care and hospital insurance – plans that supplement your major medical insurance by paying cash benefits if you experience certain medical conditions.
Dental coverage – plans designed to protect your oral health, which contributes to your overall health.
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Keep reading to learn how major medical plans available on and away from the public Marketplace are similar and different. Your personal circumstances will help you decide which is a better option for obtaining your coverage.
You’ll also discover when it might make sense to purchase a non-ACA compliant plan such as short term health, or supplemental coverage such as dental, accident, critical care illness or hospital insurance.
How do I know if I should buy from the public Marketplace?
There are a number of similarities and differences between major medical plans sold on and away from the public Marketplace. Here’s how the plans are alike.
First, all major medical plans sold through the public ACA Exchange (also referred to as the ACA Marketplace and Health Insurance Marketplace) and off the Exchange are considered ACA-qualifying “minimum essential coverage” individual health plans.
These plans include all of the Affordable Care Act’s consumer protections and benefits including:
- Coverage for healthcare services in the 10 essential health benefits categories
- No-cost preventive care – certain preventive care screenings, tests and services at no additional cost beyond your premium
- Coverage for children up to age 26
- Guaranteed-issue coverage – you cannot be denied, have your coverage canceled or be charged more based on your health history or gender
- No lifetime and annual dollar limits for coverage of essential health benefits
Second, whether you buy an ACA-compliant major medical plan from the ACA Exchange or away from it, insurance companies can only use the following five factors to calculate your major medical premium rate:
- Your age (older people can be charged up to three times more than younger people)
- Where you live
- Whether you use tobacco
- How many people you’ll be covering – just yourself, or do you also want to coverage spouse and/or children?
- What “metal” level plan you want to purchase – bronze, silver, gold, platinum, catastrophic
So what’s the difference between plans sold through the Health Insurance Marketplace and those sold elsewhere?
While the essential benefits, features and method for calculating premiums are the same for all major medical plans regardless of where they are purchased, there are three areas in which plans sold on and off the public Exchange can differ:
- Purchase timing
Depending on your income level, you may qualify for government subsidies, such as premium tax credits and cost-sharing reductions. Subsidies can help lower your premiums if you purchase your major medical plan on the public marketplace.
If you are eligible for government subsidies, you may receive them only if you purchase your plan on the public Marketplace. That means even if you are eligible for subsidies, if you buy your plan directly from an insurance company you will not receive government subsidies.
Shop for individual ACA health plans on your state Exchange or healthcare.gov. to see if you qualify for subsidies.
To help contain rising healthcare costs, many insurance companies have designed their major medical plans with narrow provider networks. In 2019, nearly three-quarters of the plans sold on the public health insurance Marketplace had restrictive provider networks.
But you may be able to find a greater variety of plan design options, including choices with less restrictive provider networks, if you shop directly from insurance companies. While the average number of insurers participating in each state’s public marketplace has dropped from 5.0 in 2014 to 4.0 in 2019, many insurers sell ACA-qualifying plans away from the federal Marketplace, even if they do not offer options on the public Marketplace.
Regardless of whether you buy on or off the public or Marketplace, carefully review the provider networks to make sure your preferred doctors and facilities are covered before buying a plan.
You can only buy a plan on the public ACA Exchange during annual open enrollment, unless you have experienced a qualifying life event for special enrollment. However, in some limited cases you can purchase a major medical plan directly from an insurance company or carrier at any time during the year.
If you have a coverage gap – It may take a few weeks for your major medical insurance coverage to take effect once you’ve selected your plan and paid the premium. Short term medical insurance can provide you temporary health insurance while you’re waiting for your major medical coverage to begin.
(Remember, these plans have coverage exclusions and benefits limits, and are subject to medical underwriting so enrollment is not guaranteed.)
Want to know what limited-benefit temporary insurance coverage could cost you?
Supplemental Coverage for Your Major Medical Plan
Given that more Americans are underinsured today, whether you buy your major medical plan on or off the public Marketplace, you may choose to purchase supplemental coverage for additional benefits to help with high out-of-pocket costs like your deductible and coinsurance.
Dental Insurance for Good Oral Health
Research shows that there’s a connection between dental health and your overall health. You may be able to select a major medical plan that offers dental coverage, or you have the option to select a stand-alone dental plan.
Compare dental plans and costs.
Medical Gap Insurance
Designed to supplement your ACA-plan, gap health insurance pays benefits if you experience qualifying accidental injuries such as sprains, fractures, concussions or burns that requires emergency care or hospitalization.
Use the benefits to pay for whatever kinds of expenses you choose. These policies are not ACA-qualifying and usually not guaranteed-issue, so you must qualify to enroll. However, this type of plan has affordable monthly premiums, you can apply for coverage at any time, and there are no provider network limitations.
This type of insurance also supplements your major medical coverage by paying a fixed amount when you incur hospital-related charges such as for room and board, inpatient prescriptions and doctor visits, inpatient and outpatient surgery, and ambulance services.
You may be able to combine this plan with critical illness insurance for access to additional cash benefits that you can use in any way you choose. That means you can pay medical bills or cover your medical out-of-pocket costs. You even can use the benefits to pay for non-medical costs like housing, transportation or childcare.
Hospital insurance is not available in every state, and in some states, you are required to have a major medical plan before you can enroll in a hospital plan.
Compare Hospital Insurance Coverage and Costs.
Summary + Next Steps
If you’re shopping for ACA-qualifying major medical insurance, you can buy a plan either on the public Marketplace or directly from an insurance company. Keep your personal circumstances in mind when deciding where to buy.
Consider the following:
Are you eligible for government subsidies to help reduce your premium costs? Remember that you may only receive subsidies if you buy a plan on the public Marketplace. Learn more about ACA subsidies, or find your ACA Marketplace and get started.
What are your healthcare needs? Check to see whether your preferred doctors and hospitals are included in the plans available to you both on and off the public Exchange.
When do you need health insurance? In some cases, you may be able to purchase major medical coverage directly from an insurance carrier outside of the annual open enrollment period.
But you can only enroll in coverage from the public Marketplace during open enrollment or if you qualify for a special enrollment period. Short term health insurance can provide you temporary coverage while you’re waiting for your major medical plan coverage to begin.
Want help sorting through your options? Call 888-855-6837 to speak with a licensed agent who can help you learn which plan options are available in your area, pricing and eligibility.
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