Not everyone can afford to pay the full monthly premium for health insurance, which is why the Affordable Care Act (ACA) makes subsidies, including premium tax credits and cost-sharing reductions, available to those within certain income brackets.
But what those that earn too much to qualify for a health insurance subsidy but who don’t make enough money to offset the costs of rising health insurance premiums and healthcare costs?
If this sounds like your situation it’s worth shopping around for ACA-compliant major medical insurance (which many people still call by the nickname “Obamacare”) and even identifying non-Obamacare health insurance alternatives that could help stretch your healthcare dollars.
We’ll explore some of your options, below.
Get the best deal on your Obamacare major medical plan
It’s still good practice to carry major medical insurance and be in compliance with the ACA, even as the tax penalty is lifted in 2019. However, because you don’t qualify for health insurance assistance, it makes sense to comparison shop for major medical insurance outside of HealthCare.gov and your state’s exchange.
Three common sources for major medical insurance sold in the private market include:
- Private, online health insurance exchanges (e.g., eHealthInsurance.com) that quote and sell plans from different companies. Learn more about how to shop for health insurance plans online.
- Websites like Healthedeals. Compare options now or learn more about finding a reputable carrier (health insurance company).
- Licensed health insurance producers (i.e., agents and brokers) in your area. Decide if working with an agent is right for you, and use Agent Finder to locate assistance near you.
Going off-exchange may provide you with additional carrier, plan and network options. That’s great if you are not eligible for a subsidy and want to save money, prefer a certain carrier, or want to ensure you have access to a specific doctor or hospital.
But what if you’re still facing a plan with a high deductible in order to make the monthly premium payments work? Is there anything to help mitigate your out-of-pocket expenses?
Add supplemental insurance to help with your high deductible
The general rule of thumb when it comes to health plan costs is: low premium = higher deductible and vice versa.
It may seem contradictory to buy additional health insurance when you feel financially strained, but that could be a solution.
Supplemental products known as medical gap insurance pay a “fixed-cash benefit” directly to you. Benefits may be paid directly to the hospital or other healthcare facility if an assignment of benefits is made by the policyholder (usually in the form of a check or direct deposit).
You can then use those funds at your discretion to help cover expenses. That may mean paying off your major medical deductible or other out-of-pocket medical expenses like your co-insurance.
Or you could use the funds to replace lost income by covering your rent, groceries, and childcare. It’s your money; you choose how to use it
If a high-deductible major medical plan paired with medical gap doesn’t sound right for you, an alternative health insurance option may be a solution.
Non-Obamacare alternative health plan options
If you don’t have an ACA-compliant plan, are you prepared to pay fully out of pocket for unexpected healthcare? That could be anywhere from a $200 urgent care visit to tens of thousands of dollars for hospitalization and a surgery.
You may want to consider non-ACA-compliant benefits in the form of short-term medical and hospital plans. These relatively low-cost solutions provide benefits that can help reduce what you pay out of pocket toward medical bills, and they can be purchased year-round. They offer less coverage, which is why the price is lower.
It is important to note that neither of these plans meet the ACA’s individual mandate for minimum essential coverage, so you would still be on the hook for the ACA tax penalty in 2018—again, the penalty will be lifted for the 2019 coverage year.
Short-term medical coverage as non-Obamacare insurance
Short-term medical insurance is a temporary solution designed to help with larger medical claims resulting from injuries and unexpected illnesses.
Short-term health benefits often include but are not limited to:
- Hospital room and board
- Emergency room treatment
- Surgical services
- Ambulance services
These plans can be a smart solution for those in relatively good health, as pre-existing conditions are not covered. That said, there is an option available through healthedeals.com that includes limited benefits for certain pre-existing conditions; you can learn more here.
Short-term insurance provides limited benefits when compared to major medical but premiums may be lower. For example, at the end of 2016, a short-term policy cost approximately $124 a month compared with $393 a month for a major medical policy without subsidies. Major medical plans are ACA compliant and include coverage for essential health benefits, while short-term health insurance does not.
Hospital indemnity plans as ACA alternatives
Hospital indemnity plans, while not the same as major medical and not considered ACA-compliant minimum essential coverage, can help pay for out-of-pocket expenses resulting from hospitalization, chemotherapy, surgery and critical illness.
- Generally provide benefits for smaller claims throughout the year, whereas short-term health insurance provides benefits for larger claims for a limited time.
- Pay fixed benefit amounts for covered medical care at a specific duration (e.g., per day, per week, per visit): For example, a plan may pay a $2,000 surgeon benefit per surgery and an inpatient hospital confinement benefit of $1,000 per day.
- Pay fixed benefit amounts, regardless of what your provider bills for medical services: For example, if your plan’s surgeon benefit is $2,000 per surgery and you receive a surgeon bill for $2,100, your benefit remains $2,000 and you will be responsible for paying the $100 balance.
- May be used along with short-term health insurance or major medical insurance but do not coordinate benefits with those policies.
Add-on products to help cut expenses with or without Obamacare
Whether you enroll in a major medical plan or choose an Obamacare alternative, you may want to consider the following add-on products to lower your out-of-pocket medical expenses:
Dental insurance can help lessen what you pay for routine oral care such as cleanings and exams as well dental work such as fillings and root canals.
A telemedicine package provides you with access to 24/7 telehealth services, anywhere you’ve got mobile or Internet connectivity. Board-certified doctors can remotely treat minor ailments such as cold, flu, ear infections, urinary tract infections, and more for just a few dollars per consultation.
An Rx discount card can help reduce what you pay out of pocket for prescription drugs. It’s simple to use: You present it at a participating pharmacy to access your discount.
Summary + next steps
We covered a lot of ground in this article, but if you’re feeling the middle class squeeze it boils down to a variety of coverage options to help curb healthcare expenses:
- Shop around and obtain the most affordable ACA-compliant major medical coverage that you can find.
- Supplement your high-deductible major medical plan with additional coverage known as “medical gap” to help you with out-of-pocket expenses.
- Utilize only non-Obamacare health insurance alternatives such as short-term medical, hospital indemnity or a health insurance package that includes both the high-dollar coverage of short-term medical and the hospital plan.
- Add benefits, including dental insurance, telemedicine and Rx discount cards to help lessen what you pay out of pocket for healthcare.
Still not sure how to proceed?
Call 866-278-1464 to speak with a certified advisor who can answer your questions and get you an instant quote.
Use Agent Finder to seek personalized advice from a knowledgeable insurance agent in your area.
First published October 31, 2016