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What is the Obamacare Coverage Gap?

What is the Obamacare Coverage Gap?

Posted May 02, 2014 by Jenifer Dorsey

More than 7.1 million Americans purchased private health insurance through the Affordable Care Act’s first open-enrollment period.1 Millions more obtained it through Medicaid and their parents’ health insurance plans. However, millions of others remain uninsured; they are the individuals who find themselves in what is known as the Obamacare coverage gap.

They include individuals who:

  • Earn too much money to qualify for Medicaid
  • Live in states where Medicaid eligibility was not expanded to those who earn up to 138 percent of the federal poverty level—$11,900 for a single person in 2013
  • Make too much money to qualify for premium tax credits and cost-sharing subsidies, yet cannot afford health insurance
  • Qualify for premium tax credits and cost-sharing subsidies, yet cannot afford health insurance
  • Work for companies that do not provide access to health insurance or reduced employee hours to avoid the mandate

The Kaiser Family Foundation estimated that in states that do not expand Medicaid, “nearly 5 million poor uninsured adults have incomes above Medicaid eligibility levels but below poverty and may fall into a ‘coverage gap’ of earning too much to qualify for Medicaid but not enough to qualify for Marketplace premium tax credits.”2 The Kaiser Family Foundation explains, “The ACA envisioned people below 138% of poverty receiving Medicaid and thus does not provide premium tax credits for the lowest income.” Consequently, those individuals below the federal poverty level do not have access to tax credits, even if they do not have access to Medicaid. Furthermore, those with incomes above 100 percent FPL who live in states that do not expand Medicaid may be eligible for Marketplace subsidies; however, Kaiser notes, “only about a third of uninsured adults (3 million people) who could have been eligible for Medicaid if their state expanded fall into this income range.”3 
Filling the coverage gap
So what can those in the coverage gap do to when it comes to paying for medical care? They oftentimes must go without or find community clinics that offer services at reduced costs, which these individuals and families must then pay out of pocket.
CNN Money’s article, “Millions Slip into Obamacare ‘Coverage Gap,’” looks at the issue through the example of Texas, a state that did not expand Medicaid eligibility. There, some people turn to nonprofit medical clinics or even head to Mexico, where they say health care is less expensive.
There are non-ACA-compliant health insurance plans that provide individuals and families with some health insurance benefits and thereby help protect their finances in the case of unexpected medical bills. Such options are offered away from the exchanges and include the following:

  • Temporary health insurance plans, which last as few as 30 days and provide benefits that help pay for medical expenses related to accidents and unexpected illnesses, and
  • Hospital indemnity plans, which provide first-dollar fixed benefits for medical expenses related to hospitalization, surgery and outpatient therapy services.

These health insurance plans typically cost less in monthly premium major medical insurance and may serve as a short-term solution or supplemental coverage option. However, because they are not ACA compliant, they will neither help consumers avoid Obamacare tax penalties nor will they include essential health benefits or ACA-mandated preventive care services.
To learn more about temporary health insurance, hospital indemnity plans or your individual health insurance options on or away from the Obamacare exchanges, visit healthedeals.com or contact a certified health insurance agent at 888-839-7679.

1 U.S. Department of Health and Human Services. (2014, April 1). "7.1 Million Americans Have Enrolled in Private Health Coverage Under the Affordable Care Act" [Press Release].
2 Kaiser Family Foundation. (2014, April 2). "The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid."
3 Ibid.

Jenifer Dorsey is a freelance writer whose specialties include health and fitness, wellness, sports and recreation. She is a competitive amateur track cyclist who also enjoys mountain biking, hiking, camping and other outdoor adventure. Jenifer received a B.A. in journalism from Columbia College Chicago and is an MFA candidate at Naropa University. She lives in Colorado.