Texans are asking this question right and left. As we roll through the "open enrollment" period for the Affordable Care Act (ACA) exchange policies, there appears to be more questions than answers for the average person. Never mind, the misinformation put out there by folks with ulterior motives. So let's dig in on whether or not you have alternatives for your health insurance coverage!
Some times in life, just because we can, doesn't mean we should!
Say what? You don't want to sell me a shiny new policy? Yes. We said that. Two things:
- If you have a pre-existing condition, please recognize and enjoy the benefits afforded to you under the ACA. It really does benefit you!
- If you are in an employed situation, it is highly likely that your options for coverage via your employer are better for you than what you can get on the individual market.
As a result, evaluate your options there first. BUT....
So You're Saying There's A Chance!
Before we go further, let us begin by saying that our job is not to care about your political point of view, but to use the products available to you within the frame work of the law to your advantage.
Earlier this year, the current administration changed how the taxation mechanism of the Affordable Care Act was to be levied up on individuals and businesses. What this change effectively means to you, the consumer, is that the tax penalty associated with the mandate portion of the legislation was removed. Therefore, your ability to secure health insurance coverage outside the ACA approved plans was restored. There were other changes that enhanced this as well. Primarily, the ability to buy a "short term policy" of greater than three months that could also be renewed for up to three years.
So That Was Boring! What Are My Options?!
Glad you asked, really! Let's look at what you can do. We have FIVE main options.
- Carry No Insurance. Really, not the greatest of options. This leaves you exposed to financial catastrophe. But hey. It is an option.
- Buy a limited medical plan. So in reality, this is a much better alternative to no insurance. This will provide you with first dollar coverage on a limited basis. But you need to understand those limitations.
- Buy a Minimum Essential Coverage (MEC) Plan. This was a popular option the last two years due to the Mandate Tax. It was inexpensive and covered preventive services. But that's where it stopped cold, and left you exposed with downside risk. And now with the mandate gone, there is very limited value in these. Option two above is a much better plan than a MEC.
- Buy a fully underwritten "off-exchange" major medical plan. This option is the highly controversial choice this enrollment season as this is where the "Short Term Medical" options will fall. Some call it junk. Others call it genius. We will explore below.
- Continue with a major medical plan provided through the exchange. The reality is, if you have a pre-existing condition, take this option. These plans are not underwritten and allow for everyone to buy the coverage that they need. We generally recommend Bronze Level Plans as they provide the best value for premium dollars in most cases. But it's best to look at the options.
So the five options sound complicated. People generally understand the first and fifth as that has been our reality. Option number three holds little value at this point. So let's focus on the other two and why they are good and bad for you.
Option #2 - Limited Medical or Indemnity Plan
These plans are an alternative to carrying no insurance in reality. When we talk to Texans, they some times tell us that they are just not going to buy health insurance because they won't get any benefit out of it due to sky high deductibles. They are fed up with paying "large premiums" and then still spending loads of dollars if they engage the healthcare system. So what can they do?
An indemnity plan will provide you real first dollar benefits when you go to the doctor, have a lab test, or go to the ER. They can even provide you money for a hospitalization or surgery! The list of benefits is clearly defined and you understand what you are getting. In reality, you can couple this with a higher deductible major med plan and use it as deductible buy down if you're crafty and know that you are going to have system usage during the year.
So what is the downside to these plans? If you only carry an indemnity plan and have a major health event, you are going to wind up with a massive bill. Period. End of Story. They are not catastrophic coverage. This plan can land you in bankruptcy court if you hit that major event without additional coverage. We can provide this, but you have to understand.
Option #4 - Short Term Medical Plan
The buzz of many articles around health insurance lately have been about Short Term Medical plans. They are often referred to as Junk Policies. The reality is that one's perception of junk, is just that. Perception. These policies absolutely have a purpose and place. Let's evaluate reality.
Earlier this year, there were changes made to the Affordable Care Act legislation that made this option possible. The removal of the personal mandate tax and the time extension of allowable time on these plans have made this a viable solution for people who need major medical coverage, but not everything a fully compliant ACA plan provides. The "not everything" is why it is labeled as junk erroneously.
So what does it not cover?
- Maternity Benefits > If you aren't having more kids, you might be OK with this.
- Mental Health Benefits > Many people would rather control this coverage personally.
- Prescription Benefits > This can be added to the short term coverage.
- Pre-Existing Conditions > This is likely the largest consideration for many. What exactly does it mean for you?
Pre-existing conditions are previous health events that you have experienced in the past or are potentially still receiving treatment for today. This can be as simple as high cholesterol and as complicated as HIV or Heart symptoms. Why does this matter? Don't those people especially need insurance? It matters in being able to appropriately price for services that will be required. Let us explain.
Most of us drive and pay for auto insurance. If you had had three wrecks in the previous 18 months and drive 30,000 miles a year, would you expect to pay more for auto insurance than the person who has no accidents and drives 6,000 miles per year? A rational person would say no way. This is exactly where pre-existing conditions come in. The ACA Exchange policies cannot charge more for these policy holders. Therefore, they charge more for everyone. The Short Term policies are allowed to not accept risk that they cannot adequately quantify or charge for, similar to the driver above. This is why the Exchange is SO VITAL for people with these kinds of issues. But is also why the Short Term policies can be a cost effective vehicle for people. By eliminating risk, the price stays down. So who qualifies for these policies is generally the next question. Not all conditions are the same. Hypertension is not always a knock out from the plans. ASK QUESTIONS!
It is important to speak with someone who can explain who qualifies and who doesn't, what the benefits are and are not, and whether or not this is actually a viable option for you. An independent agent works for you, and not for a company. They can help explain your options with respect to these alternatives and if they are fit for you and your family. Do your research, ask questions, and you will be on the path to finding the best solution for your health insurance needs.
