Individual health insurance is in a rough spot these days. Premiums, deductibles and out-of-pocket maximums are very high and doctor and facility networks are getting thinner by the month as providers are opting out of many individual plans. Some states have been hit worse than others. Some counties have only one ACA qualified plan and some have none.
I have clients who have watched their premiums go up and benefits go down each year for a few years now and more than ever people are looking for other options. Here’s what I tell them.
You have three categories of options:
- The Affordable Care Act (ACA): This includes any plan you find on Healthcare.gov or your state exchange, but often carriers will offer ACA compliant plans separate from the marketplace. Pros: These are good if you have preexisting conditions, or if you qualify for a subsidy that brings your premium down significantly. Cons: Usually these represent the most expensive, least beneficial plans and their doctor and facility networks get thinner by the month.
- Short Term/Indemnity plans: Indemnity plans are very inexpensive, first-dollar-coverage plans that I rarely recommend because they do not limit exposure. The better of these two options is Short Term Medical (STM) So many people have chosen the Short Term option that last year the length of terms was limited to 3 months. That ruling should be reversed in April. Pros: Short Term Medical is major medical coverage, usually with a better network of doctors and facilities than ACA plans and the cost is usually 1/3 to ½ the full price of comparable ACA plans. Cons: For 2018 you still may pay a tax penalty for having STM as they are not compliant with the mandate that doesn’t go away until 2019. Often the tax penalty combined with the savings because STMs are usually so much cheaper, still make it a less expensive. Also, STM plans can deny you for preexisting conditions so heaven forbid you develop a chronic illness. In that case you would be covered for the remaining term and might not be able to renew the policy for the next term.
- Health Sharing plans: These are not new, but many people are just hearing about them for the first time. They actually aren’t technically health insurance at all, but you can consider them major medical health coverage. Most of these organizations are founded as religious organizations and vary in their membership requirements. Pros: Generally less expensive and better benefits, they also keep you from paying a tax penalty as they are exempt from the mandate. Their doctor networks can be better and while some of the plans work very differently from regular health insurance, a few work very similar. Cons: Doctors and facilities are warming up to these plans, but a few still won’t take them even though they may be in network; and many of the plans have waiting periods for preexisting conditions. They also have limited drug benefits.
To summarize, the options for individual health coverage is not as robust as those with employer sponsored plans, but it’s not impossible to find coverage that meets your needs and generally you can find it cheaper by not going with an ACA plan. For most healthy people, I highly recommend looking in to health sharing plans. In my experience, the more people learn about them, the more they like them.