For those who do not qualify for coverage through the Affordable Care Act, we explore alternative coverage options
The Affordable Care Act (ACA) is a healthcare reform law that was enacted in March 2010. The primary goals of the ACA outlined by HealthCare.gov are to:
- Make affordable health insurance available to more people. The law provides consumers with subsidies (“premium tax credits”) that lower costs for households with incomes between 100% and 400% of the federal poverty level
- Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level (not all states have expanded their Medicaid programs)
- Support innovative medical care delivery methods designed to lower the costs of healthcare generally
The ACA met with a lot of debate before it was signed into legislation. Americans without health insurance coverage and employers alike struggled to understand the full benefits of the Affordable Care Act and their eligibility.
For those who do not qualify for coverage through the Affordable Care Act, we explore alternative coverage options.
Private insurance coverage
Signing up for private insurance is a route of guaranteed coverage. The benefits are federally mandated to align with the Affordable Care Act (for example, people cannot be turned away due to pre-existing health conditions). These private plans also need to guarantee enrollees coverage for specialized care such as maternity and mental health.
A few possible disadvantages of private insurance coverage includes:
- Most private insurance companies only allowing people to opt-in during open enrollment
- Premiums for private coverage being potentially high
- Requirement of physicians to be within a participating network
Short-term medical insurance
There are various reasons for someone needing short-term medical insurance coverage. This alternative to the ACA may be ideal for someone that is between jobs, thus ineligible for private insurance through an employer.
Erring on the side of caution with a short-term medical insurance plan is wise, but there are some things you should know:
- Short-term medical insurance is not mandated to adhere to the Affordable Care Act coverage requirements, which means that pre-existing conditions can make someone ineligible
- Maternity care is not covered under short-term medical insurance
- Some states do not offer short-term coverage
Health Savings Accounts (HSAs)
Another alternative to opting into the ACA is opening a Health Savings Account (HSA). Coverage through a Health Savings Account can be through an employer or opened by an individual. HSAs are beneficial for individuals that anticipate having high medical costs, such as upcoming surgeries or a chronic illness.
HSA plans have to be combined with a high-deductible health plan to cover catastrophic illnesses or injuries. Research the monthly costs of having to pour funds into 2 plans and see if a Health Savings Account is cost-effective.
There are limitations to how much the IRS allows anyone to save toward a HSA.
In 2020 the cap is set at $3,550 for individual coverage. For family coverage, the 2020 limit is $7,100. If you’re age 55 or older, you can stash away an extra $1,000 per year.
Medical cost-sharing programs
If coverage through the Affordable Care Act is not an option for whatever reason, an individual or family may choose to participate in a Medical Cost-Sharing Program. Each individual in the cost-sharing program pays monthly fees to be contributed to the pool of funds.
When medical costs arise, individuals are able to utilize those shared funds. Individuals are charged an “incident fee” similar to a copay and can then cover the additional costs with coverage in the shared program. The primary benefit of choosing a cost-sharing program as an alternative to the ACA is that they operate similarly to traditional insurances, but at a lower cost.
Some unique issues that commonly arise with Medical Cost-Sharing Programs are:
- Many Medical Cost-Sharing Programs are provided through religious-based organizations. That means that some “essential” services, such as birth control, may not be covered
- There may be strict limitations as to how often you can use the cost-share coverage
There are alternatives to the ACA. If you cannot opt-in to the Affordable Care Act due to eligibility requirements or are looking for other options, be sure to educate yourself further on each of the options above.
Read the fine print that meticulously outlines:
- Premium costs
- Policy on pre-existing conditions
- Open enrollment timelines
- If maternity care is covered
Cost obviously plays a large role in choosing medical coverage, but make sure that saving money doesn’t leave you with subpar benefits. Are you scrambling to present alternative medical insurance options to your employees?
Zenefits provides a user-friendly way for Human Resources and employees to navigate benefits. Take a walk-through of the benefits platform today.