Open Enrollment is upon us, and that means that millions of Americans will be securing health coverage for 2021 using the Federal and State Marketplaces. But with the ACA individual mandate reduced to zero in many states, you might have additional options that could help you get more value—without having to worry about the penalties levied before 2019. We look at some of the options you have.
Background: ACA Individual Mandate Reduced to $0, Ruled Unconstitutional
Over the course of the past few years, a key provision of the Affordable Care Act was removed by legislators and consequently ruled unconstitutional by a federal appeals court.
Individual Shared Responsibility Provision
A core provision of the Affordable Care Act, the “Individual Shared Responsibility Provision” was the penalty levied upon taxpayers for not securing adequate coverage.
According to the IRS, “The individual shared responsibility provision of the Affordable Care Act requires you and each member of your family to have qualifying health care coverage (called minimum essential coverage), qualify for a coverage exemption, or make an individual shared responsibility payment when you file your federal income tax return.”
A penalty that scaled as the ACA aged, the individual mandate initially was low, but in 2016-2018, the total rose to 2.5% of income above filing threshold or $695 per adult and $347.50 per child, maxed out at $2,085.
Tax Cuts and Jobs Act Reduces Penalty to $0
The first major blow to the controversial penalty was the Tax Cuts and Jobs Act, the sweeping legislation designed to put more money into the pockets of all Americans. Under the Tax Cuts and Jobs Act, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018.
Something you may have realized when filing your tax returns for Tax Year 2019, Form 1040 no longer had the “full-year health care coverage or exempt” box. The reduction opened up consumers to new health insurance options without having to worry about the penalty.
In addition to the reduction under the TCJA, a December 2019 ruling from a federal appeals court struck down the individual mandate.
Your Choices in Health Coverage
With the end of the individual mandate, it’s important to know the options you do have available. Here are just some of the paths you can take to secure coverage.
Direct with Insurer
The easiest way to secure coverage similar to a marketplace plan is to see which options are available from the insurer. One example, UnitedHealthcare, pulled out of many exchanges after losing $475 million on the ACA exchanges in 2015 and roughly $500 million in 2016.
But they aren’t alone. Many insurers have opted to over a variety of coverage options that, although do not meet the requirements set by the ACA, offer coverage quite similar to it. Whether it’s short-term coverage (discussed below) or coverage that just goes beyond the maximum limits (just under three years), you can often find something that aligns with your unique needs.
Nationally, there are thousands of different health insurance plans, each with different prices, benefits, provider networks, and the like, each offering their own advantages and disadvantages.
In this, you get a variety of options traditionally unavailable in marketplace plans:
- Wider Range of Prescription Drug Coverage: For those with specific drugs, you may not be able to find a marketplace plan that covers your medications.
- Different Structure: Marketplace plans require different levels of coverage (i.e. children’s vision and dental benefits) that you may have other options for. Off-marketplace plans make this optional.
- Broader Choice of Network: Off-Exchange Plans work with different networks, and you may be able to keep your doctor.
The Caveat: Thousands of Plans, Hundreds of Insurers, Not a Lot of Time
One of the hardest parts about going off-marketplace is the number of options. With more than 200 insurance companies and thousands of plans available, finding the right one for you can present challenges. Often, when you’re left without insurance, you don’t have much time to read through and make sense of each nuance.
Healthcare Sharing Services
Another option you may have is to enroll in a healthcare sharing service. Commonly known as a cost-sharing ministry, these are faith-based organizations that incorporate like-minded individuals who agree to help each other with medical bills.
Understandably, these are valuable for the right kind of person. With no network requirements and cash payments in the event that doctors do not accept the program, you have more flexibility. That said, you are responsible for payments similar to a deductible and can be affordable.
Caveat: It’s Not Insurance—and You Have to Play by Their Rules
As noted by Lauren Greutman, “Since it is not health insurance, they don’t have to play by the same rules.” As a faith-based organization, they can deny services that do not support their beliefs. As something that is not insurance, they can deny you or require you to phase into a program in the event you have a preexisting condition.
Short-Term Health Insurance
Short term health insurance is a type of health plan that can provide you with temporary medical coverage when you are between health plans, outside enrollment periods, and need coverage. With definitions similar to major medical health plans, these often last less than a year depending on the state available. We explored these in greater detail here.
Catastrophic Plans
Though technically available on the marketplace for individuals under the age of 30, catastrophic plans provide low premiums for low-risk individuals. As the name implies, these are meant to protect policyholders in the event of the worst-case scenario.
Catastrophic plans cover the same essential health benefits as other Marketplace plans, will provide preventive services at no cost, and at least three primary care visits before you’ve met your deductible.
However, with the extremely low premiums, these do feature high deductibles, $8,150 in 2020.
Fixed Benefit Plans
Another option that doesn’t provide traditional benefits is the fixed benefit plan. Also known as fixed indemnity plans and GAP plans, these pay a set cash benefit for specific hospital or physician service provided.
Often, these plans come without a deductible for services, provide benefits quickly or immediately, and will pay for themselves in one hospital stay.
Caveat: Understand What You’re Getting Into
These plans were designed to address the rising deductibles that came as a result of the ACA. That said, the phrase “Fixed Benefit Medical Plans provide a set amount of benefit for covered events per day, regardless of the amount the provider charges” works to the advantage of some and the disadvantage of others.
Much like catastrophic plans—great for specific types of people—you may end up paying a lot for emergencies. For example, one plan may offer $3,000/day for confinement, $2,000/day for ICU, and $100/day for inpatient physician visits during a hospital stay, but this may not come near the coverage.
Rather than providing traditional insurance, many were meant to offset costs. We discussed this in greater detail in our analysis on GAP coverage.
Association Health Plans
A new option designed to help level the playing field for small businesses, Association health plans were created to help people buy insurance across state lines. Association Health Plans work by allowing small businesses, including self-employed workers, to band together by geography or industry to obtain healthcare coverage as if they were a single large employer.
Association Health Plans will also be able to strengthen negotiating power with providers from larger risk pools and greater economies of scale. Learn more about how these work from Kaiser Health News.
Multi-Policy Coverage
A growing option, multi-policy plans are designed to provide both insured and non-insured benefits. Often providing a more complete coverage than a major medical plan, a combination may include short-term for medical, GAP for deductible protection and association memberships for Rx discounts and mobile office visits.
Think of it the same way that you would think of your property insurance. Say you work with the same vendor for home, auto, and life. By bundling these options, you can save money and eliminate gaps in coverage.
The same goes for multi-policy plans. These are bundled together by brokers who can help you get the most out of your coverage.
Caveat: Bundling Off-Market Plans
While these plans provide more comprehensive coverage than you could get from short-term, indemnity association, or GAP policies alone, they may not deliver everything you could get from major medical. It’s an option you do have, and is often a good choice, but again, it may not have everything.
The Right Guidance: Insurance Brokers Hub Puts You in Control
Health Insurance consumers have more options than ever. While more choice is always better than less choice, too many choices can be overwhelming. What’s right for you? Why not join the more than 10,000 satisfied consumers who have found coverage using Insurance Broker Hub?
Our free service gives you access to an independent network of national brokers who have the experience and expertise to design a plan around your needs and budget. Ready to get started? Simply request a no obligation health insurance quote here.
