Are you among the millions of Americans who are in the market for health insurance coverage? If you’ve already started researching your options, you’ve probably come across insurance terminology such as short term medical insurance, supplemental health insurance, fixed indemnity, major medical and private insurance plans. But what distinguishes these plans from one another? And with so many choices available to you, how can you decide which type of insurance plan best meets your needs?
Let’s take a closer look at each of these insurance coverage options. The more you know, the easier it will be for you to decide which plan to select.
Flexibility Through a Short Term Health Insurance Plan
Do you need medical coverage for a limited amount of time? If so, short term medical insurance might be right for you. Uninsured people who may benefit from a short-term medical plan include those who:
- Are looking for an alternative to COBRA
- Missed the annual enrollment period for plans purchased on or off the healthcare exchange
- Are temporarily unemployed
- Recently graduated, or are adult children who lack coverage under a parent’s plan
- Are employed but do not have group insurance coverage
- Do not qualify to apply for coverage on the marketplace during a Special Enrollment period
- Are waiting for employer benefits to start
A short term health plan is all about choice. It provides you with the option to select the deductible amount that best meets your coverage and budget needs. Because short-term medical plans do not meet the Affordable Care Act (ACA) requirements for major medical plans to provide essential minimum coverage, you should be sure to check terms and conditions of each type of plan that you are considering. However, many short term medical plans provide coverage for up to $1,000,000 in benefits per coverage period, and also offer affordable coinsurance rates.
There are many advantages to choosing a short term medical plan for your temporary health care coverage needs, such as:
- Coverage duration – You choose how long you need insurance protection: anywhere from one month up to several.
- Networks – Visit the providers you want with no restrictions. This is a significant advantage over many plans sold through the government insurance exchanges, which usually specify coverage through limited provider networks.
- Plan features – Choose additional benefits based on your health care needs and budget, such as prescription drug coverage, low out-of-pocket maximums, and in some cases, extra non-insurance savings such as access to vision benefits and telemedicine consultations.
- Options – You receive a medical coverage solution until the time when you may select a major medical plan.
When you want a plan that offers you a great range of choices and flexibility in plan features and length of coverage, short term health insurance deserves your consideration.
Supplemental Health Insurance for Coverage Gaps
Do you already have a major medical insurance plan either through your employer or one that you purchased on or off the health care exchange? Even with this coverage, you may struggle financially with high out-of-pocket expenses when medical emergencies occur. That means it’s time for you to consider purchasing a supplemental health insurance plan.
Supplemental health insurance plans, including fixed indemnity plans, are structured to help fill in the coverage gaps that exist with many major medical plans. You receive additional insurance protection to help you pay for expenses when unexpected medical accidents or illnesses occur. That’s because a supplemental health insurance plan provides you cash benefits that you may use for any type of expense you choose, including your deductible, copayments or coinsurance. Some people find they even use the cash benefits from their supplemental health plan to pay for everyday living expenses, such as car payments, rent or mortgage, or child care.
Just as with short term medical coverage, supplemental health insurance does not meet the ACA requirements for minimum essential coverage. This type of plan is designed to work with your existing major medical coverage, not replace it.
What are other advantages to purchasing a supplemental health insurance plan?
- Low premiums – Supplemental health insurance provides you with a cost-effective means of managing your out-of-pocket expenses during medical emergencies.
- Guaranteed coverage – Coverage starts as soon as you purchase the plan. (Be sure to check your state’s regulations on pre-existing conditions and limitations).
- Daily hospital benefit – This benefit extends to any illness or injury covered by your plan.
- No provider restrictions – Benefits are paid at a predetermined rate as outlined in your policy, without requiring you to see providers within limited networks.
Depending on the specific supplemental health insurance plan you select, your coverage may even provide:
- Critical illness coverage for children
- Unlimited telephone or video consultations with doctors 24/7
- Accidental death insurance (like a small life insurance policy)
- Disability insurance from a covered accident
- Discounted visions services
- Prescription drug savings cards
Keep in mind that not all supplemental plans offer the same benefits and advantages. Be sure to carefully review plan provisions and evaluate your health care needs so that you select a plan that is right for your situation.
What Coverage Does Obamacare Provide Me?
The Affordable Care Act (ACA), also known as Obamacare, was signed into U.S. law in 2010. Often called Obamacare (in reference to its status as President Barack Obama’s signature legislation), the ACA itself is not a health insurance plan. Rather, the ACA law significantly reformed the health care delivery and health care insurance markets in the United States.
The ACA had several key objectives: to increase the number of Americans who have insurance, to improve the quality and accessibility of health care, and to reduce the cost of health care. As one step towards achieving these goals, the law introduced health insurance exchanges (also called marketplaces) for shoppers to compare and purchase health insurance plans. Depending on where you live, your exchange is organized either by the federal government or your state.
To make it easy for shoppers to review plan coverage options and pricing, all plans sold through the exchanges fit into one of four standard levels of coverage. In addition, all exchange plans are considered major medical plans. To comply with ACA regulations each plan also must provide the following 10 essential health benefits:
- Outpatient care
- Emergency care
- Maternity and newborn care
- Mental health services and addiction treatment
- Prescription medication
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services, including chronic disease treatment
- Pediatric services
The ACA also included new protections for all insurance shoppers, regardless of whether plans are purchased through the exchange. These protections serve to:
- Eliminate pre-existing condition restrictions and gender discrimination.
- Prohibit your coverage being dropped if you become ill or make an honest mistake on your application.
- Enable adult children (up to age 26) to remain covered under their parent’ insurance.
- Give consumers more power to appeal denied insurance claims.
For consumers who qualify, subsidies in the form of premium tax credits and cost-sharing reductions may be available to help lower the price you pay for insurance coverage. This can be an advantage to purchasing plans through the exchange.
Other Key Factors to Consider
As part of the ACA law, all Americans (except those who qualify for an exemption) are required to purchase health insurance coverage. If you don’t buy an ACA-compliant health insurance plan either on or off the exchange, you will be subject to a tax penalty.
In addition, if you plan to purchase a health insurance plan that meets the ACA 10 essential benefits regulations, you must do so during the designated annual enrollment period. For 2017, the open enrollment period ends on January 31, 2017.
If at any time you experience a qualifying life event you may be eligible to purchase coverage on or off the exchange via a special enrollment period. Qualifying life events include a change in family status, the loss of your coverage, a missed deadline, or a hardship.
Health insurance coverage purchased through the government exchange may be a good option for many consumers. However, there are still many people who compare their options and then decide to purchase private health insurance coverage.
Why Would I Consider a Private Insurance Plan?
Private health insurance plans, including short-term medical coverage, supplemental health insurance and ACA-compliant major medical policies, continue to be a popular purchase decision. In fact, a recent study shows that 2.5 million Americans who are eligible to receive subsidies for health insurance plans bought via the government exchange still decide to purchase private health insurance coverage.
So, what are the top reasons for buying private health insurance?
If you don’t have employer-sponsored health care insurance, and you don’t qualify for cost-reducing subsidies, purchasing insurance directly from a health insurance company or a broker might be a good choice. Rates in the private insurance marketplace may be more affordable, due to greater competition and more choices of benefit plans.
How do you know if you qualify for subsidies that help reduce costs for insurance plans purchased through the exchange? Qualification is based on income. You may qualify for subsidies if you meet several criteria and earn less than 400% of the Federal Poverty Level. Keep in mind that you may only use subsidies to purchase health insurance plans through the exchange.
All health insurance plans sold through the federal exchange must conform to standard (or tiered) coverage levels and plan features. But these standardized plans might not be right for everyone. Ask yourself: do any of these situations apply to you?
- Your health care circumstances require that you have access to more medical services and benefits than provided by an exchange plan.
- You would like coverage for only a short-term basis.
- You want additional plan benefits that aren’t offered through an exchange plan.
- You seek different plan structures for deductible, coinsurance, copayment or out-of-pocket cost than those offered through the marketplace plans.
If you answered yes, take some time to check into private health insurance coverage.
Choice of Insurers
Health insurance consumers will find a greater number of plan options and providers available to them through the private insurance market. In fact, throughout 2016, a number of health insurance companies announced their decision to withdraw from offering plans on the government exchanges, leaving health insurance plan shoppers in some states with very limited options. On the extreme end, five states have only one insurer offering plans through their state exchanges in 2017. If you prefer to receive coverage through a specific insurer, purchasing coverage through the private marketplace might be your only option.
Do you have a chronic condition that requires you to receive health care services from specific providers or facilities? Do you have a strong sense of loyalty to a group of providers? Many health insurance plans offered through the exchange have limited provider networks. If you don’t receive treatment from that network provider, your coverage benefits may be reduced or you may not be covered at all. You may find that private health insurance plans offer greater network flexibility and benefits coverage.
Deciding Which Plan to Choose
Choosing a health insurance plan is a major decision that can have a significant impact on your health care and finances. When researching which plan is best for you, be sure to take stock of your needs and carefully compare your choices. Whether you need coverage for a short period of time, supplemental coverage to complete gaps in your major medical plan, or you want to purchase a major medical plan on or off the exchange, there are many options from which you may choose.