How to Get Health Insurance If You Can’t Afford Obamacare

Health Insurance

December 8, 2020

Open enrollment to buy marketplace health insurance ends in a week — December 15th, to be exact — for most of the country. Unless you get coverage from work or a government program, the next week is your last shot to get health insurance for 2021.

Under the Affordable Care Act (ACA or “Obamacare”), the current healthcare law in the U.S., private coverage is available to millions of Americans. This private coverage is typically referred to (interchangeably) as major medical benefits, comprehensive health coverage and marketplace plans. 

Marketplace coverage doesn’t have to be bought from a government marketplace. But plans that advertise as “ACA compliant” have to actually comply with the law.

That means they can’t deny you coverage if you have a health problem or a pre-existing condition. You also won’t be charged higher prices for the same coverage that someone who’s healthy buys. 

In other words, your health history doesn’t affect your ability to get insurance. (The exception is tobacco use, which can affect your rates.)

The ACA also guarantees that all major medical benefits that meet the law’s standards will cover 10 essential health benefits, including preventive care, prescription drugs, mental health care and more. 

It all sounds too good to be true, right?

Well, sometimes, it is.

Because while covering a broad range of benefits and making sure that people who need health insurance the most can get it are noble goals, they’re also pricey to maintain.

ACA plans can be expensive. And too many Americans forgo health insurance altogether because they think they can’t afford it.

If you’re one of those, then take heed, friend: you may have other options.

Obamacare coverage is great if you can afford it. But if you can’t, then check out these options for getting covered in the meantime.

First, make sure you actually can’t afford it.

Before you assume you can’t buy health insurance, make sure it’s truly unaffordable for you. Not to insult your intelligence, of course, because health insurance is expensive for many Americans. But the Affordable Care Act created subsidies to offset the upfront cost of insurance.

And chances are, you qualify for a subsidy.

Most people do. In fact, nearly 9 out of 10 people who bought a health plan from the federal marketplace last year qualified for a tax credit to lower their monthly premiums. That’s according to the Centers for Medicare and Medicaid Services (CMS), which oversees the federal exchange for health insurance.

You don’t have to shop on the exchange to get a subsidy, either. You can use a private marketplace (like ours) to see what you qualify for and apply online without ever having to navigate a government website.

If your income falls between 100% and 400% of the federal poverty level, you typically qualify for a subsidy. 

These subsidies can be substantial, too. Per the CMS, a single person with an income of 150% of the federal poverty level will pay, on average, just $57 a month for the second-lowest cost silver plan on the marketplace in 2021.

Don’t worry about having to calculate subsidies on your own, either. When you shop for coverage, you’ll enter your income during the process, and the system will automatically determine whether you qualify for cost savings. No math required on your part.

So before you write off health insurance as completely unattainable, make sure you actually can’t attain it. 

Then check with government programs.

Don’t qualify for a subsidy? You’re not alone. While most people get help to buy marketplace health plans, plenty of people miss the income cutoff. And just a few dollars more in annual income can mean the difference between a tax credit to lower premium costs and zilch

But it also works in the other direction. If you don’t earn enough income for a subsidy, then you won’t qualify for one, either. The entry point is 100% of the federal poverty level, which some households don’t meet.

If you can’t get a subsidy — or can’t afford coverage even with a subsidy — your next best option for comprehensive health insurance is a government program.

Former and current military members should check out our roundup of health insurance options for veterans

For everyone else, start with your state’s Medicaid program. 

This is a joint federal-state venture that provides low-cost or free health insurance to people who meet the state requirements for income and other factors. 

Under the Affordable Care Act, many states expanded their Medicaid programs to include a slightly higher income cutoff and a potentially broader population. Only a handful haven’t. As of the time of this post, only 12 states have not expanded their Medicaid programs.

Because Medicaid is state-based (but with partial federal funding), guidelines and eligibility vary based on where you live. Some states have more restrictive eligibility requirements than others. But if you live in a state that expanded its program under the ACA, the income cap is 138% of the federal poverty level. 

If you’ve got kids, look into your state’s Children’s Health Insurance Program (CHIP).

Even if your household income is too high for your state’s Medicaid program, CHIP could help you get coverage for your kids at least. It’s designed for families that earn too much for Medicaid but that otherwise couldn’t afford health insurance at all for their children. 

There may be other state or federal programs available to help you get healthcare if you need it, though these programs may not be ideal substitutes for actual health insurance. For more information about government programs, start with your state’s insurance department website.

Out of options? Consider a short term health plan.

Short term health insurance is a viable alternative to comprehensive health insurance. But let’s be clear up front: it’s not the same thing as comprehensive health insurance.

Short term coverage works about the same as “regular” health insurance did before the Affordable Care Act came along and started changing the game. It covers unexpected illnesses and injuries, but it doesn’t cover much more than that (usually). 

Generally speaking, short term health plans are designed for:

  • Healthy people without pre-existing conditions
  • People who are in transition (e.g., college graduates, young adults aging out of their parents’ family plan, people between jobs, etc.)
  • Limited benefits for a short duration

These plans are temporary safety nets for the truly unexpected. 

Break your leg while camping or get a bad case of pneumonia and end up in the hospital? These scenarios are probably covered. 

But you won’t (usually) find a short term health plan that covers pre-existing conditions, which are medical issues that existed before your plan starts. You also may not find one that covers prescription drugs, preventive care, mental health services and other benefits that major medical plans cover.

We say “usually” because there are sometimes exceptions. With so many options available and different ways to customize a short term health insurance plan, you might actually find one that covers a broader range than what’s typically possible.

But these plans cover less because they’re designed as backups, not as real competition against major medical plans.

And they can be a good choice — for some people. Short term health plans will not likely work for people with pre-existing conditions or those with chronic health problems

Families, too, may not benefit from short term plans since these plans typically don’t cover the kind of routine care that kids need on a regular basis.

All of these disclaimers aside, there are some advantages to short term health insurance. 

These plans:

  • Cost much less than major medical plans
  • Don’t require an enrollment period — you can sign up anytime
  • Have flexible contracts, from 30 days to just shy of a full year
  • Can be renewed for up to 36 months
  • Tend to cover medical bills for many mishaps and unexpected illnesses

Of course, they cost less, as we said, because they don’t cover the same broad range of benefits as a plan under the Affordable Care Act.

But if you just need something to tide you over until your job-based health plan kicks in or the next open enrollment period, then consider a short term health insurance plan.

At the end of the day, short term coverage is better than no coverage at all. 

Questions? You can read more about short term health plans (and shop for a plan, if you’re ready) by checking out our sister site here.

And don’t forget about special signup opportunities.

Open enrollment to buy major medical insurance ends December 15th in all but a handful of places. Along with the District of Columbia (deadline: 1/31/21), the following states have different, extended deadlines to buy health insurance:

  • California (1/31/21)
  • Colorado (1/15/21)
  • Massachusetts (1/23/21)
  • Minnesota (12/22/20)
  • Nevada (1/15/21)
  • New Jersey (1/31/21)
  • New York (1/31/21)
  • Pennsylvania (1/15/21)
  • Rhode Island (1/23/21)
  • Washington (1/15/21)

Note that in many states, even the ones with extended deadlines, the cutoff for coverage starting January 1st is usually mid-December. After that, your plan may not start until February or later. 

So if you live in one of these states, check with your state’s exchange to learn more about enrollment specifics there.

Extended deadline or not, there’s also a special chance to buy health insurance available to anyone throughout the year. It’s called a special enrollment period (SEP), and it’s based on a major life change. 

If you get married, have a baby, move or lose your job — among other things — you likely qualify for a special chance to get or change your coverage during the year. Generally, you have 60 days from the date of the event to enroll in a health plan.

Don’t count on a major life event to get you the coverage you need, though. These SEPs come with various rules and paperwork attached. You’re better off using the annual open enrollment period to buy coverage or looking into one of the alternate options outlined above.

In any case, with a week to go until the deadline, now’s the time to make a decision about your health insurance in 2021. 

If you can’t afford comprehensive benefits right now, keep in mind that you’ve probably got other options for coverage. Take a look at them carefully before risking unnecessary medical bills and the uncertainty that comes from being uninsured all year.