The Affordable Care Act (ACA) completely changed the way Americans could buy health insurance. The ACA was created to try and guarantee affordable health insurance for every American, but the numbers show that the reality of the ACA is heading in a very different direction.
In 2017, the average individual paid $393.00 per month for an ACA-approved plan, while the average family paid $1,021.00 per month. To make matters worse, the average individual had to meet a $4,328.00 per year deductible before their benefits actually started, and the average family had an annual deductible of $8,352.00 per year.
The idea of a large deductible that had to be met before benefits even started was something new to millions of Americans, and it made the ACA very unpopular. Healthy Americans who did not buy health insurance faced a one-time tax penalty of $2,085.00 per household. That left Americans with the choice of buying insurance, or paying a penalty that was significantly less expensive than the insurance itself. But what about the alternatives to ACA-approved health insurance? Is it worth it to look into ways of creating your own health insurance?
Short-Term Health Insurance
For the first year of the ACA, many healthy Americans opted to purchase short-term health insurance instead of ACA-approved policies. After 2014, the government limited short-term policies to only 90 days per year, which forced people to find even more alternatives. Many still relied on short-term insurance, but this type of coverage does have its limitations.
Short-term insurance covers emergencies and hospitalization, but that is about it. There is no maternity coverage of any kind, and there is no wellness plan that allows for benefits such as free annual checkups. Short-term insurance will not satisfy the ACA Individual Mandate, which means that you could pay for short-term insurance and still get hit with the tax penalty at the end of the year.
The attraction of short-term insurance is how low the monthly premiums can be. In 2016, individuals paid only $110.00 per month for short-term insurance, while families paid only $276.00 per month. The coverage is limited, but short-term insurance combined with paying the tax penalty is still less expensive than an ACA-approved plan.
Indemnity Health Plans
If you do not mind paying a smaller deductible than an ACA-approved plan and paying your health costs upfront while waiting to get reimbursed by your provider, then you should look into an indemnity health plan. You pay for your health services, and then your indemnity plan reimburses you whatever your plan calls for.
There is a deductible that has to be paid first that can run anywhere from $100.00 to $500.00 per event, per patient. After the deductible, your plan will reimburse you based on the payment schedule you have in your plan. In some cases, it is based on a percentage, and in others it is a flat rate. An indemnity plan is referred to as a fee-for-service plan, which means that you can choose what doctors, specialists and health care facilities you use.
You should take the time to read the details on any indemnity plan you choose to make sure you understand how your coverage will work. Unlike an ACA-approved plan, an indemnity plan reimburses you after your treatment is complete instead of sending payment directly to your medical provider. If it takes a long time to approve payment, then you could start running into collections problems with your medical provider.
The other issue with an indemnity plan is that it does not satisfy the requirements of the ACA. If you rely on an indemnity plan, then you will be paying the penalty tax at the end of the year. Indemnity plans are normally much less expensive per month that ACA-approved plans, which is what makes them attractive to consumers.
Quitting The ACA
You can purchase vision and dental coverage from a variety of sources at very reasonable rates. The ACA does not require its plans to offer vision and dental, so you would be one step ahead of the ACA if you purchased these coverage types on your own.
As you start putting together your non-ACA coverage, you can fill in that first three months with short-term insurance. This gives you time to find an indemnity plan provider you like, at a price you can afford. Once your indemnity plan is in place, you will have coverage that is outside the ACA. With the average individual ACA-approved plan costing $4,716.00 per year and a family plan costing $12,252.00, your math may show that your customized plan is less than an ACA-approved plan, and that would include paying the tax penalty.
The future of the ACA is up in the air with President Trump and the GOP Congress threatening to completely repeal the Democrats’ health insurance system. But until a replacement is offered, it is possible for people to put together their own customized health plan and save a lot of money on their insurance. That would even include paying the tax penalty every year, which is going to go up again in 2018.
Customize your own health plan and save.
Explore coverage options and pricing in your area ›
