Options When You Can’t Afford Major Medical Insurance


December 3, 2017

Can’t Afford Major Medical Insurance? You Can Still Get Covered.

With medical costs skyrocketing and the never-ending uncertainty surrounding the future of Obamacare, many Americans are foregoing enrolling in major medical health insurance plans. Millions of people in the U.S. just can’t afford rising monthly premiums and out-of-pocket expenses. Because medical costs are astronomical in almost every category, health insurance customers are turning to alternative insurance products to maximize their healthcare dollars.

Some Americans are bundling ancillary products, such as dental, vision and critical illness insurance, with short-term health insurance plans to make the most out of their limited healthcare budgets. As of now, bundling individual health products with short-term health plans does not meet the minimum essential coverage requirement under Obamacare. That means you’ll pay a fine if you don’t have major medical insurance. But bundling ancillary products and signing up for a short-term plan may make more sense for your situation, even with the penalty fee.

If you can’t afford major medical, or you are young and healthy with minimal healthcare needs, you should still have some coverage in place in the event of a medical emergency. Many ancillary products and short-term health insurance policies offer very low monthly premiums. However, with low monthly premiums comes very limited coverage. Here’s a closer look at some of your options if you can’t afford full coverage or you have limited healthcare needs.

Short Term Health Insurance

Under current law, the individual mandate requires nearly every American to obtain health insurance, meaning major medical coverage. However, Republicans in Congress are working to remove the mandate or loosen the restrictions on what qualifies as minimum essential coverage. If President Trump and Republicans have their way, short-term health insurance could qualify, making it an affordable alternative to traditional health plans.

What is Short Term Health Insurance?

A short term health insurance plan covers very little compared with a robust major medical policy, which is partly why they’re so affordable. Most policies offer you coverage for short periods of time, which ranged from one month to a day shy of a year before 2016, at which point the Obama administration issued a rule limiting short-term policies to three months. Short-term plans only cover major medical costs, such as what you might incur if you break your leg or get hospitalized, so they won’t cover routine trips to the doctor for preventive screenings. Many plans exclude any pre-existing conditions and other basic healthcare needs. Because the plans are limited, monthly premiums are as low as $30 a month.

Short-term healthcare coverage is gaining in popularity, especially among healthy Americans. In many cases, healthy people who just want coverage for a catastrophic medical event are finding it cheaper to buy a short-term plan and just pay the ACA penalty than to pay for comprehensive coverage that they won’t use.

If your medical needs are limited, short-term health insurance might be a smart choice. It’s no secret that monthly premiums and other healthcare costs for middle-income Americans are skyrocketing. According to the U.S. Department of Health and Human Services, monthly premium costs have doubled in the United States since 2013. If you can’t afford $400 or more a month in premium costs and your healthcare needs are few, a short-term plan that helps pay for a catastrophic medical event is a viable option. You can shop and compare short-term plans in your location easily online.

Ancillary Benefits

Ancillary products, like dental and vision, are voluntary benefits that you would typically add on to a major medical policy to help offset out-of-pocket medical costs. These products can also be purchased independently of a major medical plan, or you may be able to combine them with a short-term plan to maximize your benefits without maxing out your medical budget. Examples include critical illness coverage, accident insurance, and hospital indemnity insurance.

Critical Illness

Critical illness insurance covers you in the event that you suffer from a serious condition specified in the terms of the insurance company’s policy. The most common conditions under a critical illness plan include cancer, heart attack, heart surgery, major organ transplants, stroke or kidney failure. However, each insurance company has its own set of guidelines regarding covered conditions.

Critical illness insurance is far different from traditional health insurance coverage. Instead of your insurance company paying your provider directly for services, a critical illness plan will usually give you a lump sum of money, the dollar amount of which is determined by your coverage. In many cases, there are no stipulations attached to the lump sum payment, which means you can use the money as you see fit. You can choose from guaranteed-issue policies with little to no health requirements or fully underwritten policies where your coverage amount depends on the current state of your health.

Accident Insurance

If your healthcare needs are small, but you want the comfort of having some type of coverage in place when the unexpected happens, accident insurance is a practical choice. With accident insurance, the policy will give you a lump sum of money if you’re injured in certain situations. For example, a policy will pay you if you hurt yourself while working, engaging in recreational activities, or slipping and falling at the grocery store.

Some people buy accident insurance as a supplement to their major medical insurance policies. People who live an active lifestyle, for instance, may opt for accident insurance as a supplement to help pay for treatment expenses not covered by their major medical plan. Other people who have a limited healthcare budget for emergencies may choose accident insurance to help pay for unexpected medical costs.

Hospital Indemnity Insurance

If you’re exempt from Obamacare, self-employed or don’t qualify for job-based coverage, hospital indemnity insurance could be beneficial. This type of insurance plan will provide you benefits for hospital stays. If you require any type of extended hospital stay, you could be looking at $30,000 or more in out-of-pocket costs without insurance. Hospital indemnity protection can help soften the blow of those major medical expenses.

Indemnity insurance is very upfront, and it doesn’t require you to understand all those complicated healthcare terms you face with major medical policies. The bottom line is indemnity insurance pays you a lump sum benefit to help pay for out-of-pocket expenses due to a hospital stay. You can choose from policies that cover short-term hospitalization or policies that cover long-term stays. Some plans offer benefits for lost income and any outpatient treatment you may need as a result of your hospitalization. You can find policies for as little as $50 a month, but the cost of most plans depends on factors that include your age, the amount of coverage you need and the insurance company you choose.

However, do not confuse indemnity insurance with traditional health insurance. Indemnity policies don’t cover doctor visits, prescription drugs and other common types of medical costs. Many people use indemnity insurance as a supplement to their existing healthcare policies. If your healthcare needs are minimal and you’re looking for coverage in the event of an emergency hospital stay, indemnity insurance is worth considering.

Keep in mind that none of the listed products meet the health insurance requirements under the Affordable Care Act. As of now, if you choose to bundle any of these products so you have some form of medical coverage, you will still be subject to the Obamacare penalty.

Additionally, if you need extensive medical care, these standalone products may not be suitable for your situation. People with chronic health problems, pre-existing conditions, those who might become pregnant or those with children, among others, should choose major medical for its comprehensive set of benefits. When shopping for coverage, weigh the total cost, not just the monthly price tag. In the U.S., the number one reason people file for bankruptcy is an inability to pay for medical expenses. Nearly 50 percent of all bankruptcy cases in the U.S. are healthcare related. Before you sign up, review your options carefully to determine what you really need.


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