With the explosion of health insurance options available in the United States, it can be overwhelming to choose the right plan. This guide will help you understand what different types of plans are available to individuals who don't have access to employer-based health insurance and how they compare to each other. Read on to learn more about your health care options today!
On Exchange Plan
The first type of health insurance plan is an on-exchange plan. This is the most common option because it offers a combination of tax credits, minimum essential coverage, and preexisting conditions protections. On-exchange plans are also eligible for tax-deductible contributions for individuals that are self-employed.
On-exchange plans come, most commonly, in three flavors: bronze, silver, and gold plans. Bronze plans are the least expensive but also have high deductibles (the amount you must pay out-of-pocket before your insurance company will start paying) and copays (the fee you pay when you use your health insurance). Silver plans are more expensive than bronze but less so than gold plans; they have lower deductibles and copays than bronze but still provide robust coverage that will protect against any unexpected medical expense you may encounter during the year. Gold plans often offer the best day-to-day protection, but at the highest monthly premium costs. Weighing how you will use your insurance is equally as important as the premium you pay to find the best all-in option for the lowest annual cost.
Off-exchange plans are not eligible for tax credits, but they do have some advantages over on-exchange plans. Off-exchange plans are required to cover preexisting conditions just like on-exchange plans. However, off-exchange plans are not subject to ACA tax penalties if you don’t maintain continuous coverage or miss a payment on your premium. In some cases, insurance companies reserve a handful of plans for consumers who choose to forgo the exchange and go directly to the carrier. We often compare these plans for our clients with high incomes, who don't receive tax credits anyways through their state's exchange.
Children's Health Insurance Program (CHIP) is a program that covers children in families who make too much to qualify for Medicaid but don't have access to affordable private health insurance. A CHIP plan provides some coverage for doctor visits, prescriptions and other medical services.
CHIP covers children under 19 who meet the following criteria:
- In order for you to qualify as a dependent on your parent's tax return and receive benefits through their employer-sponsored group health plan, your parent must be eligible for coverage.
- If your parent has self-only coverage through their employer, he or she may add you to their plan at any time during the year if there is an open enrollment period within the calendar year of coverage.
Medicaid is a government program that provides health coverage for low-income individuals. Medicaid is run by the state and is funded by the federal government.
Medicaid is available for people who meet the income and asset criteria. There are different eligibility requirements in each state, so it's important to check with your state’s Medicaid office if you want to apply for benefits.
Short Term Medical
Short term medical plans are, historically, a small, temporary health insurance option.
They're ideal for people who need coverage for less than 12 months—or until they qualify for other types of insurance.
These plans have limited benefits and can be more affordable in some cases. But they do offer a few advantages over other individual health insurance options:
- They're available to people who don't have pre-existing conditions and are ineligible for ACA marketplace premium subsidies.
- Short term medical plans due to having fewer benefits, often have lower premiums as compared to full cost ACA Plans. For instance, a 63 year old couple with high income may be paying $2,000 per month for ACA plans. Instead, the Short Term Medical Plans may cost $700 per month. You can then use the $1,300 PER MONTH in savings to pay out of pocket for what the Short Term Plan doesn't cover(free annual checkup, colonoscopy, mammogram).
- Short Term Medical plans ask very few medical questions at application or renewal (though some states require them to cover pre-existing conditions).
Indemnity plans are also known as fee-for-service plans. These types of plans allow you to choose your own healthcare provider and pay out-of-pocket for care.
Indemnity plans are not as common as they used to be and only offer a few advantages over other types of insurance, including:
- Greater flexibility in terms of where care is obtained (you can go anywhere, even out-of-network).
- Lower premiums than many other types of health insurance like HMOs or PPOs
- They become a good complement to fill in the gaps of what high deductible medical plans don't cover. (They should never be used in lieu of other coverage)
Faith Based Plans
Faith-based plans are an option for people who want an alternative option to health insurance. These plans are exempt from certain requirements of the Affordable Care Act, including those that cover pre-existing conditions and preventive care. Faith-based plans aren’t required to cover minimum essential coverage (the 10 categories of services), like mental health care or substance abuse treatment. In addition, they're not eligible for subsidies or tax credits if you're eligible for them based on your income level.
You have a lot of health insurance options and you want to be sure that you choose the plan that's best for your needs.
You have a lot of health insurance options and you want to be sure that you choose the plan that's best for your needs. Unfortunately, it can be easy to get lost in all the jargon and complexity of different health insurance plans.
To help you understand what each type of health care plan offers, we've created this handy guide that explains these options: On Exchange, Off Exchange; CHIP; Medicaid; Short Term Medical (STM) or Indemnity; Faith Based Plans.
In this article, we've talked about the different options available to you when choosing an individual health insurance plan. There is no one size fits all solution, but there is a plan that will be best for your needs and budget. It's important to understand what these plans offer before signing up for one so that you can make an informed decision about what works best for your family's needs.