The Marketplace offers many advantages, but it is not the only option. Some Texans wondering if I can get health insurance without the Marketplace may find better options from other sources.
In some cases, private market policies that are ACA-compliant offer excellent deals. In addition, other government programs and non-ACA compliant plans bought off the Marketplace provide affordable options for many who are currently uninsured.
Purchasing a policy on the Marketplace guarantees ten essential health benefits and premium subsidies for those who qualify. However, if you make too much to qualify for government assistance, less expensive policies with the same essential health benefits may be available on the private market. Since Congress ended the individual mandate penalty, purchasing from other sources has become more attractive.
During my years writing health insurance policies, I have found that one size never fits all. The health insurance market is filled with options. Though the Marketplace has attractive options for many, some private market plans also provide excellent value.
What Is the Difference Between ACA-Complaint and Non-Compliant Plans?
The choice between an ACA-compliant or non-compliant plan is the pivotal choice when selecting a policy outside the Marketplace.
Non-compliant plans differ in the following ways:
- Much lower premiums
- Tendency toward higher deductibles
- Tendency toward lower co-insurance
- Higher out-of-pocket maximums (yearly)
- Lifetime coverage limits apply
- Many are short-term (12 to 36 months in Texas)
- Pre-existing condition exclusions apply
- Not all ten essential health benefits are covered (for example, mental health or prenatal care may be excluded)
In addition to private market plans, Texans can obtain coverage through employer or government subsidized programs, such as CHIP, Medicaid, and Medicare.
In this article, we review the employer-, private market and government-subsidized options. But first, we will present a brief overview of Marketplace plans so you can compare and contrast them with non-Marketplace options.
Marketplace Plans: The Basics
Marketplace plans are designed to offer health insurance options for those ineligible for employer- or government-sponsored coverage. Health insurance subsidized by businesses or governments makes the premiums affordable for most households.
However, before the ACA, those who had to buy full-price policies on the private market often found they were unaffordable or had underwriting requirements they could not meet, resulting in millions of uninsured Americans.
The Marketplace attempts to correct this imbalance by offering subsidies to those within specific income ranges and banning pre-existing conditions. Below we explore how the features of Marketplace policies affect policyholders.
What Are Bans on Pre-Existing Condition Exclusions?
Traditional policies treat applicants with pre-existing conditions in one of three ways: denial of the policy, coverage exclusion of the pre-existing condition, coverage exclusion for a set time period (such as three years). Insurance companies decide between these three according to company policy on specific medical conditions.
On the Marketplace, no pre-existing condition can cause a coverage exclusion or application denial. The catch is the Marketplace has a limited enrollment period each year.
What Are Subsidies?
Marketplace plans offer subsidies for applicants making less than 400% of the federal poverty level (FPL) by family size. Income subsidies reduce premiums to between $0 and a few hundred dollars per month for individuals.
If you qualify for a subsidy, the chances are excellent that a Marketplace plan will be less costly than a private market plan for similar coverage levels.
What Are the 10 Essential Health Benefits?
The ACA stipulates all compliant plans cover the following ten essential health benefits:
- Chronic disease management, preventive care, and wellness services
- Outpatient care
- Emergency services
- Laboratory services
- Prescription drugs
- Mental health and substance use disorder services
- Rehabilitative or habilitative services and devices
- Maternity and newborn care
- Pediatric services
No Coverage Maximums on the Marketplace
Marketplace plans have no lifetime maximum, whereas private market policies have caps.
How Does Employer-Sponsored Coverage Work?
In many cases, employer-sponsored coverage provides the least expensive way to obtain comprehensive health insurance. On average, employers cover 86% of premiums for singles and 71% for families. Outside of Marketplace subsidies, employer-sponsored plans usually offer the lowest premiums and most comprehensive coverage.
However, some employers pay much less of the premiums than average, with a few requiring the employees to fund the entire cost. Others may also provide only high-deductible plans.
This is often the case when companies that offered no health benefits before the ACA now provide the lowest cost insurance possible because regulations require it. In those cases, Texans may find better deals as individual consumers on the Marketplace or private market.
How Do Private Market ACA-Compliant Plans Work?
If you make less than 400% of the FPL for your family size, the chances are good that the Marketplace offers the best deal (lowest premiums for the most comprehensive coverage). However, if you make too much to qualify for a subsidy, you may find a better deal on the private market.
On average, private market ACA-complaint plans premiums run close to $100 per month less versus their Marketplace counterparts. As this is an average, the actual results vary based on the individual. For example, a young person who rarely needs medical care may find private market plans quite affordable. On the other hand, an older person with pre-existing conditions may find that Marketplace plans offer better options.
Before deciding on a private market plan, it is always good to compare both other private plans and Marketplace options. When comparing against Marketplace plans, you want to ensure that the lower premiums offered by a private plan still provide comparable coverage levels.
How Do Private Market Non-Compliant Plans Work?
Many health insurance consumers find that the costs of ACA-compliant plans are too much. Two groups are primarily affected by the problem of affordability: Individuals and families that make too much for subsidies and those who earn below the poverty line.
Being disqualified from Marketplace subsides because you make too much creates a problematic situation, especially if you have a family. With the average family paying over $20,000 per year for full-price health insurance, many households making far more than 400% of the FPL cannot afford unsubsidized insurance.
But going without insurance leads to terrible consequences, including inadequate care, inability to receive necessary treatments, and potentially ruinous medical bills. In this predicament, what is there to do?
Non-compliant plans provide an alternative. Though these plans have high deductibles and coverage limits, they are far better than having no insurance. IN case of an expensive medical bill or catastrophic illness or injury, they will cover most of the costs. These plans ensure you and your loved ones can receive the treatments they need. Because coverage is more limited, premiums are far lower.
If you take out a high-deductible plan, it is advisable to open a health savings account (HSA), which allows you to save for out-of-pocket expenses tax-free.
Texans who make below the poverty line are also good candidates for non-compliant plans. Because Texas elected not to expand Medicaid, many citizens without minor children qualify for no government-subsidized programs. In addition, ACA regulations require individuals or households make at least the FPL before qualifying for subsidies. As a result, most Texans making below the poverty line cannot gain access to health insurance.
For these folks, a private market ACA- no complaint plan may be the only option. Though deductibles are high, these plans ensure hospital admission, prompt care, and coverage for catastrophic health conditions.
What Are Government Subsidized Health Plans?
Low-income individuals and households with minor children may qualify for CHIP. The CHIP program covers children under 19 and their parents or primary caregivers. Texas CHIP charges only a $50 enrollment fee and minimal co-pays. For those who qualify, CHIP offers the lowest cost, comprehensive insurance plan in Texas.
Alternatively, some Texas children qualify for Medicaid.
Texas declined to expand Medicaid to cover adults.
The Marketplace offers a health insurance resource that has helped millions of Americans obtain health insurance. Despite this, millions more fall through the cracks of this system. Those who cannot qualify for Marketplace subsidies may find the plans offered there unaffordable. Thankfully, there are other options. Many Texans either qualify for CHIP or can find more affordable plans that are ACA-compliant or non- ACA-compliant on the private market.