Texas suffers from the highest rate of citizens lacking health insurance in America, leaving many to wonder: How do you get health insurance in Texas?
Texans can obtain coverage through government-sponsored programs (if qualified), the healthcare.gov Marketplace, or the private market. Each source has different processes and standards. Understanding these gets you the best health insurance options.
Carrying no health insurance comes with many health- and financial consequences. This article looks at the devastating problems that result and then at the options Texans have to obtain the coverage they need.
As an insurance agent for individuals and small businesses, I saw firsthand the importance of carrying quality health insurance coverage. All Texans can find coverage by using one of the resources in this article.
What Happens to the Uninsured in Texas?
Approximately 500,000 adults lack any health insurance, estimates the Texas Medical Association. The association has also sounded the alarm about a dearth of health insurance for children: Over 623,000 kids in the Lone Star State lack health insurance.
Many uninsured Texans who had an illness or severe injury in the family have suffered from the following:
Forced to Pay Full Price
Insurance companies negotiate reimbursement rates with healthcare providers and hospitals. These rates are substantially below the full price, often just 50%. In fact, healthcare businesses intentionally charge higher rates knowing that insurance companies will demand a much lower reimbursement percentage. For the uninsured, this means paying vastly more than they should.
A small medical problem quickly adds to thousands of dollars in expenses. Serious ones go into the tens- and hundreds of thousands. Most uninsured Texans lack coverage because they are too poor to afford it. If they cannot afford a few hundred dollars or less per month for insurance premiums, then bills in the thousands or hundreds of thousands are obviously insurmountable.
Many end up borrowing on credit cards or using payday loans, adding interest upon already massive debts. Others simply pay what they can, which usually barely reduces the outstanding bills. Not having health insurance often leads to a perpetual cycle of debt.
Hounded by Bill Collectors
No one likes the phone constantly ringing with bill collectors demanding money. This is especially painful when you have no money to give, and the bills are astronomical, leaving you feeling hopeless.
Because medical bills charged to the uninsured are so high, repayment plans are difficult or impossible to service. The result is constant creditor harassment.
Medical bills are so high that default is common, which severely damages credit scores. Lowered credit scores result in higher interest rates, making financial problems even worse. The outstanding balances are often high enough to make it impossible for the uninsured to receive approval for vehicle loans, mortgages, credit cards, and apartment leases.
Medical bills rank as the #1 reason for bankruptcy in the United States. Considering the exceptionally high cost of care and a large number of uninsured people, it is no wonder.
Many of the uninsured realize that re-paying medical bills is hopeless. Often, their credit is already ruined, they cannot make enough to make ends meet, and they pay more for or cannot obtain necessities, such as a new vehicle, car insurance, housing, and emergency expenses.
Because of these circumstances, it often makes sense to file for bankruptcy. The uninsured then get a fresh start where, without the debt, they can hopefully afford to get by.
With these dire consequences on the line, there is little doubt how important it is to carry health insurance, especially if you have children. But many of the uninsured have tried to obtain insurance and been unable to afford it or were turned down due to health conditions. Others have lost coverage because of a job loss or lapsed premiums on private policies.
Naturally, they are wondering if there is anything they can do to get covered.
Though no panacea exists to solve the uninsured problem in Texas, those lacking health coverage have options. Many methods of obtaining health insurance are not widely known amongst the public, which causes more Texans to remain uninsured despite the ability to obtain coverage.
You may be surprised to learn of a path to coverage you never knew about.
Options include the following:
- Employer Plans
- Government Programs
- The ACA Marketplace
- ACA Compliant Private Plans
- Non-ACA Compliant Private Plans
How Do You Obtain Employer-Sponsored Health Insurance?
Though everyone knows it is possible to get coverage through an employer, we start with this path to coverage because it is the most generous except for no-cost government programs.
Employer plans cover an average of 86% of the premiums for single employees and 71% for families. In addition, most employer plans also have much lower deductibles, co-pays, and co-insurance (the percentage of each bill you pay) compared to private plans.
For example, many employer-sponsored plans for singles have $1,000 deductibles, $30 co-pays, and 10% co-insurance. Many private plans require $3,000 deductibles, $50 co-pays, and 20% co-insurance, on top of premiums that are 15% to 30% higher.
Larger employers offer the most generous benefits because they have increased bargaining power through a larger pool of policyholders. If you are struggling to afford insurance, especially for a family, large employers may be your best bet, though many small firms also have good benefits.
How Do You Get Health Insurance in Texas Through the Government?
If you qualify, government programs provide the most benefit: $0 premiums and low out-of-pocket expenses. Because Texas declined to expand Medicaid under the ACA expansion, government program options are more limited versus other states. However, there are still many ways Texans can qualify for these programs that may surprise you.
Though most Americans qualify for Medicare under the standard guidelines, there are some special circumstances that qualify others.
Standard Medicare Qualification Requirements
Americans become eligible for Medicare at 65, provided they meet the following qualifications:
- Enrolled in Social Security or Railroad Board retirement benefits
- Eligible for Social Security or Railroad benefits but not yet enrolled
- Had (or spouse had) health insurance through government work
Meeting these qualifications entitles you to Medicare Part A (hospital insurance). However, you must purchase Part B (medical insurance) and Part D (prescription drug coverage). The premiums can be deducted from your Social Security or Railroad benefits.
Other Ways to Qualify for Medicare
If you are over 65 but do not qualify based on your or your spouse’s work record, you can obtain Medicare by buying into it. If you have earned work credits (but less than the required ten years), the credits you earned reduce your premiums. Those with no credits must pay full price.
Also, legal residents who have lived in the U.S. for at least five years can buy into the program.
Exceptional circumstances allow Americans under 65 to qualify for Medicare:
- Eligible for SSDI for at least 24 months (does not need to be consecutive)
- Receiving a disability pension from the Railroad Retirement Board
- Diagnosed with Lou Gehrig’s disease (immediate qualification)
- Suffering from kidney failure (permanent) and on dialysis or needing a kidney transplant
To find out if you are eligible and your expected premium, go to the Medicare.gov eligibility tool.
Social Security Disability
Social Security Disability Insurance (SSDI) benefits entitle enrollees to health insurance funded by the government. Recipients qualify for Medicaid right away. Though Texas elected not to expand Medicaid, that decision has no effect on Medicaid for those on SSDI. Entitlement is automatic.
SSDI recipients are also eligible for Medicare after two years. Medicare enrollment may be advantageous to individuals suffering from certain debilitating conditions.
CHIP is a government-sponsored health insurance program for children of low-income families. All Texas children are eligible if their parents or primary caregivers meet the means test. Also, CHIP covers the insured child’s parents or primary caregivers. In Texas, CHIP offers the only government-sponsored program that covers an entire family.
Qualification for CHIP in Texas is based on income level and family size.
Alternatively, low-income families with minor children may qualify for Medicaid.
Household income limits for CHIP and Medicaid are as follows in Texas:
No Medicaid for Single Adults
Unfortunately, Texas offers no Medicaid for single adults. So, if you are single, have no minor children, are under 65, and suffer no Social Security qualified disability, there are no government programs open to you. If you have no employer coverage, consider A) the Marketplace ($0 and low premiums available), B) the private market (if you can afford it), or C )non-ACA compliant plans (most affordable if you have no employer coverage and do not qualify for subsidies on Marketplace plans).
The ACA Marketplace
Individuals who are self-employed or otherwise ineligible for employer-sponsored programs should always look into the ACA Marketplace for their health insurance needs. In addition, parents or caregivers of children who make too much to qualify for CHIP or Medicaid may find better options on healthcare.gov.
Marketplace plans offer several advantages:
- ACA compliant (covers all types of medical needs)
- No pre-existing condition exclusions
- Wide variety of plans
- Subsidies available for those who qualify
If you make less than 400% of the federal poverty level (FPL), you qualify for subsidies on the Marketplace. Subsidies provide tremendous savings. Those at the lower end of the income scale receive premiums as low as $0, while those closer to 400% of the FPL still receive substantial discounts.
FPL is based on family size, according to this chart:
Households making over 400% of the FPL can still purchase health insurance on the Marketplace. Because pre-existing condition exclusions are banned, the Marketplace provides an outstanding resource even to those who make too much to qualify for subsidies. Also, Marketplace plans must provide more generous benefits than private market plans, including the following 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
ACA-Compliant Private Market Plans
The same essential benefits can be obtained through ACA-compliant plans on the private market. In addition, ACA-compliant plans cannot discriminate because of pre-existing conditions. However, no subsidies are available under these plans, making them expensive for the average household.
However, premiums average $468/month for an individual versus the Marketplace full price average of $568. In addition, premiums can be lowered by selecting a high-deductible health plan. These plans can be coupled with a health savings account (HSA). HSAs allow you to make pre-tax contributions and use the funds for premiums and healthcare expenses tax-free. Any money not spent on healthcare can be converted to retirement savings.
Non-Compliant Private Market Plans
For those who do not qualify for government programs or Marketplace subsidies and find full-price, ACA-compliant plans unaffordable, non-ACA compliant plans offer insurance at far lower costs. The lower premiums result from lesser coverage amounts, so you may still end up with substantial out-of-pocket expenses. However, non-compliant plans are far better than no health insurance. They ensure the ability to receive needed treatment and can prevent financial ruin.
Here are the pros and cons of non-compliant Private Market Plans:
- Receive prompt treatment
- Avoid emergency room visits for non-emergencies
- Coverage for significant illness/catastrophic injuries
- Policyholders are billed at the discount rate negotiated by the insurance company
- Coverage maximums (compliant plans have no lifetime limit)
- High deductibles
- High Co-insurance
- May not cover all essential health benefits
- Short term coverage (12 months renewable up to 36 months)
Despite these disadvantages, these plans will prevent policyholders from becoming indebted to the tune of tens or hundreds of thousands unless claims far exceed the coverage maximums. Most importantly, they ensure admission to healthcare facilities and prompt treatment of severe conditions.