If you’re reading this, smart money says you’re just as confused as most people about healthcare in 2019. Can I buy coverage now? Maybe. Is there a penalty if I don’t find an ACA plan? No. What are my options if I lost my coverage? Several. Is it even affordable? Maybe. But that doesn’t help much, does it? Below you’ll learn what you can do based on your current situation this year so you can make a more informed decision on your healthcare.
1. Healthcare News in 2019
First we’ll review some general information you most likely have heard or read in the news regarding the Affordable Care Act or Obamacare (please note: ACA and Obamacare are the same).
5 Key Facts about the Affordable Care Act:
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guaranteed acceptance – those with pre-existing conditions cannot be denied
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extension of dependent coverage up to age 26 regardless of student status
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free annual preventive care
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elimination of yearly and lifetime limits of coverage
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insurance carrier cannot cancel your coverage if you become ill or injured
Additionally, the ACA required Americans to obtain health insurance that included Minimum Essential Coverage (MEC). This meant certain health benefits need to be included with their insurance, otherwise you may have to pay a penalty. However in the past year, this requirement was removed so individuals and families can shop for health insurance that fits their budget and healthcare needs.
With the removal of the requirement to secure an ACA plan, the opportunity to shop for health insurance changed along with more healthcare legislation. Since ACA plans typically carry a high cost, temporary health insurance (often referred to as short term medical insurance) has become a popular alternative for healthy individuals and families. Short term health insurance can typically provide up to $1 million in coverage with a significantly lower cost per month.
2. ACA Plans vs. Short Term Health Insurance (Cue the epic battle music!)
Now that you have a basic understanding of what the ACA is and what we can shop for, we can compare them:
Which is the winner? That entirely depends on your healthcare needs and budget. Those that have pre-existing conditions or visit the doctor frequently are more likely going to find an ACA plan best for them. Individuals and families that are fairly healthy and worried more so about unexpected emergencies, short term health insurance may be the most cost effective solution. In the next section we will dive deeper into common scenarios on why someone may be shopping for insurance and which option is best.
3. Why Are You Shopping for Health Insurance
Although there are many scenarios that can lead to someone needing to buy insurance, there are 3 common situations that most Americans find themselves in: “I left my employer and my benefits ended”, “I turned 26 and got kicked off my parents’ insurance”, and “I missed Open Enrollment so what are my options?”.
a. Left My Employer
Whether you left your employer voluntarily or was terminated, you still have several options for healthcare – COBRA continuation, a new ACA plan, or short term health insurance.
COBRA continuation is available if your employer had more than 20 full time employees. This means you can continue the same insurance you had while employed; however, you will pay the full cost of the insurance plan. Generally it is $400 – $500 per person per month, and then you keep the same benefits. Your deductibles and out-of-pocket limits do not reset until the next calendar year. COBRA continuation is a great solution for individuals and families with pre-existing conditions or who visit the doctor frequently.
New ACA plans are also available when you lost coverage from your employer. This considered a Qualifying Life Event and allows you to apply for other insurance. You have a 60 day window called a Special Enrollment Period allowing you to apply for another ACA plan. Again, those with pre-existing conditions or visit the doctor frequently will find ACA plans a good solution depending on the cost. ACA plans typically have a 15th of the month deadline to begin coverage on the 1st of the next month and require proof of the previous employer’s coverage ending.
We’ve outlined that COBRA continuation and ACA plans are best for those with pre-existing conditions, but what if you’re healthy? Short term health insurance may be your solution. This option is designed to protect you from the cost of new injuries and new illnesses. Since short term health insurance does not include benefits for pre-existing conditions, the cost is significantly lower. With coverage maximums up to $1 million and nationwide networks, short term health insurance has been a growing need for healthy individuals and families.
b. Turning Age 26
The ACA allows dependent children up to age 26 to be included on a parent’s employer’s health insurance; however, they are on their own after that. Coverage will typically end on the dependent’s 26th birthday or at the end of the month when they turn 26. For most young adults this is an overwhelming process that gets pushed to the wayside leaving them uninsured. Fortunately, there is one big question to ask which will help create some direction on securing health insurance – does your new insurance need to provide benefits for pre-existing conditions or does your new insurance simply need to provide benefits for emergencies?
If you have major pre-existing conditions: COBRA continuation through the parent’s employer or a new ACA plan is going to be the best solution. There is a 60 day window from the last date of insurance to secure either option. If the deductible was already paid on the employer plan, COBRA continuation is likely the better option. If the deductible was not met, a new ACA plan will be more affordable.
If you are fairly healthy: Since COBRA continuation and ACA plans carry a higher cost, healthy individuals find short term health insurance as a great solution. This option typically provides up to $1 million in benefits for new illnesses or injuries that come up unexpectedly while maintaining a lower monthly cost. Short term health insurance can also began as soon as tomorrow for those who are suddenly without insurance.
c. Missed Open Enrollment
Open Enrollment is every year from November 1 – December 15. This is anyone’s opportunity to purchase an ACA plan for the following year. If you missed Open Enrollment, options are limited. ACA plans will not be available until the next Open Enrollment unless you have a Qualifying Life Event.
One of the next best options would be short term health insurance. This option can protect you and your family from the high cost of medical bills if an unexpected injury or illness occurs. Short term health insurance is often used to bridge the gap until an ACA plan can begin; however, due to the low cost for short term health insurance, healthy individuals and families are choosing to keep this option instead of an ACA plan.
d. Other
If none of the situations above apply, you most likely still have options. ACA plans are available when you have a Qualifying Life Event or during Open Enrollment. This will provide benefits towards pre-existing conditions and often carry a higher cost. Short term health insurance plans are available all year. This will provide benefits towards new injuries or new illnesses and often carry a lower cost.