What to Do When You Find Yourself Without Health Insurance Coverage

Guest post from HealthCare.com

health insurance What to Do When You Find Yourself Without Health Insurance Coverage PhotoWhether you lose your job-based health insurance, turn 26 and age off your parents’ plan, or become uninsured for another reason, it can be unnerving. Suddenly, you are without the benefits that help pay for healthcare, which can cause a financial sting.

It may be tempting to wait it out until you land a job with benefits, become eligible for your spouse’s plan, or save up a little money. However, playing the odds with your health and finances can be risky. Can you pay your medical bills entirely out of pocket if you get hurt or become seriously ill?

Studies show that unpaid medical bills are the biggest cause of bankruptcy in the United States.[1] On average, uninsured families can only afford to pay for 12 percent of their hospital bills; even those with incomes above 400 percent of the federal poverty level can only afford to pay 37 percent.[2]

Fortunately, you have options. The right one depends entirely upon your personal circumstances.

  1. Individual and family health insurance

If you expect to be uninsured long-term, consider buying your own major medical plan. This will give you comprehensive, health insurance that is compliant with the Affordable Care Act (ACA) and includes 10 categories of essential health benefits and certain no-cost preventive services.

Typically, you can only buy ACA-compliant health insurance during open enrollment. However, certain life events such as losing your job, moving, or experiencing a change in family status may make you eligible for a special enrollment period.

Where to buy it: Your state’s exchange, the federally facilitated exchange or in the private marketplace.

  1. State-based and federally facilitated exchanges Residents in every state may shop for and enroll in health insurance online through their state’ state-based or federally facilitated exchange websites, over the phone, by mail, or in person with an assister. Those who buy from an exchange may qualify for a financial aid subsidy to lower monthly payments and reduce out-of-pocket spending.

When it may be a good fit? If you qualify for an income-based financial aid subsidy in the form of a tax credit. This financial assistance is only available to those who purchase health insurance on the exchanges. 

When to consider other options? If you do not qualify for financial assistance, you may want to compare plan networks and rates on and away from your state’s exchange.

  1. Private marketplace You can also buy health insurance away from the exchanges through agents and brokers, insurance companies, and websites that allow you to compare and purchase plans from multiple carriers.

When it may be a good fit? If you do not qualify for exchange-based financial assistance or prefer not to buy from the government-based exchanges, this can be a great option with additional plans not offered on the government exchanges. In fact, you may find different carrier and plan options which sometimes cost a bit less than exchange-based plans (before tax subsidies). Plan networks may be broader than exchange-based plans as well, which are sometimes designed with narrow networks to keep premiums low.

 When to consider other options? If you qualify for financial assistance, you may want to buy health insurance through your state’s exchange. If you think you will be insured for a brief period, such as a month, you may consider a temporary health insurance plan.

Note: Under the Affordable Care Act, major medical insurance plans sold on and away from the state-based and federally facilitated health insurance exchanges must meet the same standards. Whether you buy in the private marketplace or your state or federal exchange, you cannot be denied coverage or charged more due to your health history.

  1. COBRA

If you lost job-based health insurance, you may be eligible for continued coverage through COBRA. The Consolidated Omnibus Reconciliation Act ensures those with group health insurance coverage may temporarily continue their benefits. The law applies to employer groups of 20 or more; however, some states have their own mini-COBRA laws that extend benefits to those employed by small businesses. Job-based health insurance plans are ACA-compliant.

When it may be a good fit? If you need or prefer to keep your current healthcare providers and benefits, COBRA is an option. If you switch plans, your preferred doctors and hospitals may no longer be in-network. Plus, drug formularies will vary from plan to plan, as will deductible, coinsurance and copayment amounts.

When to consider other options? Many times you can find less expensive coverage elsewhere. COBRA premiums can be expensive. You may be responsible for monthly payments up to 102 percent of the plan cost—both your portion, plus the amount your employer previously paid, plus a 2 percent administrative fee. 

Where to buy it? You will be notified of eligibility upon termination of your group health insurance plan. Talk to your human resources department if you have questions.

  1. Medicaid

Medicaid is a public health insurance program for low-income individuals and families. Those who qualify for it may receive low- or no-cost health insurance benefits. Medicaid is a federal program. However, because it is administered at a state level, eligibility requirements vary by state. Medicaid is ACA-compliant and fulfills the requirement that most Americans must have health insurance.

Where to buy it? You may be able to apply and enroll through your state’s exchange. You can also visit Medicaid.gov and select your state to find its Medicaid website.

When it may be a good fit? If your income is less than 138 percent of the federal poverty level and you live in a state that expanded its Medicaid program under the Affordable Care Act, Medicaid could be an excellent option.

When to consider other options? If your state did not expand its Medicaid program and you do not meet your state’s Medicaid eligibility criteria, check around. You might be eligible for exchange-based financial assistance.

  1. Temporary health insurance

If you expect to be uninsured for fewer than three months, you may consider a temporary health plan known as short term medical insurance. Short term medical insurance policies last as few as 30 days and up to 364 days, depending on your state laws. These plans include benefits for unexpected accidents and illnesses. They are not ACA-compliant.

Where to buy it? You can purchase short term medical insurance from a health insurance agent or broker, directly from a health insurance company, and through websites that sell health insurance plans from multiple companies.

When it may be a good fit? If you expect to be uninsured for a brief period or do not qualify for a special enrollment period, short term medical can fill that gap. Temporary coverage can help pay for the unexpected and offer peace of mind until you secure comprehensive, health insurance.

When to consider other options? If you need long-term health insurance coverage or have a pre-existing condition, a short term medical plan may not be your best option. Because these plans are not ACA-compliant, you may be denied coverage or charged more based on your health history.

Note: By law you are allowed a single period of up to three months without minimum essential coverage (e.g. ACA-compliant coverage), unless you qualify for an exemption. Those who do not maintain minimum essential coverage may face a tax penalty known as the shared responsibility payment.

How to decide what option is best for you

When determining where to buy your health insurance, consider your healthcare needs and what you can afford to pay for healthcare. Consider monthly premiums; deductible, copayment, and coinsurance amounts; and out-of-pocket healthcare expenses not covered by health insurance. These factors can help you narrow your plan selection.

If you need help determining what coverage suits your situation, talk to a licensed health insurance agent or broker. You may also locate certified helpers through your state-based or federally facilitated health insurance.

 

[1] LaMontagne, Christina. “NerdWallet Health Finds Medical Bankruptcy Accounts for Majority of Personal Bankruptcies.” NerdWallet. March 26, 2014. http://www.nerdwallet.com/blog/health/2014/03/26/medical-bankruptcy/.

[2] Chappel, Andre, Kronick, Richard and Sherry Glied. U.S. Department of Health and Human Services. “The Value of Health Insurance: Few of the Uninsured Have Adequate Resource to Pay Potential Hospital Bills.” ASPE Research Brief. May 2011. http://aspe.hhs.gov/health/reports/2011/valueofinsurance/rb.shtml.