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When shopping for health insurance plans as an individual, you have options. Listed below are the most common types of health insurance. If you need help understanding what you qualify for or which option will work the best for your situation, reach out to one of our dedicated, local advisors.
The Affordable Care Act Health Insurance Plans
The most common type of individual plans are available through the Affordable Care Act marketplace. We have found that 8 out 10 people qualify for savings, so this option can be surprisingly affordable. ACA plans offer all of the minimum essential coverage that is mandated by the Affordable Care Act. These plans offer free preventative care, prescription coverage, maternity care and must cover all pre existing conditions. CLICK HERE for a list of free preventative care that you may be eligible for.
The amount of savings that you may qualify for is determined by your income. The amount you can earn and still qualify for a tax credit depends on your household size. Many people do not realize that a family of 4 can earn over $100,000 annually and still qualify for a tax credit. See below for a list of the income limits based on your family size.
Will I have to pay the tax credit back?
The only time you have to pay any of the tax credit back is if you estimate lower than your actual income. If you estimate $25,000 and end up making $30,000, you will end up paying back the amount you would have paid if you had estimated $30,000. Your estimate is reconciled on your taxes.
What is the subsidy cliff?
The subsidy “cliff” is a term that you should understand. The upper limit of the tax credit is what is considered the subsidy cliff. If you earn less than this, then you are protected through maximum payback amounts, but if you go beyond the subsidy cliff, you could be liable to pay back the entire subsidy that you received.
When someone doesn’t qualify for a subsidy, the Affordable Care Act plans can be very expensive. ACA plans are premium plans because they will cover pre existing conditions, mental health, and maternity. If someone does not qualify for a subsidy, they generally start looking for other options. The most common alternatives are listed below.
Term Health Insurance Plans
The most common ACA alternative is a term plan. Depending on the state that you live in, there are different term lengths available. In many states, there are 12 month terms available, so it works just like any other health insurance plan, where your deductible starts over every 12 months and you renew once per year. In some states only 3 and 6 month terms are available. Talk to a local advisor to learn what is available in your state.
These plans are not mandated to follow the minimum essential coverage guidelines, so they are not eligible to receive tax credits, but because they may not cover maternity, mental health, or pre-existing conditions, etc. they are less expensive. Many people save as much as 30-50% off a full price ACA plan. These plans are typically health underwritten, meaning you have a short questionnaire about your health that can be verified at any time. These plans typically work great for people who have high incomes and are reasonably healthy.
Our local agents are contracted to help with health share plans, so if you want to look into this option, we can definitely help. That said, these plans have no advantages over an ACA or term plan.
It is important to understand the limitations of health share plans.
1) When using a health share ministry, you will pay for your medical bills up front, and the health share will send you a reimbursement directly. Some people have a really good experience with this, but there are horror stories from people who have waited a year, or two, or more! before the medical bill was paid. In the meantime, the medical bill sat in collections and can have a negative impact on the patient’s credit score.
2) A health share is not legally obligated to pay your bills. People purchase health insurance for the assurance that they will not be responsible for large medical bills. Health shares are not legally obligated to pay your bills. A number of health shares have gone bankrupt, so this is a concern to keep in mind. If a health insurance company is unable to pay your bills, they hold their own insurance policy that will pay member’s bills even in the event of a bankruptcy.
There are many options for health insurance. Reach out to one of our local advisors to learn what health insurance plans are available in your area. Our advisors will help educate you so you know what option might work best for your situation.