Viable Alternatives to the ACA

Question: I’ve been following this series for a few weeks. You’ve been warning people that the alternatives to the Affordable Care Act (ACA) aren’t safe. Why aren’t there any viable alternatives to the ACA, especially after the Enhanced Subsidies went away and so many people’s premiums went up?

Answer: There are multiple reasons why there are few, if any, viable alternatives to the ACA. 

Number one in my opinion is that because the ACA prohibits health insurance companies from discriminating against or denying claims for someone with pre-existing medical conditions, and the alternatives don’t, people are skeptical and fearful of buying those plans. I believe this has made many companies think twice about entering the alternative marketplace where plans have tons of fine print and exclusions. Companies are fearful of getting a bad reputation and negative online reviews.

Also, in several states, alternative plans that don’t cover pre-existing conditions or put a cap on annual or lifetime coverage are banned and not allowed to be sold.

Lastly, the very few alternative plans I’ve seen that actually protect those who are diagnosed with a serious medical condition or accident are almost always more expensive than subsidized ACA plans and don’t offer much savings versus full cost ACA plans.

But the bottom line is in most states the alternatives are junk insurance that can’t be counted on in the event of a catastrophic health event such as a diagnosis of cancer with the need for extensive chemo or radiation, a lengthy hospitalization, expensive surgery or emergency room visit, a bad accident, the the need for brand name medications, etc. They can leave those who purchase them with tens of thousands, even hundreds of thousands, in unpaid medical bills or unable to access care without coming up with huge sums of money up front. These alternative plans also often have pre-existing condition clauses that won’t cover any treatment or medication related to current or past health issues.

Let’s talk about the three alternatives; Short Term, Indemnity, and Faith Based/Medi-Share, none of which are health insurance as you know it where you just hand over your card and can receive care.  

Indemnity Plans: Pay on a schedule. For example, provide a set reimbursement for specific care. Some examples are: $500 per day for a hospitalization, $250 for an outpatient surgery, $150 for an Emergency Room visit, $100 for a CT scan or MRI, $100 per year for medications, etc. Most importantly, unlike ACA plans, they don’t limit what can be billed in a calendar year!  Indemnity Plans are the most common type of alternative that is marketed online, especially Facebook. They can be very inexpensive because they don’t cover anywhere close to what it would cost for a hospitalization, surgery, chemo, and other care. If you see plans with premiums that are a fraction of a full cost ACA option, it’s because they provide very little coverage!  I’ve written on several occasions that I would rather have someone go uninsured than waste their money on a bare bones Indemnity Plan. You’re better off putting the money you would spend on premiums in a savings account. 

Short Term plans: Generally, they only last 6 to 12 months and limit what the insurance company will pay out over that time. They often don’t cover pre-existing conditions and aren’t guaranteed to be renewed if you’re diagnosed with a serious medical condition or are in the midst of care when the term ends. Like indemnity plans, coverage can also be on a schedule with limited reimbursements and are filled with fine print and exclusions. 

Faith Based/Medi-share plans: The premise of these are that members of the group pay a monthly amount into a “community bucket.” When a member has a medical bill, they submit it to the organization to be paid from this shared fund, usually after meeting what is equivalent to a deductible. I’ve never met anyone who has had one of these plans and has needed to use it for a serious medical condition. However, I’m very skeptical and there are pages and pages of fine print. A statement from one of the largest Medi-share companies reads, “the eligibility of a medical bill for sharing is determined after medical services are rendered. Medical and lifestyle information help determine eligibility.” Again, if you need surgery or other costly care, the doctor or hospital will not be able to verify coverage or guaranteed reimbursement by an insurance company. This means you would almost certainly be forced to pay up front and in full before any services are performed! Only afterwards would you submit your request to the Medi-share group for partial reimbursement and there’s no guarantee of payment according to the plan documents.  

The Health Insurance Store has chosen not to sell any of these alternatives because none guarantee protection in the event of a serious health issue. The agency’s integrity and reputation are far more valuable and important than any commission that we would receive from these plans. 

It’s unfortunate there aren’t more viable alternatives, especially after ACA “Enhanced Subsidies” weren’t extended and many people saw huge increase in premiums this past January. My advice is to stay away from them. If you are considering one, I’m happy to evaluate it for you, show you where the “trap doors” and gaps in coverage are so you can make a wise decision. I can be reached via email, Aaron@GetYourBestPlan.com. 

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