Prior to 2014, individual and family health insurance was medically underwritten and it was not guaranteed-issue in most states. This resulted in many Americans being denied health insurance or having coverage for their pre-existing conditions excluded.
In 2014, the Affordable Care Act (“ACA” or “Obamacare”) created new standards for individual and family health insurance. The goal was to make consumer-purchased coverage comparable to employer-provided coverage nationwide.
When you buy your own individual or family health insurance coverage, you should be aware of two core buckets of options:
- ACA-qualified coverage
- Non-ACA-qualified coverage
This guide walks through the differences between ACA-qualified coverage and non-ACA-qualified coverage and provides examples of some different options in each group.
At LegUp Health, we refer to individual and family health insurance policies that meet these ACA standards as “ACA-qualified” coverage. To be ACA-qualified, a health insurance plan must meet several requirements, some of which include:
- Guaranteed-issue during enrollment periods — The plan must be made available on a guaranteed-issue basis during specific enrollment periods. In other words, if you apply for health insurance during an enrollment period, an insurance company cannot deny you coverage.
- No medical underwriting — The insurance company is not allowed to charge you more money for the plan based on your personal health conditions. (Though, they can charge you more based on your age, family size, and a few other factors.)
- No pre-existing conditions exclusions — The plan is not allowed to exclude coverage for your preexisting conditions.
- No annual or lifetime limits — The plan is not allowed to place maximum benefits on your coverage.
- Maternity coverage — The plan must provide maternity coverage.
- Free basic preventive care — The plan must cover the cost of basic preventive care services.
You can purchase ACA-qualified coverage via your state’s health insurance exchange or “Marketplace”. All individual and family health insurance plans available in the Marketplace are ACA-qualified. You can also purchase ACA-qualified coverage directly from some insurance companies.
Note that some insurance companies only make their ACA-qualified plans available via the Marketplace. And some insurance companies only make their ACA-qualified plans available via direct purchase. While other insurance companies make their ACA-qualified plans available via both and others don’t offer any ACA-qualified plans at all.
Most consumers choose to go through the Marketplace to purchase ACA-coverage so that they can take advantage of premium tax credits that reduce their costs. Premium tax credits are not available for policies purchased directly from insurance companies; they are only available for Marketplace policies.
Whether you purchase ACA-coverage via the Marketplace or via direct purchase, most insurance companies allow you to assign a licensed health insurance agent as your agent of record (“AOR”). Your agent of record is then paid by the insurance company at no additional cost to you. (Note: If you don’t have a good health insurance agent, you may be leaving free services on the table.)
The specific insurance companies offering ACA-qualified coverage vary by state. In Utah, six health insurance companies offer ACA-qualified coverage:
- SelectHealth (Marketplace and direct purchase)
- University of Utah Health Plans (Marketplace and direct purchase)
- Regence Blue Cross Blue (Marketplace and direct purchase)
- Molina Healthcare (Marketplace only)
- Cigna (Marketplace and direct purchase)
- Bridgespan (Marketplace only)
Non-ACA-qualified coverage is coverage that does not meet the ACA standards. This coverage is not available via the Marketplace. It is only available via direct purchase from issuers. I use the term “issuer” because sometimes non-ACA-qualified coverage is provided by non-insurance company entities.
Disclaimer: If you are considering buying non-ACA-qualified coverage, proceed with caution and make sure you understand what coverage you are getting. Premium tax credits are not available for non-ACA-qualified coverage.
Most forms of non-ACA qualified coverage fall into one of these three categories:
- Short term health insurance plans
- Health care cost-sharing memberships
- Indemnity medical plans
Short term health insurance
Short term health insurance plans are plans with limited coverage periods (“terms”) that usually range from 30 to 364 days. Some issuers even allow you to renew a short term plan for up to three years. The specific terms available vary by state. Short terms plans are medically underwritten and do not cover preexisting medical conditions.
Short term health insurance was originally created to provide consumers with a temporary (“short term”) bridge between enrollment periods. For example, if you missed last year’s annual Open Enrollment Period and you aren’t eligible for a Special Enrollment Period, you could buy a short-term plan to cover you until next year’s Open Enrollment Period. At which point, you could buy more permanent ACA-qualified coverage.
A few short term health insurance plan options available in Utah include:
- SelectHealth “transition” plans
- UnitedHealthcare short term plans
- National General short term plans
- Independence American Insurance Company short term plans
Health care cost-sharing memberships
Health care cost-sharing memberships are not insurance. With health care cost-sharing, you join a community with other “members” who “share” medical costs with each other. As part of a medical cost-sharing membership, you are responsible for paying a membership fee each month.
Health care sharing organizations are usually religious. Sometimes they ask you to declare your faith in order to join. The details around health sharing vary based on which community you join.
Examples of health care cost-sharing memberships include:
- Samaritan Ministries
- Zion Health
- Christian Healthshare Ministries
- Liberty Healthshare
Indemnity medical plans
Indemnity medical plans pay a set portion of your healthcare costs. They often require that you pay upfront for services and then submit a claim to the insurance company for reimbursement. They usually provided limited benefits.
Examples of indemnity medical plans include: