Although the deadline to enroll in a marketplace plan beginning January 1 has passed in most states, Open Enrollment is still ongoing. As consumers look for an affordable health plan, it can be tempting to search for plans online, which may lead people to products sold outside of the Affordable Care Act’s (ACA) marketplace. However, many off-marketplace plans are not required to comply with important ACA consumer protections, such as coverage of pre-existing conditions. This week, as a part of CHIR’s weekly Navigator Resource Guide series, we’ve highlighted FAQs discussing some of the pitfalls of buying a plan off-marketplace.
If I buy an individual health plan outside the health insurance marketplace, is my coverage going to be the same as it would be inside the marketplace?
Not necessarily. There are some health plans sold outside the health insurance marketplace that are required to provide the same basic set of benefits as plans sold inside the marketplace, are not allowed to exclude coverage of a pre-existing condition, and are also required to provide a minimum level of financial protection to their consumers. Specifically, these plans must cover at least 60 percent of what the average person would spend on covered benefits and there is a cap on the maximum amount you will pay out of pocket ($9,100 for an individual and $18,200 for a family in 2023).
However, it is important to note that you may only obtain premium tax credits and cost-sharing reductions if you purchase a plan through the health insurance marketplace. There is no income limit on eligibility for premium tax credits, so most people will do better to buy coverage through the health insurance marketplace.
While plans sold through the health insurance marketplace must be certified by the marketplace as meeting minimum coverage and quality standards, plans sold outside the marketplace need not be certified.
Contact your state’s Department of Insurance for a list of reputable brokers who can direct you to these plans, which are sold outside the marketplace, but are still required to provide the same protections as plans sold inside the marketplace.
If you decide to forgo health insurance marketplace coverage and premium tax credits, there may be other coverage options available outside of the marketplace that are not required to provide the Affordable Care Act’s protections. These include plans that are not traditional health insurance products, including short-term, limited duration insurance, association health plans, health care sharing ministries, and farm bureau plans. If an insurer or entity cannot provide a Summary of Benefits and Coverage that indicates the coverage is minimum essential coverage, be aware that the plan may have coverage limitations, particularly for pre-existing health conditions or for basic medical care. (45 C.F.R. § 147; 26 U.S.C. § 36B; 45 C.F.R. § 156.130; CCIIO, Premium Adjustment Percentage, Maximum Annual Limitation on Cost Sharing, Reduced Maximum Annual Limitation on Cost Sharing, and Required Contribution Percentage for the 2023 Benefit Year).
Is an insurer allowed to ask me about my health history?
In general, if a plan complies with the Affordable Care Act’s protections, an insurer should not require you to answer questions about your health history when you are applying for a plan. A navigator or broker may ask about your health history to guide you to the most appropriate plan offerings, but no plan offered on the Affordable Care Act’s marketplace through HealthCare.gov will require you to answer such questions before enrolling.
If you are purchasing a plan outside of the marketplace and an application requires you to answer questions about specific health conditions, or asks you to check a box to release your medical records, you may be applying for a plan that will charge you more or limit your coverage based on pre-existing health conditions. These plans do not provide the Affordable Care Act’s protections guaranteeing coverage to people with preexisting conditions and setting limits on out-of-pocket costs. Ask a reputable broker (you can find one by contacting your Department of Insurance) to look at the plan details and proceed with caution, especially if purchasing a plan online or over the phone.
An agent offered me a policy that pays $100 per day when I’m in the hospital. It’s called a “fixed indemnity plan.” What are the risks and benefits of buying one?
A fixed indemnity plan is not traditional health insurance and enrollment in one does not constitute minimum essential coverage under the Affordable Care Act. These companies are supposed to provide policyholders with a notice that the coverage is not minimum essential coverage.
A typical fixed indemnity plan will provide a fixed amount of money per day or over a set period while the policyholder is in the hospital or under medical care. The amount provided is often far below the patient’s actual costs. Thus, consumers often find that they pay more in premiums than they get in return. Consumers who suspect that a fixed indemnity plan is falsely advertising itself as health insurance should report the company to the state department of insurance. (See Other Resources, When and How to Contact Insurance Regulators for a list of state Departments of Insurance). (45 C.F.R. § 148.200; 26 U.S.C. § 5000A; CMS, ACA Implementation FAQs-Set 11).
We’ll be taking a break from the weekly series, but look out for more FAQs in January, and find over 300 searchable questions and answers along with other enrollment resources on our Navigator Resource Guide.