You’ve enrolled in a comprehensive ACA-qualifying major medical policy, either through your job or one that you’ve purchased on your own. You may be feeling a sense of accomplishment or relief having secured benefits to cover your medical costs if you experience an illness or injury and need to go to the doctor or be admitted to the hospital.
But that’s not quite the whole story.
There are at least three ways you may experience a coverage gap or be subject to additional or unexpected healthcare costs even with major medical insurance:
- You lack coverage for some services you want or need that are not considered essential health benefits – like dental care.
- Your major medical policy has high out-of-pocket costs, such as a high deductible, and you don’t have the savings to cover these costs should you need medical care.
- You accessed care that was outside of your provider network that your policy may only cover at a lower cost-sharing percentage or not at all.
Finally, a fourth way you could experience a coverage gap is if you’re temporarily uninsured for some reason, such as if you are between jobs.
Let’s look at each problem individually and talk about potential options, such as supplemental insurance, limited benefit temporary insurance, financial products, and discount programs, to help with gaps in healthcare costs and coverage.
High Out-of-Pocket Costs – More Benefits with Supplemental Coverage
If you’re worried about being able to pay your medical bills because you don’t have savings or your income isn’t high enough relative to your major medical insurance policy’s out-of-pocket costs, you may be “underinsured.”
Are you underinsured? Find out if you’re underinsured in 3 steps.
If you are underinsured your healthcare costs may become a financial hardship before you are able to pay off your deductible and begin to share costs with your insurance provider.
And remember, even then, you still pay a portion of your costs based on your coinsurance until you reach your annual out-of-pocket maximum.
That’s where supplemental health insurance may be able to help:
- Benefits work alongside your major medical benefits – meaning if your major medical policy covers a cost and that cost is also covered under a supplemental policy, both policies will pay the benefit.
- Benefits can be used however you’d like, whether to pay down your major medical deductible, pay for other healthcare costs or even for non-healthcare related expenses.
- Supplemental policies differ in what they cover and how benefits are paid, so make sure to review each type of insurance (and each specific policy you’re considering) closely.
- Premiums are typically lower because policies are not guaranteed-issue, more exclusions and limitations apply, and there are less benefits than unsubsidized ACA-compliant health plans.
- Supplemental policies typically do not have deductibles.
Some common supplemental health insurance options are outlined below.
Gap Health Insurance
Medical gap health insurance provides a fixed, lump-sum benefit for covered illnesses and injuries. Like other supplemental policies, you can use the benefit payment however you see fit, but many people use it to cover some or all of the cost of their major medical policy’s deductible amount.
Critical Illness and/or Accident Insurance
Critical illness and accident insurance policies pay either a lump sum (fixed) cash benefit upon diagnosis of a covered critical illness or a benefit amount based on treatment received for an illness or injury (indemnity coverage).
Supplemental critical illness policies, in particular, are very limited in what they cover. It’s one of the reasons premiums can be much lower than ACA-qualifying major medical policies. And it’s why you need to make sure you understand exactly what is and is not covered prior to enrolling.
Interested in additional benefits to help with the costs of treating injuries like fractures, sprains, and burns?
Hospital Indemnity Insurance
Supplemental hospital indemnity insurance pays a fixed indemnity benefit for covered costs associated with being admitted to the hospital. That means that regardless of how much you’re charged for a service, for example, hospital room and board, your hospital plan pays a fixed amount per day, week, month, visit, or event.
This type of policy can be particularly helpful since costs associated with a multi-day hospitalization can quickly add up to exceed your deductible.
Request a quote to compare plan options and costs.
Coverage or Funds for Healthcare Services That Aren’t Part of Your ACA Plan or Network
Major medical insurance, also known as “Obamacare” health insurance or ACA-qualifying health insurance, is the most comprehensive type of health insurance available because the ACA established a framework and minimum requirements that such plans must meet.
But even then, major medical plans do not cover the entire universe of potential healthcare services you might need, though some of these services may still be required and regulated at the state level.
For example, your major medical plan may not cover:
And due to provider networks, if you receive care, even services that qualify as essential health benefits, from an out-of-network provider you may have to pay a larger portion of the costs or possibly all of them out of pocket. If you have a narrow network health plan, it may be difficult to stay in-network especially if you require highly specialized treatment.
In either of these scenarios, you may want to consider additional insurance, non-insurance products, financial products or a health discount program even if you have major medical in order to get additional coverage, savings or convenience.
Individual dental insurance is typically affordable, with relatively low premiums and deductibles. Plans cover a range of services from annual cleanings to extractions and root canals. And with a range of plan options available, there’s a price point for just about every budget. Even though age and location can impact your rates, most people qualify for dental insurance.
Compare plans and costs by requesting a quote.
Telemedicine can be a convenient option when you’re busy or just don’t feel like sitting in traffic and a waiting room in order to see a doctor, especially if you’re already not feeling well.
These virtual doctor visits can be conducted anywhere you have access to a phone or a computer and the internet. Doctors can diagnose a range of uncomfortable but less serious conditions like UTIs, skin rashes, ear infections, and sinus infections, and provide care plans and write prescriptions if necessary.
You can access a provider anywhere and anytime, even if you’re traveling outside of your health insurance policy’s network or it’s 2 AM on December 24th. Anyone can purchase Telemedicine as it is not insurance.
Health Discount Programs
Health discount programs are not insurance, however, for a monthly fee they can provide you access to discounted medical and administrative services and products from participating providers.
A health discount program may include the following types of discounts and services:
- Prescription drug discounts– both generic and brand name
- Alternative health and wellness care discounts, e.g., chiropractic and massage
- Medical bill negotiation
- Counseling referral services
- Discounted durable medical supplies (e.g., wheelchairs and insulin pumps)
Disability insurance can help replace lost income for anywhere from a few months to several years if you are unable to work because of an illness or injury.
Policy terms, coverage and benefits vary considerably between plans so you’ll want to shop carefully.
Many employers offer disability insurance as part of a comprehensive benefits package.
HSAs or FSAs
Both health savings accounts (HSAs) and flexible spending accounts (FSAs) are options for helping you save and pay for healthcare-related expenses without having to dip into your checking account or using a credit card.
You can use HSA and FSA funds for qualifying medical services that also count towards your major medical deductible, such as payments to doctors, and for any qualified medical expenses that insurance doesn’t cover but you will otherwise pay for out of pocket such as hearing aids, psychological counseling, chiropractic care, and physical therapy.
You’ll want to validate that any HSA or FSA plan you’re considering allows you to use funds for specific healthcare services that you regularly use such as chiropractic care or counseling.
HSAs and FSAs are structured very differently.
Health Savings Accounts (HSA)
- Only available to people with qualifying high deductible individual or group plans.
- HSAs are financial investment products whose balances roll over annually and go with you if you leave your job.
- For 2020, the maximum individual HSA contribution is $3,550; $7,100 for a family.
- Contributions are tax-deductible or can be deducted from your paycheck pre-tax. Growth and distributions are tax-free.
Flexible Spending Accounts (FSA)
- Can be used with any type of health insurance or no health insurance at all.
- FSA funds are “use it or lose it”, balances don’t carry over for the next calendar year and your FSA may not follow you if you leave your job.
- The IRS sets contribution limits for these accounts. For 2020 it is: $2,750.
- Contributions are pre-tax and distributions are untaxed.
No Coverage? Non-ACA Health Insurance Can Help
One final scenario that you may be facing is being unable to enroll in a major medical policy right now.
Regardless of why you find yourself between major medical policies, you may want to consider a short term health insurance policy or even a short term policy with a combination of limited benefit supplemental health insurance options rather than going uninsured.
Find out if short term medical plans are available in your area and compare your costs by requesting a quote. It just takes a minute.
What is Short Term Medical Insurance?
Short term health insurance is one non-ACA option that could provide you coverage for unexpected illnesses or injuries for 30 to 364 days depending on your state (or possibly up to 36 months depending on the policy renewal rules in your state).
Plans typically provide benefits for hospital room and board; emergency room, anesthesiology, and surgical care; diagnostic services (x-rays, lab tests, and analysis); ambulance and surgical services; and doctor office visits.
Remember, these plans are not comparable to ACA plans and have much more limited coverage (it’s one reason why premiums are so low). So it’s important to understand what is covered and what is excluded in any short term medical plans you’re considering.
Some benefits of short term medical plans include:
- Monthly premiums are 31.5% less than unsubsidized major medical insurance premiums on average, $124 per month compared to $393 (2016).
- There’s no open enrollment period so you can apply year-round in most states.
- Plans are highly customizable so you don’t have to pay for coverage you don’t need.
Some drawbacks of short term medical plans include:
- They are not guaranteed-issue, you must be approved by the carrier in order to enroll.
- They are not considered minimum essential coverage and have less coverage than major medical plans.
- Pre-existing conditions are not covered.
- There are limits on benefits and there may be many exclusions.
The best way to find short term medical plans available in your area and to compare your costs is to request a quote. It just takes a minute.
Summary + Next Steps
Even with major medical insurance, you could experience cost or coverage gaps.
And if you’re temporarily unable to enroll in an ACA-qualifying major medical plan, you may be without any health benefits until the next open enrollment period or you’re able to enroll in an employer’s group plan.
You may have options. First, determine if you may be underinsured.