6 Options for Those Who Think They Can’t Afford Health Insurance

6 Options for Those Who Think They Can’t Afford Health Insurance

The Affordable Care Act includes many provisions intended to make health insurance plans more accessible and affordable to Americans. Yet, many struggle to pay for coverage. Others believe they don’t have the means to buy it in the first place. This perception is the number one reason uninsured individuals gave for remaining uninsured.A November 2014 Kaiser Tracking Poll found that 41 percent of uninsured respondents believed they expect to remain uninsured in 2015.[1] Just shy of a quarter (24 percent) said they did not think they could find an affordable plan. The second most-common reason given was that they don’t think they need it (5 percent) followed closely to not wanting to be forced to buy anything (4 percent). Less than 1 percent said they would rather pay the fine for not having coverage than pay for health insurance.

Before you give up on buying a health insurance plan altogether, know the potential consequences and solutions. Going without minimum essential health insurance coverage in 2015 may mean you owe a tax penalty in 2016. It may also mean struggling to pay your medical bills should you require medical care. What happens if you break a bone, need to be admitted to the hospital, or develop a costly health problem that requires diagnostic testing and treatment? Are you prepared to pay for care entirely out of pocket?

Read through the following options to see which apply to your life situation—you may have multiple possibilities. 

Get an exemption. Avoid the penalty.

Certain life and financial circumstances may make you exempt from buying health insurance. If you qualify for an exemption, you will not have to pay the shared responsibility payment—a tax penalty owed by those required by law to have health insurance but do not obtain coverage.

Some exemptions require application and approval through your state-based or federally facilitated health insurance exchange. Others may be claimed on your tax return. Read “22 Ways to Legally Get Out of Buying Health Insurance Under Obamacare,” to learn more.

Look into Medicaid.

Medicaid is low- or no-cost health insurance for those will little or no income. Eligibility varies by state; however, many states expanded their programs in 2014 to include adults who earn up to 138 percent of the federal poverty level. Visit HealthCare.com’s state resource page to learn more about Medicaid and health insurance where you live.

Medicaid is considered minimum essential coverage and will thereby prevent you from owing the shared responsibility payment tax penalty. 

See if you qualify for financial assistance. Then, buy from an exchange.

Premium tax credits may lower your monthly premium payments significantly and potentially make health insurance more affordable than you thought.

Income-based subsidies are available to those:

  1. Whose annual incomes are between 100 and 400 percent of the federal poverty level; and
  2. Who buy health insurance from a state-based or federally facilitated exchange.

Additional cost-sharing subsidies are available to those who earn up to 250 percent of the federal poverty level and buy from the exchanges.[2] These subsidies help lower healthcare spending by reducing your deductible, coinsurance, copayments and other out-of-pocket expenses.

Use the HealthCare.com tax credit calculator to estimate your subsidy amount.

Buy a catastrophic health insurance plan.

If you qualify for a hardship exemption or are younger than 30 years old, you may be able to purchase a catastrophic health insurance plan. This type of coverage can have lower monthly premiums and is designed to offer financial protection in worst-case scenarios (i.e., serious illnesses and accidents).

With a catastrophic health plan, you must typically pay all medical expenses out of pocket until you reach the plan’s deductible. After that, essential health benefits are paid. As outlined by the Affordable Care Act, certain preventive services, will be covered at no additional cost—even before you meet your deductible. Catastrophic plans also include three primary care visits at no additional cost and also before you meet your deductible.

Catastrophic health insurance plans are considered minimum essential coverage and will thereby prevent you from owing a tax penalty. Catastrophic plans are not eligible for Obamacare financial assistance.

Enroll in a temporary health insurance plan. Penalty may apply.

Whether or not you are exempt from buying health insurance in 2015, you would be wise to consider some level of coverage. As mentioned above, a catastrophic plan may be an option. Another is short term health insurance. This low-cost, temporary coverage is designed to provide healthcare benefits that help with unexpected medical bills. Covered expenses may include emergency care, surgical services and hospital care, among others. Policies last as few as 30 days and as long as 364 days, depending on your state laws and personal needs. Premiums are typically less than $100 per month.

Short term medical plans are not ACA-compliant, which means they do not include essential health benefits or preventive care. They are not considered minimum essential coverage and will not prevent you from owing the shared responsibility payment tax penalty.

Go without coverage. Pay the penalty.

If you do not qualify for an exemption, Medicaid or financial assistance and still believe you cannot afford health insurance, you may go without it; however, you will likely owe the shared responsibility payment.

If you go without health insurance coverage in 2015 and do not qualify for an exemption, your penalty will be the higher of these amounts[3]:

  • A flat dollar amount of $325 per adult and $162.50 per child under 18, up to a family maximum of $325
  • 2 percent of your household income above the tax return filing threshold for your filing status

Your health insurance tax penalty for not carrying coverage is capped at the cost of the national average premium for a bronze plan sold through the state-based and federally facilitated exchanges. Penalties for 2015 will be paid when you file your 2016 federal income tax return.

We can help you decide

Still not sure what to do about health insurance? Ask an expert. Call 877-275-0485 to talk to a licensed health insurance agent from HealthCare.com.

Open enrollment for 2015 health insurance started Nov. 15 and runs through Feb. 15, 2015. If you want coverage to begin Jan. 1, be sure to renew your health insurance coverage or enroll in a new plan by Dec. 15. Tell your friends, family members and coworkers who may not be aware; when polled by Kaiser, 77 percent of uninsured did not know when 2015 open enrollment began.[4]

 

 

[1] Hamel, Liz, et al. “Kaiser Health Tracking Poll: November 2014.” The Henry J. Kaiser Family Foundation. Nov. 21, 2014. http://kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-november-2014/.

[2] Andrews, Michelle. “In Addition to Premium Credits, Health Law Offers Some Consumers Help Paying Deductibles and Co-Pays.” Kaiser Health News. July 9, 2013. http://kaiserhealthnews.org/news/070913-michelle-andrews-on-cost-sharing-subsidies/.

[3] Internal Revenue Service. “The Individual Shared Responsibility Provision.” Last reviewed Nov. 28, 2014. http://www.irs.gov/uac/Individual-Shared-Responsibility-Provision.

[4] Hamel, Liz, et al. “Kaiser Health Tracking Poll: November 2014.” The Henry J. Kaiser Family Foundation. Nov. 21, 2014. http://kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-november-2014/.

About Jenifer Dorsey

Jenifer Dorsey is a regular contributor to HealthCare.com. She has covered health insurance and health and fitness for more than five years. In her free time she is a competitive track cyclist and loves to travel, especially to places with velodromes.

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