Traditional and expensive
Over the next few weeks many families, mine included, will receive the dreaded letter from their health insurance company that tells them how much their premiums will be for 2019.
Last spring my insurance company applied for a 29% rate hike. They settled for 19%. That still hurts. Especially because the deductible and out-of-pocket maximum are going up, too.
I really feel for other families receiving similar letters about similar rate hikes. Some will have to make a difficult decision—will health insurance in 2019 just be too expensive?
There are alternatives to traditional health insurance policies, and I’ve posted about them before. But a few things are changing in 2019, so I thought it was time for an updated post about health-sharing ministries, short-term health insurance policies and association health plans.
No more personal mandate…kind of
The most important change to the health insurance scene in 2019 is the elimination of the personal mandate to purchase ACA-compliant health plans.
Keep in mind, however, that although there will be no penalty at the federal level, several states have or will put in place an individual mandate of their own. As far as I know, only Massachusetts, New Jersey and the District of Columbia have mandates for 2019, but check with your state’s insurance commissioner for more information.
Other states may opt for mandates starting in 2020, as well.
Health-sharing ministries are not insurance; they are pooled resources among a large group of like-minded individuals and families. Based on the Christian tenet of neighbors helping neighbors, these ministries may be a good fit for families who are practicing Christians.
And even though they are not technically health insurance, these ministries have been exempt from the ACA’s individual mandate by virtue of the religious exemption.
The top five health-sharing organizations:
- Christian Healthcare Ministries
- Liberty HealthShare
- My Christian Care (Medi-Share)
- Samaritan Ministries
- Altrua HealthShare
Each is set up a little differently, but in general the pros of a health-sharing ministry include:
- lower monthly costs
- no open enrollment period
- no provider networks
- no denial of coverage for pre-existing conditions
The cons of a health-sharing ministry include:
- caps on annual or lifetime spending
- limits on coverage, such as no prescription medications
- more paperwork (patients pay up front and then submit a claim for reimbursement)
Also, these health-sharing programs are not insurance and are not regulated by a state’s insurance commissioner. They are not legally-binding contracts like an insurance plan, and any guarantee that they will consider any or all expenses “eligible” must be taken, well, on faith. 😇
Short-term insurance plans
Short-term health insurance plans used to be popular—before the Affordable Care Act. In short (haha), these plans provide coverage for less than one year. They are a type of indemnity plan. You pay up front and submit a claim for reimbursement based on what your plan covers.
The ACA limited short-term plans to no more than 3 months, or just as a bridge between coverage. They were not considered qualified health insurance, so anyone using them suffered a penalty at tax time.
Last summer the administration changed the rules to allow 6-month and 12-month plans, too.
Anyone who buys a short-term plan in 2019 won’t face a penalty, either, unless they live in one of the few states mentioned above.
The benefits of a short-term plan include:
- very low monthly costs for the young & healthy
- low deductibles
- no open enrollment period
- no provider networks
The cons include:
- no coverage for pre-existing conditions
- limits on coverage, such as no maternity care, prescriptions, etc.
- more paperwork
Association health plans
Last summer the administration also deregulated association health plans (AHPs) to make them more accessible to more people.
AHPs allow individuals or small businesses to band together by industry to buy health coverage. AHPs were another popular type of health insurance before the ACA. Realtors, musicians, actors, writers, and farmers, for example, were able to combine their purchasing power and negotiate lower premiums.
The ACA effectively got rid of these plans as “junk” insurance. Now they’re back, and whether they’re junk or not is really a matter of opinion. Looser regulation means AHPs can avoid some of the costly health benefits mandated by the ACA and offer lower premiums.
High premiums and out-of-pocket costs are a burden for many individuals and small businesses. AHPs will offer a more affordable option.
If you belong to an industry that may be eligible for an AHP, check with your group’s professional organization, your local chamber of commerce, an insurance broker, or the National Association for the Self-Employed.
Healthcare is still broken
The downside to these alternative health insurance plans is that they pull younger, healthier people out of the traditional insurance market. Left with only the sickest individuals, insurance companies will either raise premiums or leave the market altogether.
Every year brings new challenges, but no real solutions.
November 1, the first day of open enrollment, is just around the corner. I hope those who are happy with their insurance plans are able to keep them for another year.
I hope those who are having trouble affording coverage are able to find something that will work for them outside of traditional insurance.
If you are considering one of the alternatives to traditional health insurance, check with your state’s insurance commissioner. As the ACA is taken apart bit by bit, the states are stepping up with more regulations of their own.
This post has been updated since its original publication in 2017.