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Non-Qualified Health Plans Filling the ACA’s Coverage Gap

Female doctor examining a smiling kid patient lying on a hospital bed.

The most unfortunate truth about promises is that many are made, but very few are kept, especially when it comes to health care. While the U.S. Affordable Care Act (ACA) promises that anyone can get health insurance, regardless of pre-existing conditions, and provides premium subsidies on a sliding scale based on family size and income for those who qualify, some ACA provisions increase the cost of health insurance for many people.

As a result – the number of individuals applying for non-compliant, short-term health insurance policies was up more than 100 percent in 2014, according to Reuters. The requirement for the same premiums regardless of health history reduces premiums for many people with pre-existing conditions. However, this invariably increases premiums for those with a good health history.

Furthermore, the ACA’s age rating structure may have reduced premiums for older people but, in the process, it raised premiums for young adults. The ACA’s required mandatory coverage of certain services that not all plans had covered in the past, wound up increasing premiums across the board.

Although well-meaning, the strong regulatory and political focus on keeping premiums from increasing “too much” has forced insurers to increase deductibles. The consequence is that most people with ACA plans will not be able to collect benefits, even after paying all the premiums. And even though the enrollment glitches that plagued last year’s enrollment period have been reduced, they are far from gone, and some people were unable to enroll despite their best efforts.

An additional by-product is that many people – especially for younger adults with unremarkable health history – find the health coverage available from the ACA exchanges too expensive to be worthwhile. So, as a result they would rather pay the penalty for not having health insurance. And, this also appears to be the trend for people with smaller households, who become ineligible for premium subsidies at relatively low income levels.

It goes without saying that individuals who find the ACA coverage too expensive may not necessarily want to go completely uninsured. Their solution – is to apply for limited-scope, low-cost insurance that doesn’t meet the ACA requirements, but they consider it less costly and it covers enough to make it worthwhile for this segment of the population.

A final point of emphasis – it’s important to note that this type of insurance is not ACA compliant coverage and, if you choose to enroll in it, you will still have to pay the federal penalty for not being insured under a “qualified” health insurance plan. In essence, you’ll be paying the penalty plus the premium for the non-qualified health coverage. Still, the fact that a substantial number of people are signing up for it shows that the difference in price between ACA-compliant health care and the limited coverage is enough for a lot of people to get the lower-cost coverage, regardless of the penalty.

Obviously, the original intent of the Affordable Care Act, also known as Obamacare, was to provide health care insurance for all Americans. As is sometimes the case, politicians’ best intentions come with unexpected consequences. And, the ACA is no exception.

You owe it to yourself to have the most affordable health insurance rates available. Why not get a free health insurance quote today?

Are you enrolled in an ACA-compliant plan or do you have non-qualified health coverage? Why? Feel free to share your thoughts in the comments section below.

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