Navigator Guide FAQs of the Week: The Risks of Buying Coverage Outside the Marketplace

As 2023 comes to a close, it’s time to think about health insurance for 2024. Consumers searching for a 2024 plan online may come across products sold outside of the Affordable Care Act’s (ACA) Marketplace. Many of these plans do not comply with the ACA’s consumer protections, such as the requirement to cover pre-existing conditions. This week, we’re highlighting frequently asked questions (FAQs) from our Navigator Resource Guide concerning the risks of buying coverage outside of the Marketplace.

I received a call/mailer selling me new coverage that is much cheaper than what is available on HealthCare.gov. How do I assess my options?

Healthcare.gov, or the Marketplace website in your state, is the only place you can purchase coverage that is guaranteed to provide all the consumer protections of the Affordable Care Act. It is also the only place to buy coverage with premium tax credits. There is no income limit on eligibility for premium tax credits, which cap your premium contribution at a percentage of your annual household income, so most people will do better to buy coverage through the health insurance Marketplace. Be sure to find out what your cost would be to buy coverage in the health insurance Marketplace, taking into account any premium tax credits and cost-sharing reductions that may apply.

If you decide to forgo coverage in the health insurance Marketplace, proceed with caution when evaluating options outside of the Marketplace, as there have frequently been cases of fraudulent activity and deceptive practices. Note that using a general search engine to find health insurance online may lead you to sites and sales representatives that steer you towards non-ACA-compliant products. In order to evaluate your options outside of the Marketplace, contact your state’s department of insurance for a list of reliable brokers who can assist you in assessing your options. Always insist on getting plan documents to review prior to buying a plan, particularly when purchasing a plan outside of the Marketplace.

What are health care sharing ministries? What are the risks and benefits of signing up for one?

It is important to understand that a health care sharing ministry is not health insurance and will not provide the kind of financial protection you can obtain through a health plan on the health insurance Marketplace. Membership in a ministry does not guarantee that you will be reimbursed for your medical bills. Typically, health sharing ministries operate by having all of their members pay a monthly “share” or fee. Those fees are then used to pay other members’ medical bills, if they qualify and if the reason for needing care was not due to behavior deemed unacceptable for members.

Health care sharing ministries do not have to comply with the consumer protections outlined in the Affordable Care Act, and many states have exempted them from the state’s insurance laws. Consumers are at greater financial risk in these programs than they would be in traditional insurance. In particular, if there’s a dispute between you and the heath care sharing ministry about covered benefits, or if you’re having trouble getting your medical bills paid, you have no right to appeal to an independent reviewer to overturn the health care sharing ministry’s denial, a right you would have with individual health insurance. (26 U.S.C. § 5000A, 45 C.F.R. § 147.136.)

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. (45 C.F.R. § 148.220; 26 U.S.C. § 5000A; CMS, ACA Implementation FAQs-Set 11.)

There’s still time to find a comprehensive, affordable health insurance plan on the ACA’s Marketplace. In most states, Marketplace Open Enrollment lasts until January 15, with December 15 marking the last day to sign up for coverage that begins January 1. Check out the Navigator Resource Guide for more FAQs and other helpful resources.