Association Health Plans (AHP)

Association based health plans are tailored for people with a common interest and provide a membership card to each of it’s members. Association Health Plans (AHP) work like traditional, major medical health insurance and typically partner with a larger health insurer’s network of doctors. Similar to how a Warehouse store provides discounted prices when you buy products in bulk, AHPs can also provide lower rates by paying for its members care in bulk. Association Health Plans work in a similar fashion-the larger the Association, the lower the premiums will be and the more benefits the health insurance plan will contain.

By joining together and creating an Association, members are able to take advantage of less expensive health insurance plans because a larger percentage of monthly premiums are applied to the benefits and not to inflated insurer profit and administrative costs. As an added benefit to members having a common interest to be part of the Association, plans are designed with their members interests in mind and are tailored to meet their specific needs.

Unlike the ACA marketplace, AHPs can designate different monthly premiums based on risk factors such as age, gender, health history, and industry factors. Because the ACA (Affordable Care Act) prevented their qualifying plans from using current medical status or pre-existing conditions to determine eligibility or premium rates, insurance companies were forced to spread the costs of enrollee’s claims among everyone enrolled. This eventually lead to rising monthly premiums and annual deductibles. Alternatively, Association Health Plans gain more flexibility to set monthly premiums on an individual basis. Similar to auto insurance taking a customers driving history into consideration when assessing risk and premium rates, AHPs may take their customers health history, age, gender, etc into consideration when assessing risk for health coverage.

Unlike ACA health insurance plans which restrict enrollment for new coverage to a designated Open Enrollment period to prevent people from waiting to buy insurance until they are already sick, Association Health Plans have the ability to allow access all year long to enroll or alter the benefits within the plan. An on-going Open Enrollment can prevent people from having to go without coverage simply because they may have missed the ACA Open Enrollment period.

Another added benefit to Association Health Plans is that members don’t have to pay for Unnecessary care. Every plan sold on the Marketplace and all other ACA compliant health insurance plans must cover what is referred to as “essential health benefits.” These include:

• Pregnancy, maternity, and newborn care

• Pediatric services

• Mental health services

• Substance abuse services

• Preventative and Wellness services

• Chronic disease management

• Prescription medications

Many people who oppose the ACA dislike that these EHBs are “one-size-fits-all” and do not allow for choice when selecting their benefits. For example, EHBs require men to pay for maternity care that they obviously can never utilize. AHPs do not have to comply with the ACA essential health benefits and therefore allow more flexibility for its members to tailor the coverage to fit their needs.

Private Health Insurance

Private Health Insurance refers to be plans that are run by the private insurance industry, not by government-run health insurance such as those available on the ACA marketplace. These plans are referred to as “private” because it is offered by privately run health insurance companies as opposed to government run programs such as Medicare or Medicaid. Currently, private health insurance, which includes employer sponsored plans, currently covers more than half of the American population. The private market includes a variety of different types of health insurance including short-term health plans, fixed indemnity plans, critical illness plans, accident supplements, dental coverage, vision coverage, and more.

Private health insurance is much less regulated than government run health insurance like the ACA marketplace, which allows for lower premiums and more flexible coverage in many instances. Although there are fewer regulations, private health insurance plans are still required to meet minimum standards that are imposed by federal and state governments. A few of these minimum standards include employer sponsored plans with 15 or more employees must provide coverage for maternity care. Most types of private health insurance meet the minimum essential coverage as stated in the Affordable Care Act laws.

If your employer does not offer health insurance, and you are also not eligible for public health insurance programs like Medicare, Medicaid, CHIP, etc, you can still purchase your own private health insurance through your individual states marketplace/exchange. You can also choose to go directly through a health insurance company that offers private health insurance plans.

Fixed Indemnity Health Insurance

Fixed Indemnity health insurance is another type of medical insurance that will pay a pre-determined benefit toward specific illnesses or injuries. Unlike major medical health insurance, a fixed indemnity health insurance plan will typically pay you in cash benefits rather than pay your medical provider, but most plan offer an option for you to request that your benefits go directly to your physician or hospital. Fixed indemnity health insurance plans are not regulated by the ACA (Affordable Care Act) and do not provide coverage for the essential health benefits, which include:

• Pregnancy, maternity, and newborn care

• Pediatric services

• Mental health services

• Substance abuse services

• Preventative and Wellness services

• Chronic disease management

• Prescription medications

Fixed indemnity plans can also exclude coverage for pre-existing conditions and have annual and lifetime benefit limits. These plans will also have defined benefit limitations for all of their services.

These plans typically come with reduced monthly premiums. However, since these plans are usually supplementing major medical plans, the cost would be in addition to the regular health insurance premiums you or your employer is already paying.

One of the biggest drawbacks to a fixed indemnity plan is that, because they have limited benefit payments that are paid toward a specific medical condition, any remaining amount is the full responsibility of the policy holder. This can be detrimental in the event of a major medical event like a heart attack, stroke, cancer, or other life-threatening circumstances. Although the fixed indemnity coverage will likely make a financial payment toward each of these events, there will inevitably be a large portion not covered and the remaining financial responsibility will be on the policy holder. These plans are far from comprehensive and is not recommended as a replacement for major medical coverage.

The benefits to having a fixed indemnity health insurance plan are:

• Low premiums

• Low or no annual deductible

• No coinsurance

• No copays

While fixed indemnity health plans are fairly inexpensive, it is important to remember that they should typically only be used as supplemental insurance to an existing major medical plan that you already have in place.

Affordable Care Act (ACA)

The ACA (Affordable Care Act) is the comprehensive healthcare reform signed into law in March of 2010 by President Barack Obama, which is why it is often referred to as “Obamacare.” The ACA laws include a list of policies intended to extend health insurance coverage to millions of Americans who may have otherwise been uninsured. The Act also expanded eligibility for Medicaid eligibility and created a Health Insurance marketplace for Americans to easily navigate Health Insurance options. These laws also ensures that health insurance companies cannot deny coverage to individuals with pre-existing conditions and also provides subsidies towards coverage for lower income families if purchased through the Marketplace.

Designed to reduce the cost of health insurance, the ACA includes tax credits to lower expenses for lower income individuals and families who qualify. Monthly health insurance premiums are reduced with the application of tax credits and cost-sharing reductions reduce immediate out of pocket expenses for deductibles, copays, and coinsurance. Overall, the total amount paid for covered health expenses over the course of the year (out of pocket maximum) would be reduced.

Every plan sold on the Marketplace and all other ACA compliant health insurance plans must cover what is referred to as “essential health benefits.” These include:

• Pregnancy, maternity, and newborn care

• Pediatric services

• Mental health services

• Substance abuse services

• Preventative and Wellness services

• Chronic disease management

• Prescription medications

Preventative services including check-ups, patient counseling, immunizations, and a number of health screenings are required of ACA compliant health insurance plans.

Enrollment for ACA plans is restricted to the designated Open Enrollment period each year which is November 1st-December 15th. If you do not sign up for your selected ACA health insurance plan during this enrollment period, you cannot enroll until the following year unless you qualify for a special enrollment period due to a change in marital status, become a parent, or lose a job that provided you with health insurance coverage.

When entered into law in 2010, a provision requiring all Americans to maintain health insurance, either through an employer who provides their employees with coverage, through the ACA marketplace, or another source, or a tax penalty would be imposed. This Individual Mandate was the subject of heavy debate before the 2016 presidential election due to Constitutional arguments. Although the Individual Made (tax penalty) is still part of the ACA laws, it has been reduced to $0, essentially making the penalty obsolete and unenforceable.

Short-Term/Tri-Term Health Insurance

Short-Term Health Insurance plans (sometimes called Tri-Term) are low cost plans but they are also low coverage plans as well. A good way to think of Short-Terms plans as temporary health insurance with lower premiums, less coverage, and higher out-of-pocket costs than standard health insurance plans. You can have a Short-Term health plan for up to 3 terms in total, and terms can vary from plan to plan from as short as 3 months per term to as much as 364 days per term. In contrast, regular health insurance has an annual renewal period and can be owned almost indefinitely.

Federal regulations allow short-term plans to create their own coverage without the required mandates found in regular health insurance plans. Short-term plans typically cost much less but don’t have as much coverage as regular health insurance plans. Services most often not covered by short-term health insurance plans include:

• Mental health

• Substance abuse rehabilitation

• Prescription drugs

• Maternity care

While ACA (Affordable Care Act) plans require insurers to approve everyone regardless of current or past health status, short-term plans are capable of rejecting you if you have a pre-existing condition and because more than half of Americans have pre-existing conditions, these plans are not the best choice for those people.

Short-term plans can also have a higher out-of-pocket responsibility than other plans as well as limitations on coverage. They can also limit what they will pay toward treatments and/or hospitalizations.

The most likely candidates for a short-term health insurance plan would be:

• Single individuals who do not have a spouse or dependents and do not plan on starting a family in the immediate future.

• Healthier people without pre-existing conditions who do not intend on having to use their coverage

• Individuals who need a temporary plan to hold them over until an employer provided plan is available or until the ACA marketplace Open Enrollment begins

Short-term plans have their drawbacks, but they may be a viable option if you need a temporary solution to bridge a gap in employer coverage when you change jobs and is a lower cost alternative to COBRA insurance, but should not be used as a permanent health insurance solution.