Jane Dotson
Millions of Americans struggle to afford health insurance, but don't qualify for Medicaid. This is often due to their income being too high to meet the eligibility requirements for Medicaid, but not high enough to comfortably cover the cost of health insurance. While the Affordable Care Act (ACA) has made health insurance more accessible, it has not guaranteed that nobody will go without insurance. This has left many individuals and families in a challenging position, where they are unable to obtain affordable health coverage.
| Characteristics | Values |
|---|---|
| Income | Income is too high to qualify for Medicaid but too low to afford health insurance |
| Location | Differs from state to state |
| Eligibility | Determined by income, household size, disability, family status, and other factors |
| Options | Short-term medical insurance, fixed benefit medical insurance plans, catastrophic plans, and subsidies |
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What You'll Learn
Affordable Care Act (ACA)
The Affordable Care Act (ACA), enacted on March 23, 2010, has two parts: the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act. The ACA has evolved over the years to make healthcare more accessible for low-income households. It contains comprehensive health insurance reforms and includes tax provisions that affect individuals, families, businesses, insurers, tax-exempt organizations, and government entities.
The ACA created government subsidies to help low- and middle-income people pay for health insurance. These subsidies help offset the cost of monthly plan premiums, coinsurance or copays, and deductibles. There are two types of subsidies: premium tax credits and cost-sharing subsidies. Premium tax credits are the most common type of subsidy and help save on monthly premiums. Cost-sharing subsidies help offset the costs of out-of-pocket expenses such as deductibles and copays.
Eligibility for subsidies is determined by comparing an individual's income to the federal poverty line (FPL). There is a steep cut-off for subsidies, referred to as the "subsidy cliff," where middle-income individuals and families who make just above 400% of the FPL do not qualify for subsidies. However, the American Rescue Plan Act (ARPA), signed into law in 2021, expanded eligibility for subsidies, allowing more people to afford health insurance.
If you cannot afford health insurance and do not qualify for a subsidy or Medicaid, there are still options to obtain coverage. You can shop for more affordable alternatives, such as short-term plans, or look for other coverage options in your area that can provide necessary health insurance at a lower rate. You can also consider off-exchange health insurance plans offered directly by an insurer that are not available on state or federal marketplaces. Additionally, some states have their own health insurance marketplaces, while others go through the federal exchange at HealthCare.gov.
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Government subsidies
If you can't afford health insurance but make too much for Medicaid, you may be eligible for government subsidies to help offset the cost of health insurance. The Affordable Care Act (ACA) created government subsidies to help low- and middle-income people pay for health insurance. These subsidies can help lower or eliminate the out-of-pocket cost of monthly premiums for health coverage.
There are two types of subsidies: premium tax credits and cost-sharing subsidies. Premium tax credits are the most common type of subsidy and help you save on your monthly premium. Cost-sharing subsidies help offset the costs of out-of-pocket expenses such as deductibles and copays. To receive either type of subsidy, you must enroll in a plan offered through a health insurance marketplace.
Your eligibility for a health coverage subsidy depends primarily on your income compared to federal poverty level (FPL) guidelines, the number of people in your household, and the cost of health coverage in your state. If your household income is between 100% and 250% of the FPL, you may be eligible for both the Advanced Premium Tax Credit (APTC) and Cost-Sharing Reductions (CSRs). If your household income is more than 250% of the FPL, you may still be eligible for the APTC and will not pay more than 8.5% of your expected annual income toward premiums. However, if your income is above 400% of the FPL, you will not be eligible for subsidies.
The American Rescue Plan Act (ARPA), signed into law in 2021, expanded eligibility for subsidies to make health insurance more affordable for even more Americans. This law allows people with incomes below 150% of the poverty level to enroll in silver plans with zero premiums and dramatically reduced deductibles. The ARPA also reduces the amount people must pay if their income is between 100% and 400% of the federal poverty level.
If you do not qualify for a health insurance subsidy, there are still other options for affordable coverage. You can shop for more affordable alternatives, such as short-term plans, or look for other coverage options in your area that will provide necessary health insurance at a lower rate. You can also consider off-exchange health insurance plans offered directly by an insurer that aren't available on state or federal marketplaces.
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Short-term medical insurance
If you can't afford health insurance but make too much for Medicaid, there are other options available to help make health insurance more affordable. The Affordable Care Act (ACA) created government subsidies to help low- and middle-income people pay for health insurance. These subsidies help offset the cost of monthly plan premiums, coinsurance or copays, and deductibles. There are two types of subsidies: premium tax credits and cost-sharing subsidies. Premium tax credits are the most common type of subsidy and help you save on your monthly premium, while cost-sharing subsidies help offset the costs of out-of-pocket expenses such as deductibles and copays.
However, there is a steep cut-off for subsidies in most states known as the "subsidy cliff". Middle-income individuals and families who make just above the subsidy cut-off of 400% of the Federal Poverty Line (FPL) do not qualify for subsidies. This means that earning as little as $204 per year could put an individual or family over the 400% line and make them unqualified for subsidies.
If you do not qualify for subsidies, you can shop for more affordable alternatives such as short-term plans to fulfil your health insurance needs until you can purchase more comprehensive coverage. Short-term health insurance plans are sold through private insurance companies and can provide temporary medical coverage in certain situations. These plans are not available through the Health Insurance Marketplace and do not conform to ACA guidelines, so they do not need to cover pre-existing conditions. Short-term plans can vary greatly in cost and coverage, so it's important to read all the details before purchasing a plan.
Short-term health insurance typically provides some level of coverage for preventive care, doctor visits, urgent care, and emergency care. There may also be coverage for prescriptions. Some plans also offer cost savings for seeing in-network providers. The benefits covered by short-term plans are typically related to emergency care, so these plans may work well for those who don't require regular medical care. However, short-term plans generally do not guarantee renewal, so any conditions that develop while you are on a short-term plan may prevent you from renewing or may be excluded from your policy once you renew.
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Catastrophic plans
Catastrophic health insurance plans are a type of high-deductible health plan for people under 30 or those who qualify for a "hardship exemption". These plans are designed to protect you in a worst-case scenario, such as if you face an emergency with medical expenses totalling thousands of dollars.
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State-specific options
The Affordable Care Act (ACA) has made health insurance more accessible for low-income households, but there are still people who may not be able to afford a marketplace plan as they are ineligible for financial assistance.
If you can't afford health insurance and make too much for Medicaid, here are some state-specific options to consider:
State-run Health Insurance Marketplaces
Your first stop should be your state's health insurance marketplace. Some states have their own marketplaces, like Minnesota's MNsure. Other states, like Wisconsin, use the federal exchange at HealthCare.gov.
Medicaid and CHIP
Medicaid and the Children's Health Insurance Program (CHIP) are state-run programs that provide free or low-cost health coverage to certain groups, including low-income individuals and families, children, pregnant women, the elderly, and people with disabilities. Eligibility requirements vary by state, so be sure to check with your state's program. Some states have expanded their Medicaid programs to cover all people below certain income levels, regardless of other factors.
Premium Tax Credits and Cost-Sharing Subsidies
If you don't qualify for Medicaid or CHIP, you may still be eligible for government subsidies that can help offset the cost of health insurance. These include premium tax credits, which pay a portion of your monthly health insurance premiums, and cost-sharing subsidies, which help with out-of-pocket expenses like deductibles and copays. Eligibility for these subsidies is based on your income, household size, and the average cost of health coverage in your area.
Short-Term and Fixed Benefit Medical Insurance Plans
If you don't qualify for subsidies, you can look into more affordable alternatives like short-term medical insurance plans or fixed-benefit medical indemnity plans. These plans typically have lower monthly costs and can provide essential health coverage, but they may not offer the same comprehensive benefits as major medical insurance plans.
Catastrophic Plans
If you are under 30 or qualify for a hardship exemption, and are generally in good health, you may be eligible for a catastrophic plan. These are low-premium plans that offer ACA-compliant coverage but tend to have high deductibles.
Remember, each state has its own rules and programs, so be sure to check with your specific state to understand your options and eligibility.
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Frequently asked questions
There are affordable health insurance plans that may be suitable for your budget, such as short-term medical insurance and fixed benefit medical insurance plans. You can also shop for more affordable alternatives, like short-term plans, until you can afford more comprehensive coverage.
The Affordable Care Act, also known as Obamacare, has evolved to make healthcare more accessible for low-income households. The ACA created government subsidies to help low- and middle-income people pay for health insurance. These include premium tax credits and cost-sharing subsidies.
Your first stop should be your state's health insurance marketplace. Some states have their own marketplace, while others go directly through the federal exchange at HealthCare.gov. You can also get insurance through a private insurance company, an online insurance seller, or an agent/broker.
Health insurance can help you save on care, protect you in case of an emergency, and may include added perks such as discounts for fitness clubs and benefits like wellness programs. In some states, having insurance is legally required.
