Signs Your Household Can't Afford Insurance Coverage

The high cost of insurance is a significant concern for many households, with 63% of uninsured adults aged 18-64 citing it as the main reason for lacking coverage. While health insurance is essential for saving on care and providing protection in emergencies, it can be challenging to afford without assistance. Fortunately, there are resources available to help, and it is recommended to explore these options rather than going without insurance. This paragraph will discuss the factors that indicate a household cannot afford insurance and the possible steps they can take to gain coverage.

Government subsidies

There are two main types of government subsidies: premium tax credits and cost-sharing subsidies. Premium tax credits are the most common type of subsidy, and they help reduce the monthly premium payments for health coverage. The amount of credit received is based on the household size, total income, and the average cost of health coverage in a particular area. This credit can be directly sent to the health plan each month or claimed on federal tax returns. To be eligible for premium tax credits, an individual's income should be between 100% and 400% of the FPL. For those with incomes below 150% of the FPL, the required contribution towards the premium is zero, while for incomes above 400% of the FPL, the contribution is capped at 8.5% of household income.

The second type of subsidy, cost-sharing subsidies, helps reduce out-of-pocket expenses such as deductibles, coinsurance, and copays. These subsidies are available to individuals with incomes between 100% and 250% of the FPL, providing extra savings that lower the overall cost of healthcare. Cost-sharing subsidies are only applicable if you select a Silver health insurance plan.

The ACA has evolved over the years to expand eligibility for subsidies, making health insurance more accessible for low-income households. The American Rescue Plan Act (ARPA), signed into law in 2021, is a notable example of this expansion. The ARPA allows individuals with incomes below 150% of the poverty level to enroll in Silver plans with zero premiums and significantly reduced deductibles.

To determine eligibility for government subsidies, individuals can use online tools such as income calculators and refer to their state's health insurance marketplace or the federal exchange at HealthCare.gov. These resources can help identify the most suitable health insurance options based on one's financial situation.

Medicaid eligibility

Medicaid is a joint federal and state program that, together with the Children's Health Insurance Program (CHIP), provides health coverage to over 77.9 million Americans. It is the single largest source of health coverage in the United States.

To participate in Medicaid, federal law requires states to cover certain groups of individuals. Low-income families, qualified pregnant women and children, and individuals receiving Supplemental Security Income (SSI) are examples of mandatory eligibility groups. States have additional options for coverage and may choose to cover other groups, such as individuals receiving home and community-based services, and children in foster care who are not otherwise eligible.

The Affordable Care Act of 2010 (also known as Obamacare) created the opportunity for states to expand Medicaid to cover nearly all low-income Americans under 65. Eligibility for children was extended to at least 133% of the federal poverty level (FPL) in every state, and states were given the option to extend eligibility to adults with income at or below 133% of the FPL. Most states have chosen to expand coverage to adults, and those that have not yet expanded may choose to do so at any time.

The Affordable Care Act established a new methodology for determining income eligibility for Medicaid, which is based on Modified Adjusted Gross Income (MAGI). MAGI is used to determine financial eligibility for Medicaid, CHIP, and premium tax credits and cost-sharing reductions available through the health insurance marketplace. MAGI considers taxable income and tax filing relationships to determine financial eligibility for Medicaid.

Some individuals are exempt from the MAGI-based income counting rules, including those whose eligibility is based on blindness, disability, or age (65 and older). Eligibility for individuals in these categories is generally determined using the income methodologies of the SSI program administered by the Social Security Administration.

In addition to the above, there are other specific eligibility criteria for Medicaid, depending on the state. For example, in Connecticut, residents who are 65 years of age or older, and/or who are blind or disabled, may qualify for Medicaid coverage under HUSKY C. Income and asset eligibility varies, depending on which part of HUSKY C an individual may qualify for.

High insurance rates

Health Insurance

The cost of health insurance can be a significant burden for households, especially those with low or moderate incomes. In the US, the Marketplace average benchmark premium was $477 in 2024, which may be out of reach for many. While the Affordable Care Act (ACA) provides subsidies to help offset the cost of premiums, not everyone qualifies for this assistance. Eligibility for subsidies is typically determined by household income, with those between 100% and 400% of the federal poverty line qualifying for government subsidies.

Car Insurance

Car insurance rates have been surging in recent years, with a 24% increase in 2023 and a projected 7% rise in 2024. Various factors contribute to high car insurance rates, including individual driver profiles, vehicle type, driving record, age, ZIP code, and credit history. For example, drivers with a DUI typically pay the highest insurance rates, while experienced drivers tend to pay lower rates than young or teen drivers. Additionally, factors beyond an individual's control, such as regional increases in accidents, vehicle theft, and weather events, can also drive up insurance rates.

Strategies to Address High Insurance Rates

There are several strategies that individuals can employ to mitigate the impact of high insurance rates:

• Shop around and compare rates from different insurance providers to find a more affordable option.
• Increase your deductible, which is the amount you pay out of pocket before insurance coverage kicks in. A higher deductible typically results in a lower premium.
• Avoid unnecessary add-ons and only purchase the coverage you need. Drop comprehensive coverage if your car is older or worth less.
• Improve your credit score by paying bills on time and in full, as this can positively impact your insurance rates.
• Take advantage of discounts offered by insurance companies, such as bundling auto insurance with other types of insurance.

Financial assistance

The ACA Health Insurance Marketplace has a search tool to help identify premium savings programs based on state and income level. Additionally, Medicaid and the Children's Health Insurance Program (CHIP) provide financial assistance for low-income individuals and families. As of June 2023, almost 93 million people were enrolled in Medicaid, and 91% of those with federal Marketplace plans received financial assistance.

For those who do not qualify for Medicaid or subsidies, other options are available. Some states have their own health insurance marketplaces, such as Minnesota's MNsure, while others use the federal exchange at HealthCare.gov. Additionally, cities, states, and government-run hospitals often have financial assistance applications to help residents access local, state, and federal programs.

In New York City, for example, NYC Health + Hospitals offers financial assistance programs such as NYC Care or Options for those who are ineligible for or cannot afford health insurance. These programs help residents choose from various health insurance plans and financial assistance options. Similarly, other cities and counties may have their own initiatives to assist residents in accessing affordable health coverage.

It is important to note that even with subsidies or financial assistance, marketplace coverage may still be unaffordable for some. However, seeking financial assistance can help households access health insurance, reducing the risk of incurring high medical debts and ensuring access to necessary healthcare services.

Insurance alternatives

If you can't afford insurance, you could consider the following alternatives:

• Government subsidies: The Affordable Care Act (ACA) provides government subsidies to help low- and middle-income people pay for health insurance. These subsidies are based on your household income and the average cost of health coverage in your area. They can be in the form of premium tax credits or extra savings.
• Short-term health insurance plans: These plans can be more affordable but offer less comprehensive coverage and may not cover pre-existing conditions. They are ideal for bridging gaps between longer-term insurance solutions or for individuals transitioning between jobs or health plans.
• Limited indemnity insurance: This type of insurance provides basic medical coverage for people who may not have access to comprehensive health insurance. It also includes Telehealth services and can start the same day.
• Medicaid: This is a no-cost or low-cost alternative for individuals with limited incomes. Eligibility varies by state but is generally based on income, family size, and specific circumstances.
• Children's Health Insurance Program (CHIP): This program offers coverage options for those who may not qualify for Medicaid but still need affordable solutions.
• Private health insurance options: These plans can include short-term medical insurance for unexpected illnesses and injuries, accident supplements to help with emergency costs, and limited indemnity plans for essential healthcare needs.
• Flex Term Health Insurance: This type of insurance helps protect you from the medical bills that can result from unexpected injuries and sickness. It provides access to healthcare at a price you can afford.
• Financial assistance: Some health systems offer financial assistance in the form of interest-free payment plans or discounts, typically based on your household income.
• Health-share arrangements: These generally carry less expensive premiums than ACA premium subsidies. However, there is no guarantee that medical care will be covered, and many have very limited per-incident and lifetime caps.

Frequently asked questions