Many Obamacare Consumers Pay More Than They Can Afford For Benefits They Won’t Use

On average, a healthy 30-year old will pay almost twice as much for an Obamacare bronze plan as he or she will for a term health insurance plan.1 One factor in the high price of Obamacare is that even entry-level bronze plans must cover ten specific health benefits, from office visits to prenatal care to psychology services. While extensive coverage makes sense for those who will use these services, many consumers are paying high premiums for Obamacare plans that include benefits they neither need nor can afford. For these consumers, a term health insurance plan can be a smart alternative.

Under the Affordable Care Act, Obamacare marketplace plans must cover what are deemed ten essential health benefits. They include:

  • Outpatient care
  • Trips to the emergency room
  • Treatment in the hospital for inpatient care
  • Pre and post-natal care
  • Mental health and substance abuse
  • Prescription drugs
  • Physical and occupational therapy, speech-language pathology, psychiatric rehabilitation
  • Lab tests
  • Preventive services including counseling, screening and vaccines; care for managing a chronic disease
  • Pediatric services including dental care and vision care for kids

These ten essential benefits come at price. The average premium for a 30-year old purchasing a bronze level plan is $243.40 a month.2 For the individual seeking treatment for substance abuse, the expectant mother, or the athlete in need of physical therapy, Obamacare will provide coverage. Similarly, for someone who engages in high-risk activities like rodeo riding or contact sports, where injuries may require extensive therapy, an Obamacare plan may be the expensive but right choice.

But what about the individual who is in good health and doesn’t pursue risky sports or have expensive pre-existing conditions ? These consumers may not always need or desire prenatal, pediatric, mental health, or substance abuse care and an Obamacare plan represents an expensive premium with many insurance benefits that will go unused.

Term health insurance streamlines benefits, focusing on key services—doctor/specialist visits, emergency room services, hospital treatment, and lab tests. Note that these services are among the same benefits required by Obamacare. In addition, term health plans often offer discount cards for prescriptions and dental care. And they maintain deductibles and out-of pocket caps that are within the same range as an Obamacare bronze plan, but for a significantly lower premium. The average monthly premium for a 30-year old male purchasing a term health plan is $109.71, and $138.04 for a 30-year old female, a savings of 49 percent over a bronze plan.3

Because term health insurance is not a marketplace plan, an individual may be subject to the Obamacare tax penalty. However, there are a number of exceptions to the tax that consumers can explore and, even with the tax, term health can be less expensive than Obamacare.

For those in generally good health, the Obamacare benefits comes at a high price, one many cannot afford. For these consumers, a term health plan can provide the health benefits they need at a price they can afford.

  1. Premium Data for 2016 Shows that Term Health Insurance Costs 49 Percent Less than Obamacare for Younger Enrollees, AgileHealthInsurance Report, November 19, 2015. https://www.agilehealthinsurance.com/health-insurance-learning-center/term-insurance-costs-less-for-younger-enrollees
  2. Id.
  3. Id.

AFFORDABLE CARE ACT TAX. Term health insurance is health insurance outside of the Affordable Care Act ("Obamacare"). It does not include all ten of the minimum essential benefits of Obamacare and it does not cover pre-existing conditions. To learn more about the tax, its exemptions, and how to calculate the affordability of term health with the tax, see here. To learn more about the differences between Term health insurance and Obamacare, see here.