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The Pros & Cons of Different Types of Health Insurance

a page with brief pros and cons of different types of health insurance, including short term and Obamacare.

When it comes to health insurance, as of August 2018 and moving forward into 2019, people have more options than ever.

There is a multitude of different types of health insurance with different features to consider when making your decision.

We’ve provided a brief but substantive outline below of some of the pros and cons associated with four of the most popular types of health insurance plans.

Of the four, three are forms of major medical insurance — Short Term Health Insurance, Affordable Care Act insurance (a.k.a. Obamacare), and employer-based health insurance.

All three of these forms of medical insurance are creditable coverage that comply with HIPAA (Health Insurance Portability and Accountability Act of 1996).

The fourth type of health insurance plan is Health Benefit Indemnity insurance.

Health Benefit Indemnity insurance offers financial protection for commonly needed medical services, like hospital and doctor benefits.

What Are the Benefits of Short Term Health Insurance?

Pros

  • Very affordable premiums that can cost substantially less, sometimes even half of what is charged for an Affordable Care Act health plan.
  • Premium savings can be used to purchase other forms of care like dental or vision coverage.
  • Short Term Health Insurance has a broad network of healthcare providers and is accepted at many of the top hospitals and cancer centers in the United States.
  • Year round applications for insurance that are not contingent on the Open Enrollment Period.
  • In an updated ruling, and depending on which state you live in, Short Term Health Insurance plans can be renewable for up to 36 months.

What Are Some of the Limitations of Short Term Health Insurance?

Cons

  • It doesn’t provide coverage of pre-existing medical conditions.
  • Pre-existing conditions and health status are considered part of the application approval process and applicants can be denied coverage.
  • There could be significant coverage restrictions for prescription drugs, if they’re covered at all.
  • Some benefits, like maternity coverage, are not covered and excluded.
  • Enrollees are still subject to Affordable Care Act Shared Responsibility Tax (however, starting in 2019, this penalty will no longer be in place).

Affordable Care Act Insurance (Obamacare)

Pros

  • Mandatory that plans possess 10 essential benefits including mental health and maternity.
  • Some people are able to qualify for out-of-pocket costs and premium subsidies.
  • There is no review of applicant’s health status or pre-existing conditions so applicants won’t be denied coverage based on their health.
  • Broad coverage of many generic, brand name, and specialty drugs.

Cons

  • Paying for health insurance benefits that may not be applicable.
  • Often expensive without premium subsidies.
  • Very high deductibles.
  • Many plans limit enrollees to a narrow network of healthcare providers.
  • In many geographic areas, especially rural counties, Obamacare includes only one insurer.
  • Cannot enroll in a plan outside of the annual Open Enrollment Period without a qualifying life event (e.g. moving to a new region).

Employer-Based Insurance

Pros

  • Often offer different levels of health insurance benefits
  • Lower premiums are available due to significant subsidization from employer.
  • Employer premium subsidies and employee premium payments are not taxable.

Cons

  • Coverage discontinues after the enrollee discontinues work at the employer — Can exercise the COBRA option to continue coverage but it is very expensive (allowed to be up to 102% of premium cost).
  • Health insurance choices limited to selection approved by employer.
  • Small employers often subsidize health insurance at a lower level than large employers.

Health Benefits Indemnity Insurance Plans

Pros

  • Gives a member a cash payment upon a qualifying incident (e.g. accident or critical illness).
  • Affordable premiums.
  • Some plans include additional wellness benefits such as telemedicine so members have access to doctor consultations via phone or online video chat 24/7 at no additional cost.
  • Applications for insurance are not limited to the Open Enrollment Period and can be made any time during the year.
  • Prescription discounts often included.
  • Plans offered by Agile Health Insurance do not require medical underwriting so applications will not be rejected based on health status.

Cons

  • If you have pre-existing conditions, they most likely won’t be covered within the first twelve (12) months of coverage.
  • Benefits are tied to particular incidents, such as a hospital admission or doctor visit.
  • General illnesses like diabetes or conditions such as pregnancy don’t have benefits.
  • Capped medical expense coverage at a rate much lower than major medical plans.
  • Enrollees still subject to Affordable Care Act Shared Responsibility Tax if they do not have Obamacare/Affordable Care Act compliant insurance, but this will end beginning in 2019.
  • Not major medical insurance

If you are considering different types of health insurance to better fit your budget, click here to get a quote now.

Short Term Health Insurance is health insurance outside of the Affordable Care Act ("Obamacare"). Health Benefit Insurance is comprised of fixed indemnity and may include supplemental insurance products and non insurance supplementary health products/services; it is not major medical insurance. Neither Short Term Health Insurance nor Health Benefit Insurance cover pre-existing conditions, they do not include all ten of the minimum essential benefits of Obamacare, and you may be subject to the Affordable Care Act Uninsured Tax (The 2017 Congressional Tax Reform Act does not eliminate this tax until 2019). You can learn more here.