The Pros & Cons of Different Types of Health Insurance

Below is a quick outline of some of the major pros and cons associated with term three types of major medical insurance — term health insurance, Affordable Care Act insurance (a.k.a. Obamacare), and employer-provided health insurance.

Term Health Insurance

  • Very affordable premiums that can cost half of what is charged for an Affordable Care Act health plan
  • Premium savings can be used to buy other care such as dental or vision coverage
  • Typically has broad network of healthcare providers and is accepted at many of the top hospitals and cancer centers in the U.S.
  • Applications for insurance can be made any time during the year
  • No coverage of pre-existing medical conditions
  • Health status and pre-existing conditions evaluated as part of application approval process; applicants can be rejected
  • Prescription drugs may be uncovered (or have significantly restricted coverage)
  • Some benefits not covered (e.g. maternity coverage is excluded)
  • Enrollees still subject to Affordable Care Act Shared Responsibility Tax

Affordable Care Act Insurance (Obamacare)

  • Broad array of health insurance benefits
  • Some people qualify for premium & out-of-pocket costs subsidies
  • No review of health status or pre-existing conditions during application process; applicants will not be rejected based on their health
  • Broad coverage of many generic, brand name, and specialty drugs
  • Includes health insurance benefits you may not want
  • Often expensive without premium subsidies
  • Very high deductibles in bronze and catastorphic plans
  • 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 plan outside of annual enrollment period without a qualifying life event (e.g. moving to a new region)

Employer-Based Insurance

  • Often has a broad array of health insurance benefits
  • Lower premiums are available due to significant subsidization from employer
  • Employer premium subsidies not treated as taxable benefits for employee
  • The maximum length of time coverage can be denied for a pre-existing condition is 12 months
  • Coverage discontinues after the enrollee discontinues work at the employer — Can exercise the COBRA option to continue coverage but it is very expensive
  • Health insurance choices limited to selection approved by employer
  • Small employers often subsidize health insurance at a lower level than large employers