AgileHealthInsurance Report | 09-16-2015

Term Insurance Less than Half the Cost of Obamacare for Consumers in the Medicaid Gap



In addition to mandating health insurance coverage, the Affordable Care Act gave health insurance premium subsidies to people with household incomes between 100 percent and 400 percent of the federal poverty level ($11,770 - $47,080 for an individual in 2016). The Affordable Care Act also expanded Medicaid to cover people with household incomes up to 138 percent of the federal poverty level. However, in 2012 the Supreme Court ruled that adopting the Affordable Care Act’s Medicaid expansion is optional, so states do not have to expand Medicaid.1

Currently 30 states and the District of Columbia have adopted the Medicaid expansion, but 20 states have not.2 Utah is one of the states that have not yet expanded Medicaid, but the governor and legislative leaders recently reached a deal to implement the Medicaid expansion.3

In the states not expanding Medicaid, there are about 6.4 million consumers4 that would qualify for Medicaid if their states had implemented the expansion. Consumers in these states with incomes that are too high to qualify for Medicaid but less than the federal poverty level fall into a “Medicaid gap” where they are ineligible for both Medicaid and Obamacare subsidies.5

For consumers in the Medicaid gap, term insurance is a much less expensive option than Obamacare, even though term insurance is not considered to be a qualified health plan under the Affordable Care Act. People that do not have a qualified health plan may have to pay an Obamacare uninsured tax. However, people in the Medicaid gap qualify for an exemption so they do not have to pay any Obamacare uninsured tax.

AgileHealthInsurance.com determined how much a consumer in the Medicaid gap would save by enrolling in term insurance rather than Obamacare. Premium costs were compared for 30-, 40-, and 50-year-old non-smokers in the most populous cities in each state not adopting the Medicaid expansion.

In each city, the least expensive Obamacare bronze plan6 was compared to the least expensive term insurance plan with a deductible no higher than $5,000, an out-of-pocket maximum no higher than $6,000, and a lifetime maximum of at least $1 million. In 2016, the highest possible out-of-pocket maximum for an individual Obamacare plan is $6,850. The average deductible for Obamacare bronze plans is $5,731.7

Across all ages and cities that were examined, the least expensive term insurance plan was 21 percent to 80 percent less expensive than the least expensive available Obamacare bronze plan. In dollars, the cost difference ranged from $59 to $295 per month.

On average, a 30-year-old man in the Medicaid gap would pay 73 percent less for term insurance than for Obamacare. A 30-year-old woman would pay 72 percent less for term insurance than for Obamacare. The greatest savings were in Cheyenne, WY, where a 30-year-old man and woman would save 80 percent and 79 percent respectively by choosing term insurance over an Obamacare plan.

A 40-year-old man in the Medicaid gap would save 69 percent buying term insurance, while a 40-year-old woman would save 56 percent. Sioux Falls, SD and Cheyenne had the greatest savings for 40-year-old women and men respectively, 72 percent and 77 percent. For 50-year-old men and women, term insurance was approximately 47 percent less expensive than the least expensive Obamacare bronze plan on average. However, in Sioux Falls, savings for 50-year-old men and women were 69 percent.

Percentage Savings for Medicaid Gap Consumers Buying Term Insurance Instead of Obamacare*
StateCityMan Age 30Man Age 40Man Age 50Woman Age 30Woman Age 40Woman Age 50

AL

Birmingham

71.32%

67.79%

38.68%

70.50%

50.32%

39.08%

FL

Jacksonville

70.07%

66.39%

36.00%

69.21%

48.15%

36.41%

GA

Atlanta

75.91%

69.32%

64.04%

73.15%

67.22%

64.19%

ID

Boise

73.26%

70.07%

43.42%

72.51%

54.01%

43.79%

KS

Wichita

75.05%

68.22%

62.75%

72.19%

66.05%

62.91%

LA

New Orleans

73.21%

69.98%

43.09%

72.45%

53.80%

43.46%

ME

Portland

74.47%

68.33%

63.78%

71.80%

66.30%

63.92%

MO

Kansas City

77.89%

74.72%

49.84%

77.21%

60.08%

50.17%

MS

Jackson

76.09%

73.23%

49.41%

75.42%

58.88%

49.74%

NC

Charlotte

77.94%

75.24%

52.94%

77.31%

61.85%

53.25%

NE

Omaha

73.30%

70.07%

43.22%

72.55%

53.93%

43.59%

OK

Oklahoma City

68.18%

64.36%

32.52%

67.28%

45.20%

32.97%

SC

Columbia

69.46%

65.68%

34.53%

68.58%

47.00%

34.96%

SD

Sioux Falls

79.39%

73.81%

69.37%

77.05%

72.03%

69.49%

TN

Memphis

68.20%

64.38%

32.56%

67.30%

45.22%

33.00%

TX

Houston

63.19%

58.63%

21.07%

62.13%

36.11%

21.59%

VA

Virginia Beach

74.65%

71.58%

46.07%

73.93%

56.24%

46.42%

WY

Cheyenne

79.62%

77.09%

56.22%

79.04%

64.58%

56.51%

Average

73.40%

69.38%

46.64%

72.20%

55.94%

46.97%

Minimum

63.19%

58.63%

21.07%

62.13%

36.11%

21.59%

Maximum

79.62%

77.09%

69.37%

79.04%

72.03%

69.49%

*Medicaid gap consumers do not have to pay the Obamacare uninsured tax

In dollars per month, 40-year-old men in the Medicaid gap had higher savings than 30- and 50-year-old men and women, but 40-year-old women had lower savings. A 40-year-old woman in the Medicaid gap would save an average of $136 per month by choosing the least expensive term insurance plan, while a 40-year-old man would save $168.

Average savings per month were $158 for 30-year-old men and $155 for 30-year-old women in the Medicaid gap. For 50-year-old men and women, buying term insurance over Obamacare saved $160 and $161 per month respectively. The highest dollar savings for all ages and genders were in Cheyenne. For 40-year-old men and 50-year-old women and men in Cheyenne, savings were over $280 per month with term insurance.

Monthly Savings for Medicaid Gap Consumers Buying Term Insurance Instead of Obamacare*
StateCityMan Age 30Man Age 40Man Age 50Woman Age 30Woman Age 40Woman Age 50

AL

Birmingham

$154.77

$165.65

$132.07

$152.99

$122.95

$133.44

FL

Jacksonville

$145.96

$155.71

$117.99

$144.17

$112.93

$119.36

GA

Atlanta

$149.12

$153.34

$197.97

$143.71

$148.69

$198.42

ID

Boise

$145.67

$156.87

$135.86

$144.17

$120.93

$137.01

KS

Wichita

$141.95

$145.31

$186.79

$136.55

$140.68

$187.26

LA

New Orleans

$153.61

$165.32

$142.27

$152.01

$127.11

$143.50

ME

Portland

$159.68

$164.98

$215.19

$153.96

$160.07

$215.67

MO

Kansas City

$153.11

$165.38

$154.15

$151.76

$132.97

$155.19

MS

Jackson

$169.21

$183.38

$172.91

$167.71

$147.44

$174.06

NC

Charlotte

$211.23

$229.63

$225.79

$209.53

$188.75

$227.11

NE

Omaha

$157.64

$169.68

$146.25

$156.01

$130.58

$147.50

OK

Oklahoma City

$117.53

$124.92

$88.23

$115.98

$87.73

$89.43

SC

Columbia

$148.25

$157.85

$115.96

$146.38

$112.95

$117.40

SD

Sioux Falls

$171.56

$179.61

$235.88

$166.51

$175.27

$236.31

TN

Memphis

$118.00

$125.42

$88.64

$116.44

$88.10

$89.84

TX

Houston

$112.17

$117.19

$58.86

$110.29

$72.17

$60.31

VA

Virginia Beach

$169.35

$182.85

$164.46

$167.72

$143.66

$165.72

WY

Cheyenne

$264.00

$287.80

$293.33

$262.06

$241.12

$294.83

Average

$157.93

$168.38

$159.59

$155.44

$136.34

$160.69

Minimum

$112.17

$117.19

$58.86

$110.29

$72.17

$60.31

Maximum

$264.00

$287.80

$293.33

$262.06

$241.12

$294.83

*Medicaid gap consumers do not have to pay the Obamacare uninsured tax

Conclusion

Term health insurance is substantially less expensive than Obamacare for people in the Medicaid gap. People in the Medicaid gap do not have to pay the Obamacare uninsured tax because they have an exemption, and premiums for the least expensive term insurance plans were up to 80 percent less than the least expensive Obamacare premiums.

Consumers in the Medicaid gap do not have to pay the Obamacare uninsured tax, so they can choose whether to buy health insurance. Research shows that nearly 4 million people in the Medicaid gap are going without coverage.8 For people in the Medicaid gap that want to buy health insurance, choosing term insurance instead of Obamacare can save them thousands of dollars in premiums.

Methodology

All term health insurance plans included in this analysis were individual plans with deductibles no higher than $5,000, maximum out-of-pocket limits no higher than $6,000, and lifetime maximums of at least $1 million. Plans in the analysis included HCC Advantage and HCC Flexible from HCC Medical Insurance Services and Companion Protect from Companion Life Insurance Company. Premium quotes for term insurance plans were obtained from AgileHealthInsurance.com’s database of premium rates.

This analysis included 2016 Obamacare bronze plans that were sold on government marketplaces. Off-exchange Obamacare plans were not included in the analysis, nor were catastrophic Obamacare plans. Premium quotes for Obamacare bronze plans were obtained from the QHP landscape files for the individual federal exchange, as well as the Idaho state health insurance marketplace.

Premium quotes were obtained in November 2015 for women and men age 30, 40, and 50 that do not smoke. The study assumed that applicants seeking quotes for term health insurance would qualify for underwriting from the carrier. The following counties and zip codes were used to obtain premium quotes for the most populous city in each Medicaid gap state:

StateCityZip CodeCounty

AL

Birmingham

35210

Jefferson

FL

Jacksonville

32210

Duval

GA

Atlanta

30310

Fulton

ID

Boise

83711

Ada

KS

Wichita

67210

Sedgwick

LA

New Orleans

70130

Orleans

ME

Portland

04109

Cumberland

MO

Kansas City

64110

Jackson

MS

Jackson

39210

Hinds

NC

Charlotte

28210

Mecklenburg

NE

Omaha

68110

Douglas

OK

Oklahoma City

73110

Oklahoma

SC

Columbia

29210

Richland

SD

Sioux Falls

57110

Minnehaha

TN

Memphis

38108

Shelby

TX

Houston

77010

Harris

VA

Virginia Beach

23457

Virginia Beach

WY

Cheyenne

82007

Laramie

  1. MaryBeth Musumeci. A Guide to the Supreme Court’s Decision on the ACA’s Medicaid Expansion. August 2012. Kaiser Family Foundation. https://kaiserfamilyfoundation.files.wordpress.com/2013/01/8347.pdf

  2. A 50-State Look at the Medicaid Expansion. July 2015. Families USA. http://familiesusa.org/product/50-state-look-medicaid-expansion

  3. Robert Gehrke. Breakthrough – Utah GOP leaders reach a deal on Medicaid expansion. July 17, 2015. The Salt Lake Tribune. http://www.sltrib.com/home/2742096-155/breakthrough-utah-gop-leaders-reach

  4. A 50-State Look at the Medicaid Expansion.

  5. The maximum incomes for adult Medicaid eligibility in the states that did not implement the Medicaid expansion range from 0 percent to 100 percent of the federal poverty level. Wisconsin is the only state not expanding Medicaid that has no Medicaid gap since adults with income up to the federal poverty level are eligible for Medicaid in Wisconsin. State Medicaid and CHIP Income Eligibility Standards. October 1, 2014. http://www.medicaid.gov/medicaid-chip-program-information/program-information/downloads/medicaid-and-chip-eligibility-levels-table.pdf

  6. Obamacare bronze plans pay 60% of costs for covered medical services for a standard enrollee population. They are the least expensive type of Obamacare metal plans.

  7. Kev Coleman, Jesse Geneson. 2016 Affordable Care Act Market Brings Higher Average Premiums for Unsubsidized. November 2, 2015. HealthPocket. https://www.healthpocket.com/healthcare-research/infostat/2016-obamacare-premiums-deductibles

  8. Garfield, et al. The Coverage Gap: Uninsured Poor Adults in States that do not Expand Medicaid. April 17, 2015. Kaiser Family Foundation. http://kff.org/health-reform/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-that-do-not-expand-medicaid-an-update/

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.