Laid Off and Need Coverage? How To Avoid Predatory Health Insurance Plans

Not all health insurance plans are created equal. While certain plans may call themselves health insurance, some may not have the regulations and consumer protections mandated by the Affordable Care Act (ACA), such as covering pre-existing conditions. And due to the COVID-19/coronavirus pandemic and public health crisis in the United States, it’s more important than ever to have comprehensive health coverage. If you’re seeking health coverage and looking for affordable coverage, be sure to know what you’re buying. 

Here are the basics: short-term health insurance, health-sharing ministries, and indemnity plans lack consumer protections and often don’t cover things like pre-existing conditions, maternity care, and more. You’ll be safe if you stick with Marketplace insurance (aka Obamacare or Affordable Care Act insurance), COBRA, Medicaid, CHIP, or Medicare. You can see available Marketplace plans here or call (872) 228-2549 for help enrolling. 

Here’s what to know and what to watch out for. 

You can also grab our comprehensive guide to all of your health insurance options after getting laid off to refer back to later.

Predatory Plans 101

The first thing it’s important to be aware of is that there are several names for health insurance you get through the government’s health insurance Marketplace. This can be called Marketplace insurance, Affordable Care Act insurance, or most commonly Obamacare. All of these words refer to the same type of insurance.

A quick Internet search for “affordable health insurance” will hopefully take you straight to the Marketplace or one of its partner sites like HealthSherpa, where you can compare, shop, and enroll in an ACA-compliant health plan. But it may also turn up a number of options ranging from short-term health plans to health insurance ministries. And these plans have nothing to do with the comprehensive coverage the ACA guarantees.

To see ACA plans and prices available to you, and to see if you’re eligible for subsidies, enter your zip code below.

Short-term health insurance

Short-term health insurance is a separate category of health insurance, completely unrelated to the plans offered by an employer or through the Marketplace. It’s important to remember that this isn’t a kind of insurance that is ACA-compliant. Short-term health insurance is not and cannot be sold through the Marketplace. 

Some people mistakenly believe that short-term health insurance is the only way to get temporary health insurance, and that Obamacare plans must be held for a year or more. This is not true. You can enroll in an Obamacare health insurance plan for just a month between jobs, or for many years.

Short-term plans cover fewer things than Obamacare plans. The ACA mandates that all Marketplace plans -- like the kinds available on HealthSherpa -- cover Essential Health Benefits (EHBs). These EHBs include pre-existing health conditions, maternity care, emergency services, mental health care, prescription drug coverage, and more. Conversely, short-term plans often cover unexpected illness or injury, some inpatient and outpatient hospital services, emergency room visits, and some testing related to preventive care. But they usually do not cover many of the things any Obamacare plan would -- like maternity care, mental health, preventive care, prescription drugs, or any pre-existing conditions. And perhaps most importantly, short-term plans may refuse to cover you in the future based on the medical care you’ve used under the plan—meaning, if you use a lot of care when you’re on a short-term plan, they may drop you from that plan and refuse to insure you again in the future. Grab our free guide on Essential Health Benefits to learn more and to refer back to later.

Health-Sharing Ministries

A healthcare-sharing ministry lets a group of people make payments to help cover one another’s medical bills. Most often, these people are of a shared religious faith, but you do not necessarily have to be of that faith to join. These programs do not technically count as health insurance, and do not meet the standards of minimum essential coverage as outlined by the Affordable Care Act, which was passed by Congress in 2010. 

They do not offer the consumer protections that Marketplace plans offer. They usually don’t cover pre-existing conditions and often have lifetime and annual maximums for coverage. And healthcare-sharing ministries are not regulated by state health insurance laws and regulations like a real health insurance plan would be. Healthcare-sharing ministries are, however, 501(c)3s and thus are regulated by the IRS.

Because healthcare-sharing ministries are faith-based non-profits, they can require members to adhere to the religious or moral standards the ministry establishes. Your coverage may also be dependent on continuing to adhere to these standards—for example, you could be excluded from the ministry if you are unmarried and have a child, or if you are gay. Likewise, the ministry may not cover certain medical expenses if they do not conform to the ministry’s moral standards, such as birth control for extramarital sex or maternity care for single mothers. 

Indemnity Plans

An indemnity health plan is also known as a fee-for-service plan. Unlike a traditional health insurance plan, including ACA-compliant plans available on the Marketplace and HealthSherpa, there are no provider networks. Instead, enrollees choose their own providers and hospitals. And these providers then set their own negotiated rates, which your plan then covers a predetermined percentages of. These rates and percentages are determined by service, and then the enrollee is responsible for paying the remainder. 

While indemnity plans may seem like a good option for someone who wants complete freedom in selecting their providers, it can also lead to mounting -- and often insurmountable -- medical bills. 

Most indemnity plans are not compliant with the Affordable Care Act, and thus do not include any kinds of consumer protections. This also means they do not provide no-cost coverage for given kinds of preventative health care services. Which can mean more bills right up front for anyone seeking to maintain their health. 

Better Health Insurance Options

Marketplace health insurance (aka Affordable Care Act insurance or Obamacare)

All Marketplace health insurance plans cover the following:

• Ordinary medical services outside of a hospital
• Emergency services
• Hospital services
• Pregnancy, maternity, and newborn care
• Mental health services, including substance abuse treatment
• Prescription drugs
• Services and devices for people with disabilities
• Laboratory services
• Birth control coverage
• Preventive care and wellness services, including chronic disease management
• Pediatric services, including dental and vision care

Many people are concerned that Marketplace plans may be too expensive for them. However, they can be much cheaper than a short-term health insurance plan or COBRA if you qualify for subsidies—and 94% of HealthSherpa’s users qualified for a subsidy this past Open Enrollment Period. Most consumers on HealthSherpa pay less than $50/month for ACA-compliant health coverage. 

Short-term health insurance plans, indemnity plans, health-sharing ministries, and COBRA plans all aren’t eligible for any kind of subsidies as they are not sold on the Marketplace. 

And while normally you can only enroll in a Marketplace plan during the annual Open Enrollment Period (OEP), losing your job is a Qualifying Life Event that will make you eligible for a Special Enrollment Period. Typically, Special Enrollment Periods last for 60 days, which means you will need to enroll in a Marketplace plan quickly after you lose your job and coverage. If you miss the Special Enrollment Period after your Qualifying Life Event, you will have to wait until the next Open Enrollment Period to get health insurance (November 1 to January 15 in most states). Grab our free guide on how to apply for Marketplace insurance to learn more.

COBRA

If you’re about to lose your employer-based health benefits under certain circumstances, COBRA allows you to continue being on your employer’s group health plan at your own expense. It also covers your spouse and any dependent children on your health plan. COBRA is often high-quality health insurance—it’s the same insurance plan with the same insurance company you had under your employer—it can be very expensive. The cost of COBRA insurance depends on the health insurance plan you had under your employer, as you will now be responsible for paying the pull monthly premiums for that plan without any employer contribution, plus a 2% COBRA administration fee on top of that. 

COBRA costs an average of $599 per month. An Obamacare plan of similar quality costs $462 per month—but with the government subsidies available, the average cost of an Obamacare plan on HealthSherpa is only $48 per month. If you’re deciding between COBRA and a Marketplace plan, check if you’d  be eligible for any subsidies and compare the health care costs to make a decision.

Grab our guide to COBRA to refer back to later. 

Medicaid

You can also use HealthSherpa and the Marketplace to find out if you qualify for Medicaid or CHIP, which are both high-quality and low-cost health care options. This part of our health care system is intended to help low-income Americans.

Medicaid is a program jointly funded by the federal government and the states to provide health insurance coverage to low-income Americans. Medicaid eligibility is determined based on income level, and adults, children, pregnant women, the elderly and people with disabilities all can become Medicaid recipients. Medicaid is comprehensive, high-quality, and robust health care coverage that is very affordable for those with limited resources.

Each state sets up and administers their own Medicaid program and determines the scope of services provided based on a broad set of federal guidelines. Federal law requires that all Medicaid programs cover a certain set of “mandatory benefits.” These benefits include inpatient and outpatient hospital services, nursing facility services, home health services, physician services, and laboratory and x-ray services. Also mandatory are family planning services, nurse midwife services, certified pediatric and family nurse practitioner services, freestanding birth center services (when already licensed and recognized by the state), and smoking cessation counseling for pregnant women. Medicaid also covers what’s known as EPSDT: Early and Periodic Screening, Diagnostic, and Treatment Services.

In 37 states and the District of Columbia, anyone making less than 138% of the Federal Poverty Level can qualify for Medicaid. That's $17,609 for an individual and $36,156 for a family of four. In the 14 states that have chosen not to expand their Medicaid programs, adults usually do not qualify for Medicaid unless they meet additional conditions. You can grab our free guide to Medicaid here to learn more. 

See if you’re eligible for Medicaid by entering your information below.

Children’s Health Insurance Program (CHIP)

CHIP, or the Children’s Health Insurance Program, provides low-cost health insurance to children up to age 19 whose families earn too much to qualify for Medicaid in their state, but do not earn enough to be able to afford private insurance. In some places, CHIP also covers pregnant women. Every state runs and offers a CHIP insurance program for children.

Any child up to age 19 who is uninsured but whose family earns too much to qualify for Medicaid might be eligible for CHIP. Each state has different guidelines in terms of income eligibility and eligibility standards, generally. But if you or one of your children is under 19 and uninsured and health insurance coverage seems too expensive to afford, you should go ahead and apply.

46 states plus the District of Columbia make CHIP eligible for children whose families earn up to or above 200% of the Federal Poverty Level, or $52,400 for a family of four. 24 of these states offer CHIP eligibility to children in families who earn 250% or more of the Federal Poverty Level, or $65,500 for a family of four.

If you’re interested in enrolling in a comprehensive health insurance plan from the Marketplace -- including seeing if you qualify for Medicaid or CHIP -- that includes all of the consumer protections and essential services laid out in the Affordable Care Act, then you can shop for plans here, or call us at (872) 228-2549 to see available plans in your area. 

Medicare

Medicare is the health insurance program for people aged 65 or older. Specific groups of people younger than age 65 can qualify for Medicare, too, including those with disabilities and those who have permanent kidney failure.

You can learn more about Medicare here.