What Is the Cheapest Health Insurance You Can Get?
With individual health insurance premiums averaging about $393 per month in the United States in 2017, many people may be left wondering if affordable health insurance plans exist. Currently, the cheapest health insurance you can get is Medicaid, because it provides free or low-cost coverage to those who qualify.
If you need coverage but don’t meet the qualifications for Medicaid, don’t panic. You may have other options for cheap health insurance. However, take caution before you sign up for any plan, warns health care expert Shelby George, senior vice president of Advisor Services at Manning & Napier.
“The unfortunate reality today is that there’s so much jargon, complexity, and misunderstanding in the health insurance world,” she says. “It’s become just like shopping for a car. Spend the hours necessary to understand what you’re getting for what you’re paying.”
Here are some key points to keep in mind while you search for the right affordable health insurance plan:
What to Look For
Medicaid: It's free or lowest-cost if you qualify
The IRS premium tax credit that can offset or completely cover your policy cost
An inexpensive short-term policy since IRS rules now allow you to keep one for up to one year
What to Watch Out For
Policies that claim to be low-cost but really aren't (the national average health insurance premium is about $393 per month)
Income limits that could disqualify you from Medicaid
The extremely limited coverage provided by short-term policies
The fine print: Insurance policies often have complex rules and many exclusions
Can You Get Health Insurance for Free?
Before you shake your head at the prospect of an unaffordable policy, figure out what you’ll actually pay. For many people, the answer may be nothing if you qualify for the Affordable Care Act’s premium tax credit health insurance subsidy—a tax credit taken in advance to lower the amount you pay for your monthly health insurance premium.
To get the subsidy, you must apply for it and purchase a plan through your state’s health insurance exchange, also known as the Health Insurance Marketplace. The amount you receive will depend on the estimated household income that you put on your Marketplace application. Usually, you must make between 100 and 400 percent of the federal poverty level to qualify.
If you qualify for a subsidy, the Marketplace can send the credit directly to your insurance company, which will apply to your monthly plan premium. In some cases, you may not have to pay out of pocket at all for health care costs. Every state has different rules and different costs, but this bears looking into before you evaluate any other alternatives.
Is a Short-Term Policy for Me?
On February 20, 2018, the Trump administration proposed a plan that would loosen regulations on short-term health insurance. The Obama administration had capped short-term health insurance policies at 90 days, but the new plan would allow short-term policies of up to a year. That hasn’t happened yet, but you can essentially get the same thing by purchasing a three-month policy that will renew for the next nine months.
These policies do not cover you for pre-existing conditions that transpired before you purchased the policy, but if you develop a condition during the term, you’ll have coverage for it for the rest of the year, explains Nate Purpura, vice president of marketing for individual and family products at health insurance company eHealth.
Short-term policies offer limited benefits compared with policies on the Affordable Care Act health insurance marketplaces offered by each state. They don’t include maternity care, substance abuse, and mental health, and can charge more at the outset for people with pre-existing conditions. But, on the whole, they cost less than comprehensive policies without a subsidy. A 35-year-old could purchase a short-term policy with a $5,000 deductible and $500,000 in total available benefits for about $100 a month.
Can I Combine Health Insurance Policies?
Another possibly cost-effective way to insure yourself is with a combo platter of sorts—but it could also become more complicated. You can try mixing traditional indemnity insurance, designed to pay a set daily benefit if you’re hospitalized or in an accident, with a short-term medical plan that can enable you to get to the doctor a few times a year for your more minor ailments.
Manning & Napier's Ms. George noticed consumers jury-rigging these sorts of arrangements on their own, with sometimes troublesome results. In some cases, people had to file every claim with all insurers on the menu so that every possible dollar could be recouped. That became complicated, so recently, the company rolled out combo plans with single insurers to make the claims process easier.
Still, eHealth's Mr. Purpura notes that you have to pay particular attention to two things when choosing health insurance plans: “Is the plan medically underwritten [based on your health], or guaranteed issue?” And second, “What will it cover on a daily basis if you’re hospitalized?”
Always make sure you understand what you’re getting for what you’re paying before choosing a health insurance plan.