Too Expensive? There are Alternatives to Obamacare Health Plans

The new health care exchanges and ACA network aren't totally new. They've been around for a year. For those who have pre-existing conditions or no coverage through their work, they may now have health care coverage that they might not have otherwise, and many work-at-home moms are included in this group.

Many have avoided it, however, because they either have coverage somewhere else, were able to keep an existing non-ACA plan, or were just happy to pay a fine.

This next year, however, things change a bit.  For one, many insurance companies are no longer offering the same plans they were when certain non-ACA plans were allowed to remain. For these insured members, they will need to pick a new plan by January 1st. (Note that plans have to offer an ACA-compliant plan that is similar in coverage, but this usually means the price goes up dramatically.)

Second, the fine for not being insured goes up in 2015.  While you may have been comfy paying the 2014 fine of 1% of your yearly household income (above the $10,000 per individual tax filing threshold) or $95 per person max -- whichever is higher, things get a bit steeper in 2015.  Starting in January, if you don't have insurance for all but 3 months out of the year, you can expect to pay:

"2% of your yearly household income. (Only the amount of income above the tax filing threshold, about $10,000 for an individual, is used to calculate the penalty.) The maximum penalty is the national average premium for a bronze plan. $325 per person for the year ($162.50 per child under 18). The maximum penalty per family using this method is $975."

And it only gets more expensive after that.  2016 and beyond carries a fine of 2.5% of income or $695 per person (and after that it's adjusted for inflation.)

So, what can a person do if they visit the Healthcare.gov website and find that the prices for plans are just too high? Even with a subsidy, many are finding that it's double or triple what they pay for non-ACA plans.  And for others, they are moving to a much higher deductible, a lower covered amount, or both.

There are 2 alternatives to the plan that some are choosing, outlined here. (Please consult with a tax or finance professional if you have questions.  This is not professional advice.) 

1. Join a cost sharing network.  Under the rules of the ACA, groups like MediShare and Samaritan Ministries are not subject to some of the coverage rules, and members are not subject to fines for not joining the traditional exchange.  You are usually subject to lifestyle stipulations for share networks, including those mentioned (which are for Christians only.)  Coverage premiums are often more affordable than the exchange without a subsidy, but pre-existing conditions are usually not covered.

2. Get a short-term plan.  For a plan that meets your basic needs without extras (such as coverage for pre-existing conditions or maternity care), you can still get a short-term plan through sites like ehealthinsurance.com.  These are plans that usually cover you for no more than 10-11 months, rates are low, and deductibles can be low, as well.  Members who choose this option are usually healthy adults who want coverage in case of an emergency, but don't qualify for subsidies under the ACA -- or choose not to take them.  Short term plans do not exempt you from the fines, however. Members who go this route usually do so because the cost of fines, plus their monthly premiums, plus their deductible are still much less with a short term plan than anything currently offered on the exchange.

Even if you decide you can't go with either of these two options (perhaps due to pre-existing conditions), it's important to remember that you have some flexibility when choosing ACA plans to help offset costs.

• If you can get a subsidy, and want to, it can reduce monthly premiums.  
• You can also choose to go with a higher premium and lower deductible, with the plan to deduct premiums for your self-employed business (this is for sole proprietors only). 
• And HSA's are still on the table for savings on plans with high cost sharing.

Regardless of what you choose, open enrollment starts soon. Now is the time to review your taxes for the year, see where your earnings sit, and put a plan in place to save you the most money.

What will you do in 2016?  Is an ACA plan in your future?