I Can’t Afford Health Insurance and Don't Qualify for Medicaid
If you can't afford insurance or get Medicaid, you might qualify for government help to get cheaper rates.
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You can qualify for hundreds of dollars in automatic monthly savings, called subsidies, if you earn a low income and buy health insurance through HealthCare.gov or your state health exchange.
The average government subsidy is $536 per month. If you aren't eligible for health exchange subsidies, you can save on your monthly rate with a cheaper plan type, such as a high-deductible or catastrophic health plan.
Affordable Care Act (ACA) subsidies
The best way to get cheap health insurance rates is to take advantage of Affordable Care Act (ACA) subsidies.
Affordable Care Act subsidies help people with a low income save on their monthly health insurance rates.
You can qualify for an ACA subsidy if you buy insurance through HealthCare.gov or your state's health exchange and earn between roughly $21,000 and $60,000 per year for a single person or $43,000 to $125,000 for a family of four or if your health insurance rates are more than 8.5% of your annual income.
As you go through the buying process, you'll be asked for your income and household size. If you meet the subsidy qualifications, you'll have the choice of automatically applying your subsidies to your monthly health insurance rate, or you can choose to get your subsidies at the end of the year as a tax credit.
Affordable Care Act (ACA), also called Obamacare, subsidies can only be used for regular health insurance plans from HealthCare.gov or your state's health exchange. You can't use an ACA subsidy to help pay for workplace coverage, Medicaid, catastrophic plans or short-term health insurance.
Cost-sharing reductions (CSRs)
Cost-sharing reductions help you pay for the costs you're responsible for when you visit the doctor.
For example, cost-sharing reductions could help with what you owe when you have surgery or get a prescription filled. Cost-sharing reductions make accessing care more affordable by lowering your medical bill.
You need to earn between about $15,000 and $37,500 as an individual or roughly $31,000 and $78,000 for a family of four to be eligible for cost-sharing reductions. In addition, you can only qualify for cost-sharing reductions if you have a Silver health plan.
High-deductible plan options
High-deductible health plans are much cheaper than normal medical insurance. However, you'll have to pay thousands of dollars out of pocket before your insurance kicks in for most services.
A deductible is the money you need to pay before your insurance starts working. Most health plans have deductibles that range from a few hundred to a few thousand dollars.
By law, a high-deductible health plan must have a minimum deductible of $1,600 for an individual plan or $3,200 for a family plan. However, many plans have significantly higher deductibles.
If you have a high deductible health plan, you can contribute tax-free income to a special account that can only be used for medical costs, called a health savings account (HSA).
Other health insurance options
If you don't qualify for ACA subsidies, you may be able to take advantage of other cheap alternatives. These plans typically cost less than regular health insurance. However, they often have less coverage, higher deductibles or other drawbacks.
It's a good idea to weigh all the costs you'll have to pay with a plan before you buy. That's because a plan with a low monthly rate may leave you with thousands of dollars in costs that you're responsible for when you visit the doctor.
Catastrophic health plans offer bare-bones coverage for a very cheap monthly rate. You have to pay a $9,450 deductible before a catastrophic health plan will start covering most non-preventive services.
That makes a catastrophic health plan a poor choice for most people. However, catastrophic insurance might make sense if you're in good health and you have enough money in savings to easily cover your deductible.
You can only buy a catastrophic health plan if you're under 30 or you qualify for a special hardship exemption.
Short-term health insurance plans typically cost less than regular health insurance.
You can buy a short-term health plan with up to $1 million in coverage per year for less than $200 per month. That's much cheaper than a Silver health plan which costs $584 per month on average.
Keep in mind that short-term health plans often have worse coverage compared to regular health insurance because they don't have to cover the same essential services as a marketplace plan. For example, short-term health plans might not cover maternity or psychiatric care.
Short-term plans can also reject you or charge you a higher rate based on a pre-existing condition and many plans cap your annual benefits.
Short-term health plans may have very high deductibles compared to ACA plans. It's usually a better idea to buy a plan through HealthCare.gov or your state's health exchange when possible.
However, short-term health insurance can make sense if you need temporary coverage and you have a limited budget.
You may be eligible for Medicare if you have permanent kidney failure (end-stage renal disease), Lou Gehrig's disease (ALS) or if you've been on Social Security Disability Insurance (SSDI) for at least two years.
Otherwise, you'll automatically qualify for Medicare when you turn 65.
You can stay on your parent's health insurance until age 26. In addition, some states let you keep your parent's coverage into your late twenties or early thirties.
Currently eight states let you stay on your parent's health insurance after you turn 26. A further 14 states let you keep your parent's coverage past 26 if you have a disability that qualifies you.
A basic health plan bridges the gap between Medicaid and a subsidized ACA health plan.
Basic health plans offer roughly the same coverage that you get under Medicaid. You can enroll in a basic health plan if you're no longer eligible for Medicaid and you earn up to about $30,000 for a single person or $62,000 for a family of four. In New York, the limit is higher at $37,650 for an individual and $78,000 for a family of four.
Although all states can offer a basic health plan option, they're only available in Oregon, New York and Minnesota. Massachusetts offers a similar program called ConnectCare. You can qualify for extra subsidies through ConnectCare if you earn up to around $75,000 as a single person or about $156,000 for a family of four.
Tips for saving on health insurance
You can save on your monthly health insurance rates by comparing quotes from different companies, increasing your deductible and choosing an HMO plan. When shopping for a regular health insurance plan, there are several steps you can take to lower your monthly rate. These tips can save you hundreds or even thousands of dollars per year.
Compare health insurance quotes
You can save hundreds of dollars or more per month without sacrificing coverage by switching to a cheaper plan.
LA Care has the cheapest Silver health plan nationwide. It costs $345 per month on average . In contrast, the most expensive Silver plan, sold by EmblemHealth, costs $1,412 per month. That's a difference of $1,067 per month for the same level of coverage.
Keep in mind that plan availability and cost depend on where you live. It's also important to factor in customer satisfaction when choosing your health insurance company.
With that said, companies that charge higher rates don't always offer better service. For example, Kaiser Permanente has both cheap average rates and high levels of customer satisfaction.
Increase your deductible
You can usually decrease your monthly rate by increasing the amount you pay before your insurance kicks in, called a deductible. For example, you could save on your monthly rate by increasing your health insurance deductible from $500 to $1,000.
Increasing your deductible isn't the same as buying a high-deductible health plan (HDHP). Remember, HDHP's have to meet certain guidelines, such as having a minimum deductible of $1,600 for a single person or $3,200 for a family.
It's important to have enough money in your savings account to easily cover your plan's deductible. That's because your insurance won't cover many important services until you've met your deductible.
Switch from a PPO to an HMO
Switching from a PPO to an HMO can save you hundreds of dollars per year or more.
Consider enrolling in an HMO if you don't mind trading flexibility for cheaper monthly rates. The average 40-year-old will pay $510 per month for an HMO plan, on average, compared to $598 per month for a PPO plan. That's a savings of $81 per month on average.
HMOs
PPOs
HMOs (health maintenance organizations) restrict you to a network of doctors. Additionally, you need to get a referral from your primary care doctor to see a specialist.
HMOs
HMOs (health maintenance organizations) restrict you to a network of doctors. Additionally, you need to get a referral from your primary care doctor to see a specialist.
PPOs
PPOs (preferred providers organizations) offer more freedom compared to an HMO because they don't require a referral to see a specialist. Also, you can see out-of-network doctors with a PPO, although you'll pay more to do so.
Frequently asked questions
What are my options if I can't afford health insurance and don't qualify for Medicaid?
Qualifying for financial help from the government, called Premium tax credits (ACA subsidies), is the best way to get cheap health insurance if you don't qualify for Medicaid.
You can qualify for premium tax credits if you earn between about $21,000 and $60,000 per year for a single person or $43,000 to $125,000 for a family of four (138% to 400% of the Federal Poverty Level) or if your health insurance costs more than 8.5% of your annual income.
What should I do if my employer offers health insurance but I can't afford it?
You can find cheap health plans through HealthCare.gov or your state health exchange if you're struggling to afford coverage through your workplace. The government offers automatic discounts, called insurance subsidies, to people who earn a low income and buy their health insurance through their state marketplace or HealthCare.gov.
What is the lowest income to qualify for Medicaid?
You can qualify for Medicaid if you earn about $21,000 as a single person or less or $43,056 for a family of four or less. These income limits are slightly higher in Hawaii and Alaska.
Sources
Federal Poverty Guidelines were taken from the U.S. Department of Health and Human Services (HHS). Information related to Medicaid eligibility requirements and Affordable Care Act subsidies came from the Kaiser Family Foundation (KFF) and Medicaid.gov.
Health insurance rate data was taken from public use files (PUF) made available through the Centers for Medicare & Medicaid Services (CMS) government website and state marketplaces.
Editorial note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.