The fact is that major medical health insurance – the kind that meets your coverage requirements under the Obamacare law – is too expensive for many Americans.
The fact is that major medical health insurance – the kind that meets your coverage requirements under the Obamacare law – is too expensive for many Americans. Or it may be unavailable when you need it, because you can only buy major medical coverage during the annual open enrollment period or when you experience a qualifying life event.
So, what can you do if you need protection from unexpected medical bills but can’t afford major medical insurance or don’t qualify?
Luckily, there’s a new coverage alternative for people in this situation. We call it packaged medical insurance. It won’t meet your coverage requirements under Obamacare, but it can offer you a broad range of valuable protections against unforeseen medical expenses. (3 Steps to Understanding Packaged Medical Insurance)
What is packaged medical insurance?
Packaged medical insurance is a package that contains several distinct lines of coverage and, in some cases, additional non-insurance products that can help you save money on medical care. For example, packaged medical insurance may include several – or all – of the following:
- Short-term health insurance – Short-term health insurance provides you with limited coverage for unexpected medical needs for a limited period of time (usually no more than three months). On average it’s significantly more affordable than major medical coverage, though it typically won’t cover many things like preventive care, coverage for pre-existing conditions, maternity care, and other items covered by Obamacare.
- Accident insurance – Accident insurance is designed to provide you with a specific pay-out in case you suffer a covered accident or injury. Generally, the pay-out is made to you rather than to your medical provider so you can use the funds for whatever you need, even things like rent or mortgage that are not directly related to the covered accident.
- Critical illness insurance – Critical illness insurance pays you when you are diagnosed with a covered serious medical condition. As with accident insurance, the pay-out is generally made to you rather than to the doctor or hospital. Also like accident insurance, you can use the money to pay for medical bills or for other things, like your rent or mortgage while you’re unable to work.
- Gap insurance – Gap insurance is similar to accident and critical illness coverage. Gap insurance plans often combine the benefits of both of these products into one. Again, the pay-out is typically made to you rather than to your medical provider.
- Indemnity medical insurance –You can broadly think of an indemnity medical insurance plan as hospital reimbursement insurance, though it may provide coverage for non-hospital charges too.
- Dental insurance – Many people get dental insurance through their employers but you can also purchase it as part of a packaged medical insurance product. Dental insurance provides limited coverage for specific benefits that may renew on an annual or bi-annual basis.
- Vision insurance – Like dental insurance, vision insurance provides you with limited coverage for annual vision check-ups and for vision hardware, such as glasses, frames, or contact lenses.
- Rx discount programs – Rx discount programs (also known as prescription drug discount cards) provide you with discounts on certain prescription drugs when you purchase them through a participating pharmacy. This is not an insurance product.
- Telemedicine benefits – Telemedicine is not insurance but it can provide you with access to medical professionals by phone or online, typically 24 hours a day and 7 days a week, so you can ask for advice from a physician whenever you need it. In some cases, a telemedicine doctor can even write you a prescription based on your consultation.
How does packaged medical insurance work?
Packaged medical insurance is all about convenience and protection. By combining several different products into a single bundle, packaged medical insurance makes it more convenient to get multiple forms of coverage – spreading your risks out and protecting your finances in case of unexpected medical costs.
While all the products contained in packaged medical insurance may be purchase separately, some packaged medical insurance products may allow you to use a single application for all the products they contain. Some may also centralize your billing and claims so that you don’t need to pay multiple monthly premiums or file claims with separate insurance companies.
There are no special discounts on your monthly premiums when you buy packaged medical insurance instead of buying each product separately, but you may save money on application fees in some cases.
What does packaged medical insurance cover?
Packaged medical insurance is designed to provide you with a suite of complementary protections. While it will not cover everything an Obamacare-compliant major medical plan does, packaged medical insurance can provide you with substantial coverage for hospitalization and other medical care resulting from an unexpected illness or injury. Packaged medical insurance may provide you with varying levels of coverage for things like:
- Doctor office visits when you’re sick
- Medical care rendered in a hospital
- Ambulance charges
- Emergency room care
- Discounts on prescription drugs
- Limited coverage for some preventive care may be available in some cases
Keep in mind that some of the components of packaged medical insurance may have separate deductibles that you need to fulfill before your coverage kicks in. Also, each product within packaged medical insurance has its own limitations and exclusions.
What does packaged medical insurance NOT cover?
Packaged medical insurance is not designed to provide you with coverage for all of Obamacare’s 10 “minimum essential health benefits.” As such, it does not meet your coverage requirements under the law and may leave you open to a tax penalty unless the major medical plans available in your area are determined to be unaffordable based on Obamacare criteria.
While the coverage available from one package to another may vary, packaged medical insurance generally will not cover:
- Pre-existing medical conditions
- Preventive medical care
- Well-child visits and immunizations
- Maternity care or well-woman visits
- Prescription drugs (though discounts may be available)
How much does packaged medical insurance cost?
The cost of packaged medical insurance can vary widely from one bundle to another. Packaged medical insurance bundles that offer the most robust coverage may cost from $200-$300 per month, while less robust coverage options may cost around $150-$200 per month. Actual costs may be higher and will vary based on individual circumstances.
If that still sounds expensive, keep in mind that according to eHealth’s 2017 Health Insurance Price Index Report, the average cost of Obamacare-compliant health insurance is $378 per month for an individual not receiving an Obamacare subsidies. The average unsubsidized family premium for Obamacare-compliant coverage is $997 per month.
It’s also worth keeping in mind that the different components of packaged medical insurance are individual products that can be purchased as standalone products outside the package.
Can I be declined for packaged medical insurance?
It is possible to be declined for coverage under some components of packaged medical insurance based on your personal medical history. For example, you may be declined coverage for a short-term health insurance plan, which is a common component of packaged medical insurance.
However, other components of packaged medical insurance are less likely to decline you based on your personal medical history. For example, dental and vision insurance plans generally will not decline your enrollment based on your medical history but will limit the benefits paid to you.
Likewise, accident insurance and critical illness insurance plans are also less likely to decline your enrollment based on your personal medical history, although these policies may still decline to cover injuries sustained before coverage or medical conditions diagnosed before coverage.
Always check the specific terms of coverage for each individual product within packaged medical insurance to see what is covered by each specific policy.
Where can I get packaged medical insurance?
Packaged medical insurance is not available through the government-run health insurance marketplaces where Obamacare-compliant health insurance is found.
However, licensed health insurance agents and private online marketplaces (like eHealth.com) that offer Obamacare-compliant health insurance plans may also offer packaged medical insurance. When you shop through a licensed agent, you may be able to compare various insurance packages side by side to find the best match for your needs and budget. Some insurers offer packaged medical insurance products directly as well.