When an underwritten plan is the wrong choice
An underwritten plan is the wrong choice if you have a condition you need treated, expect a pregnancy, qualify for meaningful Marketplace savings, or could not absorb a big bill the plan might not pay. These plans can decline you based on health questions, and they do not all follow ACA rules.
Sam to confirm: review and sign off on this guide, and add your own view
What "underwritten" means
Underwriting means the insurer looks at your health and health history before deciding whether to cover you and on what terms. Marketplace plans cannot do this: HealthCare.gov says no plan can reject you, charge you more, or refuse to pay for essential health benefits because of a condition you had before coverage started.
Plans outside those rules can. Take short-term plans. The Maryland Insurance Administration says the company may ask health questions, and you may be denied or have coverage limited based on your answers.
That is how these plans can cost less: they can turn away the people who are likely to cost more. For a healthy person, that may be a fair trade. For someone else, it can be a very bad one.
Five times it is the wrong choice
You have a condition you need treated
Read how the plan handles pre-existing conditions. A plan that excludes the one thing you need covered is not cheaper, whatever the monthly price says.
You are planning a pregnancy
Marketplace plans must cover maternity and newborn care. Outside the Marketplace, it may be limited or missing. In Maryland, short-term plans are not required to cover maternity care or outpatient prescriptions.
You qualify for real savings on the Marketplace
Premium tax credits apply only to Marketplace plans. If you qualify for meaningful help, price that first. It may beat the alternative without giving anything up.
A big bill would sink you
Some plans pay fixed dollar amounts instead of a share of the bill. In a 2020 commentary for Brookings, two researchers called fixed indemnity coverage a problematic form of "junk insurance." A set payment can fall far short of the actual cost. If you are self-employed, your savings and your business may be the same money.
You are healthy now and worried about later
Ask what happens at renewal if your health changes, and when you could get back into a Marketplace plan. Open Enrollment comes once a year.
When it can make sense
If you are in good health, earn too much for Marketplace savings, have read what the plan leaves out, and can handle the bad-year number, an underwritten plan may be a reasonable fit. Sam's clients on this site describe plans that fit their budgets and doctor visits they used. Others would be better off on the Marketplace. Which one you are is the point of the call.
"Fit First Health Insurance wasn't created to single out people who make unhealthy choices and we are not denying that there is a need for the current marketplace plans."
Ten questions to get answered in writing
Ask any agent these, including Sam. Then check the answers against the plan documents.
- Is this major medical coverage, or does it pay fixed amounts per event?
- Is this an ACA plan? If not, which essential health benefits does it leave out?
- Are my current conditions excluded or limited? Show me the wording.
- Is there a limit on what it pays per day, per year, or for life?
- What is the most I could owe after a three-day hospital stay?
- What happens at renewal if I get sick? Can my price change, or can coverage end?
- Do I have to join an association to get this plan?
- Are my doctors, hospital, and prescriptions covered? Which network does it use?
- Are work injuries excluded?
- How are you paid on this plan, compared with others?