Cutting your ACA insurance costs

As pointed out on the previous page, this approach works for generally healthy people who can go a few months at a time with little need to go to a doctor, but what coverage in case on an accident or illness

Here is how and why it works

1. The current rules allow you to go 60 days without insurance each year and not pay an IRS penalty.  Technically, the rules say “up to 3 months” but since the insurance is sold in monthly amounts, that means 2 months, since “up to 3” means “2”. Don’t take our word for this, here is the page on Healthcare.gov that says the same thing.
2. You must get enrolled in an insurance plan during the open enrollment period, which is usually from November 1 through January 31.
3. If your previous year’s insurance plan was cancelled (they usually are), then you are allowed until February 28th to enroll.
4. If you are basically health, non-ACA plans, called short term medical insurance plans, will give you similar coverage at a far lower cost.
5. You can still be ON an ACA plan for part of the year to get a physical and coverage for pre-existing conditions that may need treatment for just a few months of the year.

How to do it

1. Sign up for short term medical insurance in December to cover January and February
2. During the open enrollment period (typically November 1 through January 31st, or February 28th, if your previous insurance plan was removed) sign up for an ACA plan (Silver level with a lower deductible works best – you will only have it for a few months)
3. Have the ACA plan start March 1st
4. While your ACA plan is in effect (starting March 1st), get your annual physical, vaccinations and any testing and treatment you need for any pre-existing conditions and anything new found.
5. Stock up on any prescriptions you know you will need.  Try to get a years’s worth, while you are under the ACA coverage.
6. When you have completed all the testing and treatment you need, sign up for a short term medical insurance policy (see this page)
7. Once the short term plan becomes effective and you are sure you have no expensive or serious medical needs, cancel your ACA plan by calling the insurance provider and telling them to cancel it.
8. Through the end of the year, when your short term plan ends (they are sold in 3 month increments), sign up for another 3 month plan..

Why this works

It’s simple math. Compare the total year’s costs for a 59 year old man who stays on the ACA plan for 4 months, March, April, May and June.  The monthly premium costs are from Healthcare.gov and Blue Cross Blue Shield (short term)

The total annual savings for this individual would be $4,208! And he still had the annual physical and vaccinations covered at 100%.

Risks

If you develop a new medical condition, while you are on the short term plan, you will be covered, but if you are more than 3 months away from the end of the year, and the short term plan ends, you would THEN have no coverage for that condition.  In other words, you couldn’t get another short term plan that would cover the condition since for the next 3 month plan, it would be a “pre-existing condition”.

How great is this risk?  That’s hard to measure. You can eliminate it by keeping the ACA plan from March 1st through September 31st.  That means you would buy a 3 month short term plan to cover the last 3 months of the year (and the first 2 months). That reduces your annual savings to $2,630, but for most people that is still quite substantial.

Getting Started

Go to this page, click on the links there of the short term medical insurance providers and fill out the forms (no obligation) yo see what it would cost you.