Use our Health plan shopping guide for tips on buying health insurance.
Some consumers look at alternative health plans as a way to save money. Don’t assume they’ll provide traditional major medical coverage. Alternative plans may not be regulated by the state, and they don’t have to follow federal Affordable Care Act (ACA) rules. Unlike ACA plans, these plans:
- May not cover all injuries or illnesses, including preexisting and chronic conditions.
- May have waiting periods to join, pay less for each service, and limit their total yearly payments.
- Don’t allow you to get federal help – such as tax credits and cost-sharing reductions – to lower your premiums and out-of-pocket costs.
Alternative health plans include:
- Short-term plans
- Limited benefit plans
- Subscription plans
- Discount plans
- Health care sharing ministries
- Association plans
Short-term health plans
Short-term plans last 12 months or less, but sometimes can be renewed up to 3 years. They usually offer fewer benefits and have lower coverage amounts than major medical plans. When a short-term plan ends, you will have to buy a new plan. If you’re sick, you might not be able to get another short-term plan. You might have to wait until open enrollment or a special enrollment period on Healthcare.gov to buy a traditional health plan.
Limited benefit health plans
There are several kinds of limited benefit plans. They will only pay some of your health care costs.
- Accident plans will only pay part of your bills for some injuries.
- Disease plans, such as cancer insurance, will only pay part of your bills for a specific illness.
- Fixed-indemnity plans will only pay a set amount (such as $100 per day if you’re hospitalized).
Subscription health plans
Subscription plans are also known as direct care or concierge care plans. Members typically pay a monthly or annual fee to use a doctor or service included in the plan. There may be other fees for each visit, lab work, or other services. If you need care that the subscription plan doesn’t cover, you might have to pay the full cost yourself.
Discount health plans
Members of discount plans pay monthly fees to get reduced rates on specific health care services. Some common discount plans cover vision, hearing, or pharmacy services. While they may use the term “PPO” (preferred provider organization) to describe their provider network, they are not traditional health plans.
Health care sharing ministries
Health care sharing ministries are nonprofits that limit membership to people of a similar faith. Members agree to make monthly payments to pay for the medical expenses of other members. These plans aren’t regulated by the state, and there is no guarantee they will pay claims. They also might not cover preexisting conditions or provide as many benefits as major medical plans. Check a plan’s consumer reviews to make sure it has a good record on paying claims and providing service.
Association health plans
There are many kinds of association health plans. Some are set up by member-based associations, while others are set up by employers. Association plans are sometimes exempt from state and federal laws and might not cover as many services as major medical plans. If you have to join an association to buy its plan, look carefully at the membership dues, the plan’s coverage, and its consumer reviews.
Learn more: Association health plan laws