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Difference Between ACA Health Insurance and Other Types of Health Insurance

November 2, 2023

Difference Between ACA Health Insurance and Other Types of Health Insurance

Today, more Americans have health insurance coverage than at any other time. One of the most significant changes that have contributed to this is the availability of Affordable Care Act (ACA) health insurance. With ACA coverage, Americans have access to a range of benefits and protections not available with other types of health insurance. But what exactly is the difference between ACA health insurance and other types of health insurance?


The Affordable Care Act was signed into law in 2010 with the aim of creating affordable health insurance for Americans. Under the ACA, new standards and requirements were put in place to ensure all health plans offered through the marketplace were comprehensive and covered essential health benefits. Coverage is available through government-run federal and state marketplaces and is referred to as ACA health plans or marketplace health plans.

On the other hand, private health insurance plans are those that can be obtained directly from insurance companies. These plans can be available through licensed  insurance agents and employee health benefits. They can come with a wider range of options and often offer different premiums, deductibles, and coverage levels.

 

One major difference between ACA plans and private health insurance plans is the set of minimum required benefits. ACA health plans are required to cover a minimum set of essential health benefits that include things like maternity care, prescription drugs, and mental health services. Private health plans, however, are not subject to these requirements. These plans may offer different levels of coverage based on the provider. This means that while some private health insurance plans may offer more comprehensive coverage, they may also come with higher premiums or deductibles.


 

Health insurance is a crucial resource for many families as it provides access to crucial healthcare services and supports. As a result, it's important to understand the different options and various types of plans available. Keep reading to take a closer look at the difference between ACA health insurance and other types of health insurance.
 

Cost Differences

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It's important to have a good understanding of the costs of various options when it comes to purchasing health insurance. The pricing of traditional health insurance plans is based on various factors. The location where you live and your age will have a major impact on the cost of your health insurance premiums. Additionally, your medical history could also influence the cost of your insurance. Along with these influencing factors, each insurance company takes into account the specific benefits offered, administrative costs, and reserves when setting pricing.

As an alternative to private health coverage, the ACA has assisted with providing coverage for nearly 20 million people in the United States through discounted plans. As discussed, ACA plans are offered through state or federal marketplaces. One of the key features of ACA health plans is the subsidies offered to help make health care more affordable for low-income individuals and families. These subsidies can help reduce monthly premiums and out-of-pocket costs.

ACA Health Insurance Subsidies

To qualify for ACA insurance subsidies, you must meet specific income requirements and apply through either the federal healthcare marketplace or your state's marketplace. The ACA offers sliding-scale subsidies to help lower premiums and out-of-pocket costs for eligible individuals. Financial assistance is available to marketplace enrollees through a premium tax credit and a cost-sharing reduction.

The premium tax credit can reduce your monthly payments for insurance plans purchased through the marketplace. A key difference between ACA health insurance and other types of health insurance is the available tax credit to reduce costs. To receive the premium tax credit for coverage, you must meet the following criteria:

  • Have a household income at least equal to the Federal Poverty Level
  • Have no access to affordable coverage through an employer
  • Not be eligible for coverage through Medicare, Medicaid, or other forms of public assistance
  • Have U.S. citizenship or proof of legal residency
  • If married, must file taxes jointly in order to qualify

If you're eligible to receive a premium tax credit and have a household income from 100% to 250% below the federal poverty level, you can also receive cost-sharing reductions. Cost-sharing reductions can lower enrollees’ deductibles, copayments, and coinsurance for covered health care services. Around 90% of those who have applied for ACA health coverage through the marketplace are receiving subsidies.

Traditional Health Insurance Costs

Other types of health insurance, such as employer-sponsored plans or individual plans purchased outside of the ACA marketplace, may also offer essential health benefits and protections. However, these plans usually come with a range of premiums, deductibles, coverage options, and qualifications.

Generally, traditional health insurance plans fall into two categories: individual plans and group plans. Individual plans often have higher costs than group plans since they're tailored to the individual's unique needs. A difference between ACA health insurance and other types of health insurance is that older individuals or those with pre-existing conditions may face higher premiums with traditional policies. On the other hand, group plans are typically offered through an employer, union, or professional association and may be more affordable.

When selecting a traditional health insurance plan, you should review all costs, including deductibles, premiums, copays, and coinsurance. These costs can add up quickly and may impact your overall healthcare spending. While the cost of traditional health insurance can seem overwhelming, remember that investing in quality healthcare coverage can provide peace of mind and help protect you from unexpected medical expenses.
 

Coverage Differences

Alt Text: A female patient receiving the care she needs because of quality health insurance.

The Affordable Care Act was created with the aim of making healthcare more accessible and affordable. One of the key provisions of the ACA was the requirement that healthcare plans meet minimum coverage standards. All ACA plans must provide coverage for the ten essential health benefits. These health benefits include:

  • Laboratory Services: If you need to have a test run by a laboratory, your insurance plan must cover the expense.
  • Emergency Services: If you need to go to the emergency room, your insurance plan should provide coverage for the expense.
  • Prescription Drugs: Your insurance plan should provide coverage for a variety of prescription drugs.
  • Mental Health and Substance Use Services: All plans should also provide coverage for mental health and substance abuse services, including inpatient care for substance abuse or mental health issues.
  • Maternity and Newborn Care: A qualified plan will provide maternity or newborn care coverage, including the cost of labor and delivery expenses.
  • Pediatric Services: A qualified health plan will cover routine medical care for children. Another difference between ACA health insurance and other types of health insurance is that all plans must include dental and vision care for children as well.
  • Rehabilitative Services and Devices: If you require rehabilitation to restore functionality and mobility, your plan should cover this expense.
  • Ambulatory Patient Services: Your insurance plan should cover routine outpatient care, which includes urgent care visits.
  • Preventive and Wellness Services: Your insurance plan should cover preventative services like routine physicals.
  • Hospitalization: If you have to be hospitalized, your insurance plan should contribute to covering the cost of services.

Compared to other types of health insurance, ACA plans offer a wider range of benefits and protections. Further, ACA plans cannot deny coverage to individuals with pre-existing conditions, which was a common practice in the past.

In general, the majority of private health plans have conformed to the basic requirements of the ACA. However, coverage limits, options, and covered services might vary by provider. For example, they may offer different levels of prescription drug coverage or require approval for certain visits to a specialist. These plans may also have caps on coverage, leaving individuals with high medical bills if they exceed those limits. It's crucial to consider your healthcare needs and budget carefully when selecting a health insurance plan, as well as have an understanding of the coverage differences between ACA plans and other types of plans.

 

Availability Differences

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One of the critical issues with health insurance in the past was that the costs and general availability made it out of reach for many Americans. The ACA, also known as Obamacare, introduced significant changes to the way health insurance works in the United States by mandating that all individuals have health insurance and setting minimum standards for coverage and availability. While some of these requirements have changed, and the mandate for coverage is no longer in place, health insurance is more widely available in the United States today.

 

A key difference between ACA health insurance and other types of health insurance is its availability through the marketplace. Healthcare marketplaces are operated by state governments or the federal government in the absence of a state portal. These platforms provide you with a wide range of options for ACA health insurance coverage. The idea behind the healthcare marketplace is to simplify the purchase process. Marketplace enrollment will also ensure you receive any subsidies you might qualify for.

Traditional health insurance plans are usually purchased through an employer or directly from a health insurance company through an agent. These plans offer varying levels of coverage and don't necessarily meet the minimum standards required by the ACA. However, other types of health insurance plans offer more flexibility in terms of choosing healthcare providers and services. With this flexibility, they may also be more restrictions and higher out-of-pocket costs.


Overall, understanding the distinction between ACA health insurance and other types of health insurance is essential. ACA health insurance is specifically tailored to ensure the coverage of essential health benefits and protect individuals from experiencing catastrophic financial burdens due to healthcare costs. On the other hand, traditional types of health insurance may offer expanded coverage with more options and a variety of costs. Choosing the right health insurance plan requires a thorough understanding of your healthcare needs, financial situation, and available options. Call 1-800-314-5594 to speak to a licensed insurance agent or compare plans online!

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