But Does It Work for You?

The new Obamacare insurance marketplaces are getting lots of attention—much of it negative—but for many individuals, they are not the only option for finding health insurance coverage.

Many people don’t know that people without access to Medicare or an employer insurance plan can choose to skip the government-run marketplaces and buy their health coverage ­directly through insurance companies, brokers or agents instead (except for residents of Vermont and Washington, DC, where buying new policies outside the Obamacare marketplaces is not an option). To investigate policies available outside the marketplaces, contact insurance companies, brokers or agents and ask them if they have policies available that are not available through a government marketplace.

Even easier: Visit ­insurance shopping sites such as eHealthInsurance.com or GoHealth.com to find plans from many providers, including plans and even providers not listed in the Obamacare marketplace in your state.

Buying outside the marketplaces might expand the range of policies available but might increase costs, perhaps dramatically, when you consider the subsidies available inside the marketplaces.

Still, the availability of additional ­options outside the marketplaces could be welcome news for many. That includes some of the millions of Americans whose insurers have canceled their old plans, explaining that those plans don’t meet the new government requirements. The insurers have offered to replace the old policies with new ones, but many of those new ones carry higher ­premiums. What you need to know…

TAX CREDIT CONSEQUENCES

obamacaretaxbreakPurchase a health insurance policy through a government marketplace in your state, and you might qualify for tax credits (see box at left) to help you pay the premiums, which could make the marketplace option very attractive. Buy your health insurance outside these marketplaces, and those tax credits will not be available. Keep in mind that whether or not you qualify for tax credits for a given year is based on your actual modified adjusted gross income for that year, which you won’t know precisely until that year ends.

If your income might drop a lot in 2014, it may make sense to buy coverage through the Obamacare marketplace, even if you won’t qualify for tax credits based on your current income estimate.

WHY BUY ELSEWHERE?

Many insurers that take part in a marketplace are offering plans outside the marketplace that are not available inside, and a few insurers are not offering plans through a marketplace at all in many states. These insurers are shunning the marketplaces mainly out of concerns that they might attract too many older and/or unhealthy customers whose health-care needs will cut into their corporate profits, rather than young and fit customers.

Your decision about whether to choose a plan inside or outside a marketplace may depend largely on which plan has your preferred doctors and hospitals in its network. Many plans offered in a marketplace have very limited provider networks, even if you opt for an upper-tier gold or platinum plan. In contrast, there could be a policy offered outside the marketplace that includes your preferred doctors and hospitals. Ask an insurance agent, broker or company whether a particular plan includes your preferred doctors and ­hospitals.

You might even find slightly lower premiums for comparable coverage outside the marketplace, assuming that you don’t qualify for tax credits. But in general, premiums are likely to be similar through either source. Starting in 2014, new policies sold to ­individuals outside the marketplaces will be required to provide the same ­”essential benefits” and abide by the same regulations as policies sold through the marketplaces, including the requirement that insurers no longer deny coverage or charge extra for preexisting conditions. “Outside” plans are required to be rated according to Obamacare’s bronze, silver, gold and platinum tier system to make comparisons easier.

Exception: President Barack Obama recently announced that insurers would be allowed to offer current policyholders the opportunity to renew their existing plans for 2014, even if those plans are too bare-bones to meet the new standards. At press time, it was unclear whether Congress or the president would take further steps to allow policyholders to keep existing plans.