Ask the Medicare Specialist

Question from Sarah: My premiums went up on my UPMC Pennie plan and so did my out-of-pocket costs for the emergency room, outpatient surgeries, and hospitalizations. I have a friend who has health insurance with a company I never heard of, and her premiums are much lower than mine. Is buying health insurance outside of Pennie a good option?

Answer: Before I get started, let me explain that Sarah has an ACA (Affordable Care Act) plan, aka Obamacare. Pennie is the Pennsylvania Marketplace where people who don't get health insurance benefits from another source go to buy individual plans. Most people get federal subsidies (tax credits) that help lower monthly premiums. The only place to cash those in is on either the federal or a state marketplace.

Sarah's friend has an Indemnity plan which isn't health insurance as most of us know it. She would be in a terrible position if she ever got really sick, had a lengthy hospitalization, a bad accident, or needed expensive treatments or prescription drugs. She would either end up in bankruptcy, be forced to spend tens to hundreds of thousands of dollars out of her own pocket to get the medical care she needed or might not be able to access that care because it would require payment up front.

Let me be really clear here. If you have bought what you think is health insurance from any company that doesn't sell plans on either the federal or a state marketplace, you made a horrible mistake. You were taken advantage of and almost certainly lied to.

I just helped a friend who had one of these Indemnity Plans and thought he was saving money by going "off marketplace" as he put it. I looked over his benefit grid for him just this week. Thank God he or his wife didn't get cancer or need any other expensive care. For example, they were only covered at a reimbursement of $200 per day for oral or intravenous chemotherapy and an annual maximum of $6,000 for each. A 30-day supply of oral chemo is over $10,000 and so is a single outpatient IV chemo treatment. If my friend or his wife would have needed 12 months of oral chemo or 12 IV treatments and still had this garbage plan, he could have been on the hook for a whole bunch of money, depending on when the diagnosis came. If he didn't have the money to pay for the treatments saved, he almost certainly wouldn't have been able to receive them.

In Western Pennsylvania we only have three "major medical" health insurance companies on Pennie, UPMC and Highmark, that are available in all counties, and AM Better, new for 2025 and available in select counties. What defines major medical health insurance is that it puts a cap on what someone can be billed for covered medical and prescription care. In 2025, that ranges from $6,000 to $9,200 per person per ACA regulations.

Unfortunately, for those who don't qualify for subsidies, ACA plans can be very expensive and also have large deductibles and/or out of pocket costs. I understand people wanting to research alternatives. But the fact is there are none that are viable. DO NOT BUY AN INDEMNITY PLAN AS AN ALTERNATIVE TO AN ACA PLAN! You're better off not having an indemnity plan, taking the money you would spend on one and putting in a savings account to help pay for any costs you may incur if you get sick. They're almost worthless. The people who sell them are scoundrels and snake oil salesmen, the worst of the worst who pawn this junk off on people as legitimate health insurance.

The Health Insurance Store has been helping people enroll in ACA plans since its inception in 2014 and are experts in the rules, regulations, and nuances of the law. Anyone who has an indemnity plan or currently has no coverage, has until January 15th to enroll for 2025.

If you have questions regarding this column or would like to make an appointment for a no-cost consultation, give our office a call or email me personally. [email protected].