We all know health insurance has an expensive price tag. Even plans with high deductibles and small provider networks can come with costly premiums. And for those who don’t have an employer chipping in for coverage, or for people who don’t qualify for premium assistance on the Affordable Care Act’s Health Insurance Marketplace, those premiums can be in the tens of thousands of dollars.
Enter Packaged Health Insurance
Packaged health insurance (sometimes called bundled health insurance) is a way of combining several limited benefit insurance plans and products to create a more comprehensive set of benefits at a lower price than traditional major medical coverage. As an example, the package might include any combination of the following types of plans or products:
✓ Short-term medical plans which provide limited duration health insurance coverage. These plans don’t cover the same benefits as a traditional major medical plan and usually have an annual cap on benefits. Learn more about short-term health insurance.
✓ Accident plans typically pay out a lump sum of cash to the insured per each accident of injury.
✓ Hospital indemnity plans typically pay out a lump sum of cash to the insured based on the number of days in the hospital.
✓ Critical illness or cancer plans typically pay out a lump sum of cash to the insured upon being diagnosed with a critical illness (such as a stroke or heart attack) or cancer.
✓ Fixed indemnity plans typically pay out a lump sum of cash to the insured after receiving certain medical treatments. For example, a lump sum of cash may be paid out for each office visit or emergency room visit.
✓ Dental and vision plans provide insurance coverage for dental and vision expenses.
✓ Telehealth provides a low-cost way of speaking with a nurse or doctor over the phone for treatment related to common illnesses.
✓ Discount plans provide discounts for certain medical expenses, such as prescription drugs.
Packaged health insurance may be considered by more people in 2019 when the Individual Mandate penalty for not having a traditional major medical plan goes away.
Advantages of Packaged Health Insurance
Depending on the options chosen, packaged health insurance can range from 30% to 50% less than a traditional ACA health plan. Aside from the lower price tag, there are several other advantages to this type of insurance.
There is no coordination of benefits between the separate plans, so services that qualify for benefits under more than one policy could receive benefits from multiple plans. Payment is typically made to the policy-holder, so they would be free to use the money in any way they want—including for things like house or car payments. Also, unlike traditional health plans, these plans are available for purchase at any time during the year, as there are no open enrollment or special enrollment periods.
It is important to note that packaged health insurance does not satisfy the ACA Individual Mandate requirements. However, packaged health insurance may be considered by more people in 2019 when the penalty for not having a traditional major medical plan is eliminated.
Potential Drawbacks
Packaged health insurance is not without its drawbacks, though. It often involves the completion of multiple insurance applications with premium payments to multiple companies which can be a headache for some people. Some plans are underwritten, which means they may be declined based on health status. Gaps in coverage are also likely to occur if there is a catastrophic health event.
Nonetheless, it’s an alternative to explore if a traditional plan is too expensive, especially for those individuals who usually have low medical costs. Plus, it’s better to have some coverage than no coverage.
This is not to say that we would recommend replacing an ACA plan with a package of various limited benefit plans. Although they can be costly, these plans provide the most comprehensive coverage and the highest level of protection. Still, for individuals who are currently uninsured and don’t have a qualifying event to enroll in ACA coverage mid-year, packaged insurance may be a good option to hold them over until the next open enrollment. For individuals with high-deductible health plans, packaged insurance can also be a good way to offset some of their out-of-pocket costs.
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