Some consumers look at alternative health plans to save money. These plans might not be state regulated and don’t have to follow federal rules.
Unlike traditional health insurance 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 total payments.
- May require you to join an association and pay membership dues to buy a plan.
- Don’t allow you to get federal subsidies to lower your premiums and out-of-pocket costs.
- May use post-claims underwriting. This means if you file a claim for a high-cost service, like an inpatient hospital stay for an asthma attack, the plan can look at your medical history. If they find you had a preexisting condition (like having seen a doctor for asthma in the last year), they can deny the claim and possibly cancel your plan.
Common types of alternative health plans
Short-term plans last three months or less. They usually offer fewer benefits and have lower coverage amounts than traditional health insurance. When a plan ends, you have to buy a new plan. If you’re sick, you might not be able to get another short-term plan.
Limited benefit health plans pay part of your bills for some injuries or a specific illness, like cancer. There are several kinds of limited benefit plans:
- Accident plans only pay part of your bills for some injuries.
- Disease plans, such as cancer insurance, only pay part of your bills for a specific illness.
- Fixed-indemnity plans only pay a set amount (such as $100 per day if you’re hospitalized).
Disclosures you’ll see on these plans
Alternative health plans will have text on them telling you that they’re not traditional health insurance.
These are examples of disclosures you might see on these plans:
- This policy provides limited benefits. Benefits provided are a supplement to major medical coverage and are not a substitute for major medical coverage or other minimal essential coverage as required by federal law. Lack of minimal essential coverage may result in additional tax payment being due.
- Note: This is a supplement to health insurance and is not a substitute for major medical coverage. Lack of major medical coverage (or other minimum essential coverage) may result in an additional payment with your taxes.
- These products provide limited benefits. [Name of Plan] is not major medical or comprehensive health insurance and does not provide the mandated coverage necessary to avoid a penalty under the Affordable Care Act.
Other health coverage that isn’t insurance
Texas law allows some other ways to pay for health coverage that are exempt from most state regulations and federal protections. These aren’t insurance. Because they're exempt from regulation, TDI usually can't help if you have a complaint.
Subscription health plans often charge members monthly or annual fees to visit a doctor or use telemedicine. These are also called direct care or concierge care.
These plans don't cover hospital care and there might be other fees for each visit, lab work, or other services. If you need care that the plan doesn’t cover, you will have to pay the full cost yourself.
Discount health plans typically sell cards that provide members with discounts for services from participating health care doctors and facilities. Some common discount plans cover vision, hearing, or pharmacy services.
They might use the term “PPO” (preferred provider organization) to describe their provider network, but they aren’t traditional health plans. Members pay the full discounted cost of medical services.
Nonprofit agricultural organizations like farm bureau organizations can offer health benefit plans to their members. These plans:
- Can deny coverage or charge more based on your health.
- Can exclude coverage for preexisting conditions.
- May have annual or lifetime coverage limits.
- Aren’t subject to state and federal coverage standards.
- Are exempt from state and federal insurance regulations, except state balance billing laws.
Health care sharing ministries (HCSM) limit membership to people of a similar faith. They’re a non-insurance arrangement where members agree to make monthly payments to pay for other members’ medical expenses.
While nonprofit organizations run these plans, some spend a high percentage of member contributions on administrative expenses. HCSMs often exclude preexisting conditions and aren’t regulated by state or federal government. If an HCSM doesn’t pay a member’s claim, the member has no legal protection.
Texas has taken enforcement actions against some HCSMs for Texas exemption law violations.