Kelly Fristoe, CEO of Financial Partners in Wichita Falls, Texas, helps people buy health insurance both on and off the Affordable Care Act exchanges. He helps customers determine whether it's more advantageous to buy an exchange plan, with or without a premium subsidy, or to buy directly from insurers and brokers offering off-exchange plans.
“Right there at 400% (of the federal poverty level), it could go either way,” Fristoe said. It depends on plan design, other ancillary costs and sometimes the customer's political views about the healthcare law.
Instead of one seamless market for individual insurance, the ACA has generated two different marketplaces for the same type of product, said Katherine Hempstead, director of health insurance research at the Robert Wood Johnson Foundation. Insurers are selling millions of plans to people off the exchanges, which has gotten far less attention than the exchange business, even though the two markets are about the same size.
HHS said last November that 8 million to 12 million Americans had individual off-exchange coverage. That's about half of the entire individual market. On- and off-exchange enrollment varies by state, and is mostly tied to the labor market and insurance regulations, Hempstead said.
Humana reported last month it had 731,000 on-exchange plan members as of March 31, compared with about 213,000 off-exchange members. That may seem like a small number for the off-exchange market, but it's actually a 62% increase from the previous three-month period that ended Dec. 31.
People who don't qualify for subsidies may decide to buy an off-exchange plan because that's what they have done before. Out of pocket-costs for off-exchange plans are higher than for exchange plans, mostly because premium subsidies don't apply.
Some consumers who would qualify individually for subsidies stay away from the exchanges because of the ACA's so-called family glitch, which disqualifies them for premium subsidies for family coverage. They may buy off-exchange plans that are more affordable than those they can get through their job and more appealing than non-subsidized exchange plans. Estimates of those affected by the family glitch range from 2 million to 4 million.
Fristoe says others prefer off-exchange coverage simply because they are politically opposed to the ACA. “A lot of folks down here are not happy with the adminstration. They are not happy with this law. They take a stance and say, 'We don't want none of that Obamacare stuff.' And I'm like, 'Really, people?' Gosh.”
