Navigating the ACA Health Insurance Marketplace as a Travel Therapist

Navigating the ACA health insurance marketplace as a travel therapist

Written by: Jared Casazza, PT, DPT

Update 7/24/2019:

After applying for coverage through the marketplace this year, I found out some new information that contradicts part of the original post, so I wanted to make an update.

I learned that you are not eligible for marketplace subsidies if you are currently offered health insurance through an employer. This means that even with a low income, health insurance through the marketplace will be full price as long as you have been offered an affordable coverage option through the travel company that you’re working with.

When not on contract, going with a marketplace plan would still be a very affordable option for most travelers (those taking extended periods of time off like Whitney and me), but it may not be the most affordable option while on contract without being able to take advantage of the subsidies.

Be sure get a quote to see what the cost would be in your state and situation through the marketplace in order to make the most informed decision! 

 

Original Post 11/21/2018:

As I mentioned in my last post regarding the various health insurance options for travel therapists, Whitney and I have consistently chosen to take the company sponsored health insurance over our past few years as travel physical therapists. However, this is no longer going to be a viable option for us moving forward since we took six months off in 2018 and will likely be taking nine months off in 2019. Taking the company sponsored insurance and then using COBRA once we finish our assignment would be much too costly for that long period of time between contracts, so starting in 2019 we are planning to sign up for an ACA marketplace plan.

I’ve done a lot of reading and researching about the marketplace plans as well as the subsidies offered, and I hope to shine some light on them for you based on what I’ve learned. Keep in mind that health insurance costs can vary greatly depending on location and that some states have more or less options than others. The information in this article is going to be based on my own information for my home state of Virginia. It’s possible that your own state will be different, but I imagine that much of the information will apply to some degree for every state.

Disclaimer: this is not meant to be personal advice for your individual situation, as I am not an insurance expert or financial advisor. This is information that I’ve learned from reading and researching, and that I plan to implement in my own situation. Everyone’s situation is different, and this information could change at any time. If you’re interested in doing anything similar, then do your own research or reach out to a licensed professional for help, as this post is meant for illustration purposes only!

 

Background on the Different ACA Marketplace Plans

The plans offered through the marketplace have various premiums, deductibles, and out of pocket maximums, as well as other distinguishing features. These plans are tiered into levels called Bronze, Silver, or Gold based on cost and how good the plan is in general. You can usually expect a Bronze level plan to have a lower premium cost, but a higher deductible and out of pocket maximum, while a Gold level plan will likely have a higher premium but better coverage. It’s always important to look at the plans closely to find the one that fits your needs the best since even plans in the same tier can differ significantly at times.

Another factor to consider is that as travelers, we move from state to state often, and since health insurance is purchased through your home state, coverage and providers could be limited in some places that you may travel to. It is a good idea to consider this when choosing a plan. You can check out the website of the insurer that the plan will be through to see if they cover providers in a variety of places nationwide, or just in and around your own home state. For marketplace plans, there is a section (shown below) where you can go to the website of the insurer to see where providers are located.

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Depending on your situation (mostly your Modified Adjusted Gross Income), it’s possible that you will be eligible for subsidies (the ACA marketplace refers to these as premium tax credits) that can make a health insurance plan bought through the marketplace even cheaper than the company sponsored plans available to you. These subsidies are available to anyone that makes between 100% and 400% of the federal poverty level. The 400% level actually ends up being a pretty generous amount of income to still qualify and will include the majority of travel therapists. The reason that many travel therapists will qualify is because of a generally lower AGI, due to part of our income being untaxed. Oddly enough, with an income less than 100% of the federal poverty level, you wouldn’t be eligible for any of the premium tax credits since it is assumed that you would qualify for Medicaid in that scenario. Below are the income levels that would qualify you for premium tax credits (subsidies) for 2018 courtesy of ehealthinsurance.com.

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An Example Scenario

For a traveler working 48 weeks per year, making a taxable income of $21/hour, he would have a Modified Adjusted Gross Income (MAGI) of approximately $21 x 40hrs x 48 weeks = $40,320. The traveler would still qualify for a partial credit at that point, which would help to make the health insurance more affordable.

Let’s assume this traveler is a single, 30 year old, at an income level of $40,320 with his tax home in VA (which would be a scenario for me if I was working 48 weeks per year). In this scenario, he would be eligible for a subsidy of $222/month as shown below in a quote from the healthcare.gov website.

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With this premium tax credit accounted for, his cheapest option through the marketplace would be a Bronze level plan, for a monthly premium cost of $168.40. He could also get a Gold level plan for $283 that has a much lower deductible and out of pocket maximum. But if it were me, I’d opt for the lower cost plan since I likely wouldn’t meet the deductible either way.

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$168.40 isn’t terrible, but it’s definitely more than I’d like to spend. Luckily with some smart planning, the traveler in this scenario can bring this cost down significantly! An easy way to reduce his MAGI is through 401k contributions. Not only will these contributions save him money on taxes, reduce his student loan payment (only on an income driven repayment plan), and set him up for a better financial situation in the future, they will also save him money on his health insurance premium cost by giving him a higher premium tax credit amount!

Another Scenario – With 401k Contributions

Let’s consider the same situation as above with the traveler that is working 48 weeks per year, but now let’s assume that he maxes out his 401k, which is $19,000 for the 2019 tax year. That would bring his MAGI down from $40,320 to $21,320. Now we can see what he would be eligible for with a MAGI of that level.

With the same variables as above (30 y/o male in VA) the lower MAGI now makes him eligible for a premium tax credit of $458/month!

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With a premium tax credit of that amount, a Bronze level plan would be $0/month (even HSA eligible!), and a very good Silver level plan would only be $48! Both of these options are shown below.

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Basically, by contributing $19,000 to a 401k, the traveler in this example would save $168.40/month ($2,020/year) in health insurance premiums, while also saving about $4,000 in taxes (between VA state and federal taxes). That’s a pretty awesome return on that investment.

It should also be noted that the reason the deductible and out of pocket maximum on the Silver tier plan in the above scenario are significantly lower, in addition to it being in a higher tier than the Bronze plan, is due to Cost-Sharing subsidies. These are an additional layer of subsidies on top of the premium tax credit that are put in place to specifically reduce the deductible, co-pays and out of pocket maximum for low income individuals/families. These cost-sharing subsidies only apply to the Silver level plans and aren’t available for the Bronze and Gold plans at all. The closer an individual is to the 100% of poverty level (without going below that level as noted above due to Medicaid territory), the lower not only the monthly premium gets for the Silver level plans, but also the lower the deductible, co-pays, and out of pocket maximum gets as well.

Drawing Some Conclusions From These Scenarios

At an income level of $12,500, one would be able to qualify for a Silver level plan with a $3/month premium, a $250 deductible, and a $700 out of pocket maximum! Healthcare plans don’t get any better than that these days.

Even with this being the case, I don’t think it’s worth it to go below the $19,000 MAGI level, at least in my case, since I don’t use my health insurance often anyway and would rather have a plan that is eligible for an HSA. None of the Silver tier plans that I have seen qualify for an HSA.

Another downside of a MAGI near the poverty level would be limited benefit from the Saver’s Credit since it’s nonrefundable (more on that in this article). On the other hand, for someone with higher medical costs each year, having a much lower deductible and out of pocket maximum could be worth much more than the value of having an HSA and the Saver’s credit so this is definitely something to consider depending on each individual situation.

If contributing $19,000 to a 401k is too much for you, don’t worry there’s still hope. Even at an MAGI of $27,000, which would be a 401k contribution of about $13,000, the monthly premium for a Bronze level plan would still only be $2.60/month. The premium steadily increases from that point as MAGI continues to increase.

Even though I don’t need any extra incentive to max out my 401k each year, I’m happy to accept a reduction in health insurance premiums for doing so! In this case, the more you contribute to your future retirement the more you save on health insurance now. So, even if you can’t contribute a large amount, it’s definitely to your benefit to contribute as much as possible. It’s also important to point out here that even though traditional IRA contributions reduce your AGI, they don’t reduce your MAGI since they are added back in to calculate your MAGI. For this reason, the only real meaningful ways to reduce your MAGI would be with a 401k or health savings account.

Our Plan for 2019

For Whitney and I, we plan to contribute enough to our 401k and HSA to get our MAGI down to around $18,809. At that level, not only will we have the option of a free Bronze level health insurance plan through the marketplace, but we will also pay $0 in federal taxes and have a $0 income driven student loan payment! How can you beat that?

Running Your Own Scenarios

If you’re interested in getting quick quotes for your own situation and don’t want to enter your information on the healthcare.gov website, I’ve found that this subsidy calculator works well and is really quick and easy to use. The downside is that, at least for my state, it doesn’t show the actual cost of the plans available, just the amount of subsidy that I would receive. The healthcare.gov website is definitely the most comprehensive way to compare different scenarios, and I encourage you to familiarize yourself with the site and see what you’d be eligible for based on your situation.

Take-Home Points

  • For a travel therapist that wishes to take significant amounts of time off between contracts or switch between different travel companies often (especially those that often meet their health insurance deductible), travel company sponsored health insurance probably doesn’t make sense. Luckily as travel therapists, most of us will qualify for premium tax credits for health insurance plans through the ACA marketplace.
  • With some planning ahead and saving for the future, it’s possible to actually get a Bronze level plan for free, provided that you reduce your MAGI enough through 401k and health savings account contributions. The amount required to achieve this for you will vary, but for me as a 30 year old male living in VA, anything below a MAGI of $26,500 will mean a free Bronze level plan due to the subsidies offered at that income level.
  • Contributing to your 401k is already a great idea, but the premium tax credits make it that much sweeter! If you’re a big saver like me and planning to transition to less travel assignments each year or part time work in the future, the combination of tax savings and health insurance premium savings from investing in your future with 401k contributions can be massive! If you aren’t currently a big saver, then maybe the savings on your health insurance premiums will encourage you to start!

What do you do for your health insurance as a travel therapist? Let us know in the comments below. If you have any questions about this or anything else travel therapy related, feel free to reach out to us. But do keep in mind that I’m not an expert in this area, and all of this information is based on reading and researching for my own situation.

If you are new to travel therapy and would like help getting started or  recruiter/travel company recommendations, then we can help with that as well! Thanks for reading!

Travel Therapist Health Insurance Options Explained

Travel therapist health insurance options explained

Written by: Jared Casazza, PT, DPT

***Editor’s Note: Original post written in November 2018, updated December 2020

We get a lot of questions about travel therapist health insurance options and alternatives. Navigating the various health insurance options can be tough, especially with the many changes in the past decade and likely many changes to come in the future. Rising healthcare, and therefore health insurance, costs are a major concern for most Americans currently.

For travel healthcare professionals, health insurance is a particularly common topic since our contracts are generally only 13 weeks at a time, and figuring out what to do about health insurance after a contract ends can be confusing. I want to explore the various options here and hopefully give you some insight to help you make a decision regarding your own health insurance as a travel therapist.

***Please note, we are not experts on health insurance plans, and this is just a summary of some information we’ve researched and gathered on our own. We encourage you to do your own research, and if necessary, reach out to a professional who deals with health insurance plans to ask further questions. We do know a private health insurance agent we can connect you with if you’re interested in asking further questions.

Company Sponsored Health Insurance

Usually the cheapest and easiest option for a traveler is to take the company sponsored health insurance through the travel company, while on contract. The lower cost compared to other options is due to the fact that the company sponsored health insurance is partially paid for by the travel company as part of your total benefit package. The company pays a portion of your health insurance premium (in some cases 75% or more of it) so that it’s more affordable for you. If you pass up this benefit, in some cases the company will be able to give you slightly higher weekly pay based on the money they save from not having to pay for a portion of your health insurance, but this can have potential legal implications for the company if done incorrectly so it is not a common practice. The majority of travel companies offer health insurance benefits, although there are some smaller companies that do not.

Most companies offer 2-3 different plans based on your individual needs. There will likely be at least a high deductible plan that offers a relatively low premium and a lower deductible plan with a higher premium. Which plan you choose depends on your own needs, but in general, those who are young, healthy and therefore unlikely to meet the deductible of either plan are better to choose a high deductible plan with the lower premiums, while those with more medical needs or perhaps growing families can often come out better with a lower deductible plan while paying the higher premiums.

In my experience, the premiums on these plans are pretty affordable no matter which plan you choose. I’ve paid anywhere from $5-$40/week for my company provided health insurance coverage over the past few years. Luckily, I rarely have any need to use the health insurance, but when I have needed it the coverage has been sufficient for my needs.

Signing up for a company sponsored plan should be very straight forward with guidance offered by your recruiter or by the benefits department of the travel company. You should be eligible to sign up for the coverage any time that you start a new contract with a company. Most companies offer health insurance benefits starting on the first day of your assignment, but some require you to wait for 30 days or until the first of the month before they take effect, so make sure to ask your recruiter about this to avoid any problems or confusion.

There are however some limitations to the company sponsored health insurance, which we will discuss below. But first, let’s go through some of the other options.

Affordable Care Act (ACA) Marketplace Plans

Some travelers choose to go with one of the ACA marketplace options available to them and forego the company sponsored options. The marketplace plans will almost always cost more than the employer sponsored plans and, as mentioned above, this shouldn’t be a surprise since in this scenario you will be responsible for the entire premium amount instead of having the travel company pay for a portion of it. For some, the increased cost of the plan is offset by more variety with plan options that can allow the traveler to find a health insurance plan better suited for them.

Since the marketplace offers subsidies based on the individual’s income from the previous year, there are cases where the subsidy amount will be high enough to actually make these plans even more affordable than the employer sponsored coverage. I cover the income levels and subsidies available in the marketplace plan in depth in another article. Since the amount of subsidy you qualify for can drastically change the amount of various plans for you, it’s always a good idea to get some quotes for potential marketplace plans even if you will likely take the employer sponsored health insurance. The vast majority of travelers will qualify for at least a partial income based subsidy due to the level of taxable income that we receive, but how big the subsidy is will depend on your Modified Adjusted Gross Income (MAGI).

Getting quotes for various plans and signing up for one through the marketplace is pretty easy. Visit the healthcare.gov website and follow the steps to get started on the homepage. I’ve spent a lot of time on the website and have found it to be user friendly. One thing to remember with these plans is that you can only enroll during the open enrollment period (November 1 – December 15) each year or when you have a “Qualifying Life Event.” This means that if you choose to forego employer sponsored health insurance and miss the open enrollment period, you could potentially have to wait until January 1st of the next year to have coverage! Make sure to watch the dates and don’t miss the November 1st – December 15th window if you choose to go this route. However, one of the qualifying events is losing coverage from your employer. So you should be eligible as soon as a travel therapy contract ends if you decide to switch to an ACA plan at that time.

“Off-Exchange” Health Insurance Plans

The above two options are the most common ways that regular employees and travelers alike receive their health insurance. There are however some people that either forego company sponsored health insurance or aren’t eligible and choose to not get coverage through the marketplace. They instead may choose “off-exchange,” private health insurance plans, which are plans offered directly through the insurer themselves or through a private insurance agent/broker.

These options vary based on the state in which you’re located, and not all states allow individuals to go through a private insurance plan, so be sure to check the regulations for your home state. They also usually have limitations for pre-existing conditions, which means they’re usually best only for young, healthy individuals without any significant medical problems.

These private insurance plans are not eligible for the subsidies offered based on income through the ACA marketplace, which may be a downside for some travelers. Without the subsidies, the plans can be much higher priced than employer sponsored plans or insurance plans offered through the ACA Marketplace. To partially make up for the higher price tag, these plans can occasionally offer better coverage options than those found on the marketplace. However, if you are not eligible for subsidies via the ACA Marketplace due to your income level, then these plans may be either similar cost or cheaper than paying full price for an ACA Marketplace plan.

If you’re interested in learning more about the “off-exchange” plans, this healthinsurance.org article is a good resource. If you’d like to get connected to a private health insurance agent to discuss these options compared to other options, please contact us and we can connect you with an agent who we have worked with.

Health Care Sharing Ministries

Even though this option is not technically health insurance at all, I would be remiss to not include it in this list. Health Care Sharing Ministries are organizations created to share medical costs between a group of people that have the same religious views. These organizations are very careful to spell out the fact that they do not actually offer health insurance, since they do not offer any guarantee to pay. This sounds scary, but in practice, they seem to work fairly well, and most of what I’ve read about them has been positive written by those enrolled.

This is how it works: everyone enrolled in their organization has a monthly premium and a stated deductible amount, just like with a normal health insurance plan. The money is then pooled together, and it’s paid out to anyone enrolled that makes a claim, after the claim is verified by the organization. They cover the same things as most insurers, although there are some things that may not be covered due to religious reasons, which can include things such as birth control pills. To be eligible to enroll in these organizations, you generally must be a Christian and be dedicated to living a Christian life, which means abstaining from activities such as smoking cigarettes, using drugs, drinking in excess, or engaging in extramarital affairs. They also generally do not allow major pre-existing conditions like the ACA marketplace plans are required to do.

Health Care Sharing Ministries offer much lower premiums for their coverage, which is largely made possible by the fact that they are able to exclude those with severe medical conditions. These organizations’ plans are also not eligible for the subsidies offered by the ACA marketplace like the “off-exchange” plans above. More people are choosing to enroll in these organizations as health insurance prices continue to increase, with estimated membership between all Health Sharing Ministries at 340,000 people.

These plans may be a viable option for travelers, especially those that aren’t eligible for any subsidies through the ACA marketplace and don’t want to take the employer sponsored coverage, assuming that the traveler meets all of the criteria and is willing to accept risk involved. For more information on Health Sharing Ministries or to compare companies, this article is a good resource.

Why Not Always Go With the Employer Sponsored Health Insurance?

Since employer sponsored coverage is often the easiest and the cheapest option, you may be wondering why a traveler would ever choose to go a different route. The two most common reasons have to do with coverage between assignments (or when switching agencies) and meeting the deductibles of the health insurance plan.

For those that choose to take time off between contracts, the employer sponsored plans can sometimes prove difficult. Most travel companies will allow you to stay on their plan for somewhere between 14-30 days between contracts, but that’s only if you take your next contract with them as well. If you take more time off between contracts than the company allows, or you switch travel companies for your next assignment, then this will mean you lose coverage during that time. Plus, if you switch to a new agency, which many travelers do from contract to contract, you may be switching insurances often throughout the year which can be a huge hassle.

Whitney and I have found ourselves in the position of having a lapse in coverage between contracts a few times in the past, and going without health insurance, even for a short time, isn’t ideal. Luckily, COBRA coverage exists for this reason, but I’ve found that many travelers don’t know about it. Sometimes this causes them to choose to forego the employer sponsored plan due to these anticipated lapses in coverage.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act, and it basically gives an employee the right to continue his/her employer health insurance coverage after losing his/her job (which would be the case for a traveler between contracts). This coverage can last for as long as 18 months or until the employee finds a different health insurance plan. This is perfect for a traveler who is switching companies between contracts or taking an extended period of time off of work. It is important to note that when switching to COBRA coverage, your premium will increase due to your employer no longer paying a portion of it, but the cost should still be a reasonable, especially for a short duration.

My personal favorite part about COBRA coverage is that you have 60 days after your loss of employment to sign up for the coverage, and any medical costs incurred between the date you lost your coverage and the date you sign up for COBRA will be retroactively covered. What that means in practice is that if you have a month off between contracts, and you’re switching travel companies, you could wait the 30 days between contracts to see if you have any medical expenses. If you don’t, then you can skip signing up for the COBRA coverage altogether and save the  money on the premium since you didn’t need the health insurance during that time anyway. If you happen to have a big medical expense come up during that time (not unreasonable if getting to the next assignment involves driving across the country), then you can sign up for COBRA afterward and have it retroactively cover that medical expense. This is the best of both worlds since you’re protected either way, but you only have to pay for the coverage if you actually end up needing it during that time off.

The other big reason a traveler may choose not to take the employer sponsored health insurance is that he/she plans to usually meet his/her deductible amount throughout a normal year. This can be a problem if switching between companies, because each time you leave one plan and start another, your progress toward the deductible starts over and you lose the progress you’d made toward the deductible on the old plan. For someone with a lot of medical expenses (usually a chronic medical condition requiring expensive treatment or medication), having to start over on the deductible with new plans can mean a lot more money out of pocket than the money saved by using the employer sponsored plan. In this situation, I think it makes a lot of sense to go with a plan through the ACA marketplace, or a private insurance plan, and keep it continuously throughout the year while traveling, instead of switching plans often through different employers.

What’s Our Choice When It Comes to Insurance?

Over the past five years as travelers, Whitney and I have utilized various strategies for our own health insurance. I’ll go over the methods we’ve chosen to use, which may reflect some good options for you to consider for yourself.

During the first three years as travelers, when we were taking more consistent back to back travel contracts, Whitney and I chose to go with the cheaper employer sponsored health insurance plans through the travel companies. We generally chose the highest deductible plan offered since we don’t use our insurance often anyway and preferred to have a lower premium. During short breaks between contracts or if switching to a new agency, we would forego insurance knowing that we could have signed up for COBRA as needed. Fortunately, we never actually incurred any medical expenses between contracts to make it worth it for us to sign up for the COBRA coverage retroactively. But, it did give us peace of mind knowing that it was available if we needed it though.

When we started to take bigger gaps of time off between travel contracts in order to travel for fun internationally, we started using a different strategy. During that time, we still used the employer sponsored travel agency insurance while on contract. But during our longer gaps between jobs, we signed up for plans through the ACA Marketplace. Because of our lower taxable income as travelers, and due to only working part of the year, we were able to keep our AGI pretty low and thus qualify for subsidies through the ACA Marketplace, making these plans more affordable.

More recently, we have decided to change our strategy for insurance for a few reasons. One is that our business income has increased and we’ve been working PRN jobs near home, making our taxable income and thus AGI go up. Therefore we won’t qualify for as many subsidies through the ACA Marketplace plans, making this option less affordable. Also we had the opportunity to learn more about the coverage provided by private insurance plans, after talking with a private insurance agent, which has made us lean more towards these plans for our current situation and health. So now we have decided to sign up for our own private health insurance plans which we will keep throughout the year, regardless of whether we are on contract or not.

Conclusion

For the average travel therapist, going with the cheaper health insurance offered by your travel company and using COBRA coverage for short gaps between contracts probably makes the most sense financially and logistically. For some cases it can be more reasonable to sign up for a plan through the ACA marketplace and decline the coverage offered by the travel company; or to use some combination of the company insurance while on contract and the Marketplace when off contract. This is especially the case with travelers who plan to take multiple months off between contracts, or who often meet their deductibles and will have to start over on the deductible each time they switch between companies. “Off-Marketplace” private insurance plans may be another option to consider based on your individual situation, taking into account regulations in your home state, your AGI, and your health status. Health Sharing Ministries usually offer a lower premium than insurance plans offered through the marketplace, but they are more risky since they aren’t actually health insurance and therefore don’t offer any guarantee to pay. This may be a good option for you depending on your personal situation, taking into account the limitations.

Hopefully this helps to shed some light on the health insurance options available to you as a travel therapist. Keep in mind that health insurance (and healthcare in general) is likely to go through many changes in the near future, so make sure to do your own research to ensure the accuracy of the information provided here at the time of reading this. And again, keep in mind, we are not experts. This is just a summary of the information we have researched to the best of our understanding.

If you have any questions about this information, or would like contact information for the insurance agent we know, feel free to reach out to us.

If you are new to travel therapy and would like help getting started or would like our recruiter/travel company recommendations then we can help with that as well! Thanks for reading!