What Are the ACA Marketplace Alternatives for Health Insurance?

Sometimes, the health insurance options within the Affordable Care Act (ACA) marketplace may not be a great fit for your under-65 clients.

Whether they need lower premiums, different benefits, or even just temporary coverage, there are certainly alternatives to ACA insurance you can help your clients explore!

Why Consider Off-Marketplace Health Plan Alternatives?

Each of your clients have different circumstances that may lead them to, or away from, ACA marketplace health insurance. Changes in the ACA market may also push some of your clients away from being eligible for ACA plan cost sharing reduction.

Some of the reasons to consider alternatives to marketplace insurance include:

• Higher costs
  • If your client doesn’t qualify for ACA subsidies, they will pay the full plan premium.
  • Enhanced ACA subsidies will end in 2025 if Congress does not extend them, causing premiums to rise even higher.
  • Higher premiums, deductibles, and co-insurance may lead clients to want to change their coverage to save on out-of-pocket costs.
  • Healthier clients are still paying for required essential health benefits (EHB) even if they don’t need them
• Limited access to plans and providers
  • Lower-premium plans restrict access to provider networks, limiting your clients’ options for health care.
  • Plans could require your clients to pay more for out-of-network coverage.
  • Clients that live in rural regions have even less options, leading them to only have a few choices
• Limited enrollment flexibility
  • Your clients can only enroll in ACA marketplace plans during the Open Enrollment Period (OEP) or during a Special Enrollment Period (SEP) if they meet the qualifications.
  • If your client needs immediate coverage, only the ACA marketplace alternatives can help.

With these challenges in mind, let’s look at some of the specific options you could discuss when considering ACA alternatives!

Short-Term Medical Insurance

Short-term health insurance plans, offered by private insurers, often cover individuals for a shorter period than the usual year-long coverage period of most major medical plans.

These plans are a great option for those seeking coverage for a shorter amount of time, an affordable safety net, or coverage in case of an emergency. Plans are available for as short as 30-day periods or up to four months.

Note: September 2024 Short-Term Limited Duration rules limiting coverage are currently being reviewed by the U.S. Departments of Labor, Health and Human Services (HHS), and Treasury. We may see tri-term (three-year) plans return in states that do not prohibit them. DE, MD, and OR restrict the term limits of these plans to three months or less.

On August 7, 2025, the Centers for Medicare & Medicaid Services (CMS) announced it will not enforce the 2024 STM duration limits while reviewing rules—opening the door for states to allow short-term medical plans lasting up to 12 months and renewable for up to three years.

Who Is Eligible for Short-Term Medical Insurance

Clients who are eligible for most private health insurance plans may qualify for a short-term medical plan. There are some instances where clients may not be eligible.

Who Isn’t Eligible for Short-Term Medical Insurance

Some individuals may not be eligible for short-term health plans. The qualifications may vary by carrier and their underwriting standards, so make sure to double check your clients’ eligibility status with carriers before applying.

The following individuals may not be eligible:

• Non-U.S. citizens
• Individuals in CA, CO, CT, DC, HI, ME, MA, NJ, NM, NY, RI, VT, and WA
• Clients under another major medical insurance policy
• Individuals who qualify for Medicaid
• Men who weigh more than 300 pounds; women who weigh more than 250 pounds
• Pregnant individuals
• HIV and AIDS positive individuals

Individuals in CO, CT, DC, HI, ME, MN, NM, VT, and WA are not eligible for a short-term health plan because there are no products available. Generally speaking, the rules to sell these plans are so strict in these states that no insurers offer them.

Clients in CA, MA, IL, NJ, NY, and RI cannot purchase these plans because they are banned in those states.

What Do Short-Term Health Plans Cover?

Not all services and appointments that are covered by most major medical plans are covered by short-term health plans. For example, short-term health typically covers emergency room visits, some prescriptions, some doctor’s appointments, hospitalizations, and surgeries.

There may be a limit on the number of covered doctor visits, benefits (e.g., certain amount per day in the hospital), or prescription drugs (e.g., certain prescriptions may only be covered if your client is an inpatient in a hospital).

Unlike ACA insurance plans, short-term health insurance plans are not required to meet the minimum essential coverage standards established by the ACA. Because of this, there may be many coverage gaps that your client would need to be aware of if they’re used to a traditional health plan.

Keeping the list of covered benefits smaller allows this type of insurance to be affordable.

What Short-Term Medical Insurance Doesn’t Cover

Dental and vision benefits are not included with short-term medical plans. It’s also important to note some short-term health plans may only provide a drug discount card instead of offering prescription drug coverage.

Drug discount cards give the client access to certain prescriptions at a lower price, but there is no insurance reimbursement.

Pre-existing conditions, maternity and newborn care, as well as mental health services and substance abuse services are not covered under short-term insurance due to the underwriting process.

When to Recommend Short-Term Health Plans

A client may be inclined to purchase this coverage due to the quick approval process or low premiums, but when should agents recommend short-term medical plans?

Short-term health plans can bridge coverage gaps between enrollment periods or employer coverage, making health care more accessible and affordable for more individuals.

Many plans available from a variety of carriers are flexible options. Depending on what your client is looking for, you could find the right plan for their needs. The underwriting process typically goes quickly, and clients often have coverage in a short amount of time.

Short-term health plans can bridge coverage gaps between enrollment periods or employer coverage.

For clients without complex medical concerns or pre-existing health conditions, these plans can be valuable options. Rather than go uninsured, in case your client faces a health emergency, they can have some level of coverage — a safety net — to protect them from high out-of-pocket costs.

These plans can also be canceled, without penalty, at any time.

Your client may benefit from a short-term health plan if they:

• Don’t have employer coverage
• Are starting a new job
• Need insurance quickly
• Do not qualify for a premium subsidy through the marketplace due to their income level
• Are young adult clients who may be aging out of their parents’ plan if they’re looking to buy more time before purchasing a major medical insurance plan
• Struggle to find health insurance due to expenses or options available
• Missed the ACA OEP and do not qualify for a SEP
• Are older and waiting for their Medicare Annual Enrollment Period (AEP)

Things to Keep in Mind About Short-Term Medical Coverage

When discussing short-term health plans with clients, you must remember that clients must be able to pass the simple underwriting process and that costs may vary depending on age, location of the client, and the coverage level selected.

Remember that clients must be able to pass the simple underwriting process and that costs may vary.

Clients looking for a short-term health plan should be aware of maximum limits as well. These plans will only cover a maximum number of expenses in one term. Terms can be as short as a month to a year, with the option to renew.

Double-check with your client if they expect to have more significant medical concerns, and if so, consider a higher level of coverage.

Short-term medical plans are not considered qualifying health coverage. This means that, when short-term medical coverage ends, it does not create a SEP to join a marketplace plan.

Short-term medical plans are not considered qualifying health coverage.

If an individual does want to join a marketplace plan, they may have to wait until the upcoming Open Enrollment Period (OEP). There may be a coverage gap if the short-term policy is ending, and they choose not to, or are unable to, renew.

Check out your clients’ options before deciding on a short-term health plan; they’re not always the most affordable option. These plans typically have higher deductibles than other health plans, so they may need to explore other options.

Ancillary Plans

Ancillary plans typically act as a broader category of supplemental coverage in addition to your client’s primary health insurance plan.

These are most helpful when your clients have a gap caused by their primary health insurance or to provide financial protection for emergencies or specialized medical needs.

Interested in cross-selling ancillary plans with Medicare products? Open A Quick Guide to Cross-Selling Ancillary Insurance with Medicare Products! Maximize your book of business and learn more about ancillary insurance.

What Do These Types of Plans Cover?

Some basic types of ancillary insurance include:

• Dental
• Vision
• Disability
• Life insurance
• Accident insurance
• Wellness benefits
• Fixed Indemnity plans

Even though ancillary insurance is considered supplemental, it is often more necessary due to the unpredictability of life. This difference makes ancillary insurance more desirable to just about anyone!

Fixed Indemnity Plans

Within the ancillary category, fixed indemnity health insurance plans set a fixed dollar amount for covered medical services or events, regardless of the actual cost, the provider, or the network.

Some common benefits include:

• Daily hospital confinement
• Diagnostic outpatient care (like MRIs, lab tests, and X-rays)
• Anesthesia
• Prescription drug copays

Fixed indemnity plans are one of the most flexible ancillary plans that allow you to see any doctor or hospital, use the medical expense payout for anything you need, and supplement your current health insurance.

It’s important to note these plans are not guaranteed issue; they require health underwriting. There is limited to no coverage for pre-existing conditions.

These plans also do not qualify as minimum essential coverage. There is no SEP to enroll in other coverage when the plan term ends and no maximum out-of-pocket caps.

Who Is Eligible for Ancillary Plans?

Because there are two different categories of ancillary plans, employer-sponsored plans and stand-alone plans, the eligibility criteria can differ between the two.

Employer-Sponsored Plans

Eligibility here is chiefly determined by your employment status (whether you’re full-time or part-time) and, occasionally, how long you’ve been employed by the company. The employer also pays a portion of the premium, instead of the client shouldering the entire cost.

Typically, better coverage is offered to full-time employees, but some part-time employees may be eligible for certain benefits deemed by the employer.

Some employer-sponsored plans also have specific eligibility requirements set by the type of ancillary plan they have, like an employee in a high-risk industry that may need accident insurance.

Stand-Alone Plans

These plans are mainly offered in the private insurance market. They’re generally available to anyone and everyone, making it the most versatile type of ancillary insurance. However, it’s important to look at every aspect of stand-alone plans so that you and your clients are as informed as possible when making decisions regarding supplemental coverage.

Underwriting

Some ancillary plans may require your clients to pass underwriting. If they’re not healthy enough to pass underwriting, they may not be eligible for coverage.

When to Recommend Ancillary Plans

A lot of primary health insurance plans don’t cover the supplemental areas like dental, vision, and more so ancillary plans come in clutch when your clients have gaps in their coverage. There are also usually extra areas that are covered, such as accident insurance, that could be helpful for a large range of clients.

Selling ancillary plans to your clients not only adds to your portfolio but helps expand the depth of how you can help your clients.

You may be asking yourself, “Who makes the best client for one of these ancillary plans?” Some of the best clients for ancillary plans include:

• Active individuals — Those with a more active lifestyle may need supplementary insurance that includes accident coverage
• Young families — Parents concerned about injuries for their young children
• Self-employed individuals and business owners — Many choose private plans that have high deductibles, creating gaps in their coverage
• Early retirees — Protect their savings by covering high deductibles or hospital stays
• Special healthconcerns — Critical genetic health issues or high-risk jobs can be covered with the extra coverage
• Healthy enough — Beneficiaries need to be able to pass underwriting in some cases

It’s important to remember that this is supplementary coverage and should not replace a primary health insurance coverage plan.

It’s important to remember that this is supplementary coverage and should not replace a primary health insurance coverage plan.

Things to Be Aware Off

When discussing these plans with your clients, there are a couple of trends to make note of regarding ancillary coverage plans.

The cost of health care has drastically risen in the past 10 years and shows no signs of slowing down. This, in turn, will cause other things like supplemental coverage to rise as well. Clients must be informed of the possible extra costs associated with an ancillary plan to make an informed decision.

On the flip side, a higher demand for mental health services has expanded most ancillary plans to include that kind of coverage. With this expansion into mental health services, your clients may have more outlets for services not previously covered.

The One Big Beautiful Bill Act (OBBBA) has also impacted all the various facets of health insurance, including ancillary insurance. The bill’s changes to ACA and Medicaid will make ancillary coverage more important than ever, as individuals are projected to lose their coverage.

What Can Agents Do When Selling These Plans?

Having a strategy is important when preparing to offer alternatives to HealthCare.gov insurance or other marketplace plans. Carefully consider what products you want to offer based on your state and your target market.

Because there are so many facets of these ACA marketplace alternatives, it’s important to remain educated and updated as much as possible.

Because there are so many facets of these ACA marketplace alternatives, it’s important to remain educated and updated as much as possible.

Knowing and explaining all the positives and risks of these plans will help you ensure clarity and trust between you and your clients and give them the best option for their situation.

Due to the ever-changing nature of these plans, having Errors & Omissions (E&O) insurance can protect you from any mistakes in your service to your clients. It’s better to be safe than sorry, so make sure you have one and that the products you’re offering are fully covered.

Ultimately, we encourage you to stay mindful of your client’s budget, health concerns, and out-of-pocket exposure as you assist them in finding coverage. You’re exploring when alternatives to ACA insurance make sense, so we already believe you’re doing this and looking out for your clients’ best interests!

While there is a lot to digest with ACA marketplace alternatives, Ritter helps you stay in-the-know with health insurance news and changes. Gain access to other cool resources and tools to enhance your business by registering with Ritter for free!