When Melanie Miller discovered that her health insurance premium was projected to rise nearly threefold to $914 per month this year, she decided to stop exploring options on the Affordable Care Act (ACA) marketplace.
The 59-year-old retired educator, who recently relocated from Ohio to Michigan, currently pays $341 monthly for two separate plans—one that covers routine and urgent medical care, and another that provides fixed payments for hospital admissions. However, neither of these plans meets federal requirements for comprehensive coverage.
Despite maintaining a healthy lifestyle through yoga, Miller expressed feeling “vulnerable.” In the event of a hospital stay, her plan only covers a flat fee of $2,000, which is significantly less than the average hospital bill of around $30,000.
“I don’t gamble, but this situation feels like gambling,” she remarked.
The congressional decision not to renew enhanced tax credits for marketplace plans late last year has increased the attractiveness of alternative insurance options—like those Miller has—which generally feature lower premiums but do not comply with ACA standards. Unlike marketplace plans, these alternatives, which include offerings from both major insurers and smaller firms or nonprofits, may deny claims with limited legal recourse for consumers. These plans are not obligated to cover essential health benefits such as preventive services and can impose annual or lifetime limits on coverage.
The effectiveness of these alternative options is a contentious topic. Consumer advocates label them as “junk insurance,” while supporters argue that limiting alternatives to costly marketplace plans could lead to a rise in the uninsured population. Some states, including Kansas and Florida, as well as the federal government, have relaxed regulations or provided incentives for these types of plans. Conversely, states like California and Massachusetts have sought to discourage enrollment in non-compliant insurance. However, as premiums strain household finances, these regulatory frameworks are being tested.
Alternative insurance options vary widely, including short-term policies intended to fill temporary coverage gaps, which often exclude preexisting conditions, and fixed-indemnity plans that pay a set amount per service regardless of actual costs. Additionally, there are arrangements where individuals pool their funds to cover each other’s medical expenses, including faith-based “healthcare sharing ministries,” which present a more economical choice than marketplace plans. Since they are not classified as insurance under federal or state laws, they are not required to cover even eligible medical expenses.
While enrollment data for these alternative plans is mostly private, various indicators suggest a notable shift in the insurance landscape. Recent estimates indicate a 20% decline in marketplace enrollment compared to 2025, and a survey conducted by KFF revealed that 5% of individuals on the exchanges switched to private, non-marketplace individual coverage, which may not adhere to ACA guidelines. Covered California, the state’s healthcare marketplace, intends to survey former participants to track their choices.
Industry insiders note that the expiration of subsidies has prompted alternative plans to ramp up their marketing efforts. Colorado insurance broker Samantha Albritton observed an increase in advertising for fixed-indemnity plans in the lead-up to ACA open enrollment compared to previous years. One particular healthcare sharing plan, Zion HealthShare, reported a membership surge of over 75,000 in February—an increase of 50% since last June.
Critics of these alternative plans argue that significant issues can arise when individuals utilize them as primary insurance, often realizing too late that the coverage is inadequate. “Humans have bodies that can fail them,” remarked Amy Killelea, an assistant research professor at Georgetown University’s Center on Health Insurance Reforms.
Killelea and other experts emphasize that the fine details of these plans can be complex and that enrollees lack the consumer protections typically associated with traditional insurance. A study published in 2023 found that only half of participants understood that prescription medications were not covered after reviewing a summary of a sample short-term policy’s benefits and a disclosure indicating that the plan was not compliant with ACA standards.
When Jade Ramsey, at the age of 24, opted out of her employer’s insurance due to high premiums, she sought a more affordable option through Southern Guaranty Insurance Company, selecting a policy similar to a fixed-indemnity plan after experiencing fatigue and unexplained bruising.
Just two weeks post-enrollment, Ramsey, who resides in Arizona, found herself unable to walk. A visit to the emergency room resulted in a six-day hospital stay and a staggering bill of $143,823 in 2021, where she was diagnosed with acute lymphoblastic leukemia. Her insurer denied coverage for the hospital bills, classifying her cancer as a preexisting condition and offering no additional options after her appeal was rejected.
The medical bills subsequently went to collections, adversely affecting her credit score. Ramsey recounted an emergency room visit for chest pains attributed to the stress from her overwhelming debt. Eventually, she qualified for Medicaid, and while her credit score improved, she never settled the debt, opting to disregard calls from collections agencies.
Southern Guaranty Insurance Company did not respond to requests for comment.
Supporters of alternative insurance argue that restricting these more affordable options could lead to an increase in the uninsured population. “Individuals should have the freedom to spend their own money on healthcare in a manner that suits them best,” stated Brian Blase, president of the Paragon Health Institute, a prominent conservative think tank. Paragon advocated for the termination of enhanced marketplace tax credits, claiming that they incentivized improper enrollment by encouraging unscrupulous brokers to enroll individuals without their informed consent.
Robert Godfrey from Clearwater, Florida, values having a variety of options available. As his monthly premium was set to rise significantly…
