6 Alternatives to Paying for Health Insurance

Health insurance premiums and out-of-pocket costs can take up a significant part of a household budget. Fortunately, lower-cost coverage options may be available. Some are comprehensive insurance, while others provide limited benefits or discounts and should not be treated as substitutes for health insurance. Comparing premiums, deductibles, coverage exclusions and potential out-of-pocket costs can help you determine which option fits your needs.

A financial advisor can help you account for healthcare costs when building a budget or financial plan.

1. Cost-Sharing Programs

People in these plans pool their resources to share medical costs. They don’t function in the same way health insurance does, but they are similar in some ways. For instance:

• Members pay monthly fees that are similar to insurance premiums but generally lower.
• When members receive care, they pay a fee much like a co-pay to cover part of the cost.
• The rest of the cost of care is covered at a rate similar to insurance.
• Programs negotiate discounts with doctors, hospitals and other providers.

Medical cost-sharing programs are sometimes faith-based. Some programs ask members to follow tenets of the faith, such as avoiding alcohol. They might also offer several options with different share requirements. Shares are often based on the number of people in the family and the age of the oldest applicant in household. In one example in particular, annual shares range from $1,000 for young, unmarried singles to as high as $10,500 for families.

2. Short-term Insurance

Short-term insurance offers coverage for periods of a month to a year. While it doesn’t meet the essential benefit requirements to satisfy the mandate of the Affordable Care Act, it works similarly to long-term health insurance.

Short-term health insurance typically has a low deductible. It may not matter whether you get treatment in or out of a provider network. And there is no open enrollment period.

Premiums are lower than most long-term health insurance. Some providers advertise premiums as low as $3 a day. ¹

One shortfall is that short-term health insurance does not cover pre-existing conditions. Nor does it typically cover mental health treatment or costs of a normal pregnancy, although it may cover complications of pregnancy.

3. Association Health Plans

Association health plans cover groups of small businesses and individuals. Writers, musicians, farmers, actors and other self-employed people may be able to join industry-specific association plans.

These groups buy health coverage for all members, often at significant savings to what members would pay if they bought insurance on the open market as unaffiliated individuals. Although association health plans are still a form of health insurance, they are not regulated as tightly and lack some of the minimum benefits required for ACA plans.

Individuals and small businesses can check with their state’s department of insurance by phone or online to identify an appropriate association health plan. Some states are better for health insurance than others. The National Association of Insurance Commissioners maintains a list of state websites and contact information. Chambers of Commerce and professional organizations may also have information on association health plans.

4. Health Savings Account (HSA)

If you have a high-deductible health insurance plan, including one purchased through ACA health exchange, you may be able to set up a health savings account (HSA). Money you deposit in the health savings account is deductible from your federal income taxes, up to a set amount.

The limit on tax-deductible HSA deductions changes yearly. For 2026, individuals can contribute $4,400. Families can contribute $8,750. ²

You can pay qualifying health expenses including deductibles and co-pays with a debit card tied to the health savings account. If you pay upfront for health services using cash or a credit card, you can reimburse yourself from funds in the HSA.

Either way, disbursements from the account are also free from federal income tax. The combination of tax benefits of the health savings account with the low premiums of high-deductible health insurance make this a lower-cost alternative for those who are still considering traditional health insurance.

5. Health Discount Card

Health discount cards give holders a discounted rate on services from participating healthcare providers. These cards do not act as insurance. They are only for people who are paying cash for medical care. Participating providers may include hospitals, physicians, dentists, optometrists, chiropractors and others. Having these cards may mean you are eligible for discounts on some prescription drugs.

Some cards require an annual or monthly membership fee. Fees are generally less than $10 a month. ³ Others don’t require any fee at all. The discounts vary widely but can be as much as 85%. The major limitation is that providers have to be participants in the card’s plan.

6. ACA Marketplace Plans and Premium Tax Credits

ACA Marketplace plans offer comprehensive health insurance, and eligible households can use premium tax credits to reduce their monthly premiums. The amount of the credit depends on factors such as household income, family size and the cost of Marketplace coverage where you live.

The enhanced premium tax credits available through 2025 expired at the end of that year. The original ACA premium tax credit remains available in 2026 for households that meet the eligibility requirements, though some enrollees could pay more for coverage than under the previous rules. ⁴

Enrollment periods depend on the health-insurance marketplace you use. HealthCare.gov typically opens annual enrollment in the fall and keeps it available into January, while state-run exchanges can set their own schedules. Certain changes in your circumstances can also allow you to enroll outside the annual period through a Special Enrollment Period.

Comparing the premium and out-of-pocket costs of a Marketplace plan after any available tax credit with limited coverage options can help you evaluate the total cost of each choice.

7. Government Health Programs

Medicaid provides free or low-cost health coverage to eligible people based on factors that can include income, household size, pregnancy, disability and age. Eligibility rules differ by state because some states have expanded Medicaid eligibility and others have not. You can apply for Medicaid at any time during the year.

Medicare generally provides health coverage to people age 65 and older and certain younger people who meet disability or other eligibility requirements. Coverage is divided among different parts that cover hospital services, medical services and prescription drugs.

The Children’s Health Insurance Program (CHIP) provides free or low-cost coverage to eligible children and, in some states, pregnant women in households that earn too much to qualify for Medicaid. Medicaid and CHIP applications can be submitted throughout the year.

Eligibility and costs depend on the program and your circumstances, so check your state Medicaid agency, Medicare or the Health Insurance Marketplace before choosing private coverage.

Bottom Line

Conventional health insurance available through the Affordable Care Act exchange has appealing benefits such as coverage of pre-existing conditions and the possibility of subsidies. But the premiums for conventional health insurance don’t fit every budget. One of these lower-priced alternatives may give you the protection you need for a price you can afford.

Tips for Managing Your Healthcare Costs

• Get expert help. Just as you would consult a healthcare professional to assess your well being, be sure to consult a financial professional to asses your fiscal well being. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Shop around. Considering alternatives to health insurance is important for maintaining a healthy budget. A comprehensive budget calculator can help you understand which option is the best for you.
• Get informed about the future. Medicare for All is a major issue in the 2020 presidential election. Find out all you can about what it would mean for your and your healthcare expenses as you strategize alternatives to lower your costs.

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