Not everyone is eligible to get health insurance from their employer – so, how to shop for health insurance? For independent contractors, those who lose their job, and people who want to shop around for different plans, there are alternatives.
Ways to Buy Health Insurance
Most of us get health insurance from our employers. In fact, over 150 million Americans get health insurance for themselves or their family from an employer sponsored health plan. Employers are able to negotiate bulk rates by getting coverage for an entire organization at once.
If you don’t get health insurance from your job, there are four primary ways to buy healthcare.
Understanding Costs of Private Health Insurance
When you’re comparing health insurance options, there are a few costs to consider.
Healthcare Premiums
First, health plans have a premium. Your premium is your monthly cost of health insurance.
Insurance plans with higher premiums may make up for it by offering wider coverage of health conditions, more doctors, and better customer care. Premiums are also based on your current healthcare needs.
Deductible
This is the amount you’ll pay before your insurance company will start covering the costs. A $5,000 deductible means if you’re in a serious accident, you’ll pay out of pocket this amount.
Then, your insurance company will cover the rest.
High deductible plans are usually cheaper each month (lower premiums). But if anything goes wrong, you’ll be on the hook for even more money. High deductible plans are most popular among young people who expect to pay very little for health issues.
In-Network Doctors
Health insurance companies provide access to networks of doctors. They negotiate discounts and coverage contracts with thousands of healthcare providers around the country.
Insurance companies may not cover services from your favorite doctor. So while you’re shopping, it’s important to see which doctors are covered. Your preferred doctor or healthcare professional may not be included in your insurance plan.
In this case, you’ll pay full price for their services.
Copays
Copays are the costs of visiting the doctor. These are baseline fees outside of the coverage you receive. Commonly, these range between $50 and $100 per visit. For the most common doctors’ visits, your copay will cover all the care you receive in the office.
Unfortunately, for more complex visits or medications, your copay is just the start. Once insurance gets involved, they may only cover a certain percentage of your total costs, at which point your deductible requirements may kick in.
Lower copays often require higher monthly premiums.
Maximum Out-of-Pocket Expenses
Finally, your healthcare plan will have out-of-pocket maximums. Between your deductibles and copays, your healthcare plan may implement a maximum expense limit.
This high limit ensures you don’t go broke when paying for catastrophic healthcare needs. Cancer and chronic conditions may cost tens of thousands of dollars per year. With maximum out-of-pocket expenses in some plans, you’ll limit how much you’ll pay each year.
All of these factors determine how much your health insurance costs over the course of a year. Most often, when shopping for health insurance you’ll balance all of these costs and factors to find a plan that’s best for you.
What Influences the Cost of Health Insurance?
Your age, how much money you make, how many people you need to cover, and how you plan to use your coverage all affect how much you’ll pay.
A family of 4 looking to cover basic healthcare needs like physicals and checkups may pay less each month than a couple with chronic pre-existing conditions.
What is the Affordable Care Act (Obamacare)?
It’s been a few years since the Affordable Care Act (ACA) was passed into law. But its implications are still felt today.
The ACA made it possible to purchase health insurance directly through a government marketplace. These plans are backed by tax credits that can reduce the cost of insurance for many Americans.
The ACA mandates that insurance plans listed on the government marketplace cover 10 key points (see below).
Each plan listed on the exchange is categorized as Bronze, Silver, Gold, and Platinum. These categories are distinct in what they cover and how much they cost.
What is the Difference Between “Exchange” and “Marketplace?”
You’ve likely heard these terms used interchangeably when you’re looking at ACA plans. They mean the same thing, but the official terminology has shifted to favoring “marketplace” in recent years.
What is Open Enrollment?
Plans available on HealthCare.gov are restricted to an open enrollment period.
To keep things organized, health insurance providers limit when you can sign up for their plans.
This means that if you’d like to switch from your current insurance to something new on the marketplace, you may have to wait.
Typically, open enrollment for Obamacare happens around November each year. This window lasts about 6 weeks.
If you sign up during this time, your health coverage will kick in on January 1 of the next year.
Because open enrollment dates may change each year, you should always confirm when open enrollment begins.
If you purchase insurance directly from an insurance company, you don’t have to wait at all! You can purchase these plans any time of the year.
The 10 Essentials of ACA Plans
If you’re looking to buy health insurance through the HealthCare.gov marketplace, there are 10 things they must include. These essentials may not be covered by plans outside of the marketplace.
Purchasing through the marketplace carries the advantage of knowing your plan will cover these items at a minimum.
- Emergency services
- Surgery or other hospitalizations
- Pregnancy, maternity, and caring for your newborn
- Mental health care
- Prescription drugs
- Wellness and preventative medicine for chronic conditions
- Laboratory and imaging services
- Outpatient care
- Pediatric health, including dental and vision care
- Rehab services to help those with injuries and disabilities
There are also two additional provisions that ACA plans must include and those are covering birth control and breastfeeding assistance.
Saving Money When Shopping for Health Insurance
There are thousands of healthcare plans available to purchase. And they all have different benefits and shortcomings.
As with most products, health insurance requires shopping around to get the best fit!
For starters, check with the HealthCare.gov website to see what plans are available at your income level. Most major insurers have a few plans available on the official marketplace.
Subsidies and Credits
The first way to save on healthcare is to qualify for subsidies.
Buying your own insurance may qualify you for assistance from the government. These tax credits, sometimes called the Advanced Premium Tax Credit, lower your monthly premium.
Additionally, the Cost-Sharing Reduction program may also kick in for some workers. The Healthcare.gov website will tell you if you qualify for these programs.
Shop Around
But remember, these aren’t all of the plans available at the moment. They are a curated list that are all eligible for tax credits and subsidies to reduce the cost of healthcare.
It’s possible to find a very similar plan for health insurance by contacting a broker or the insurer directly.
It can be time consuming to compare rates from different providers. But with a few phone calls and online searches, you can start to get an idea of what
Medicaid and Medicare Eligibility
Medicaid is a state-run insurance program to help low income earners and their families. Your state’s Health Department will have information about how to enroll and to see if you qualify.
Medicare is a program designed for seniors. Those over the age of 65 may be eligible for monthly premium reductions for standard medical care.
Both of these initiatives are there to help those who need it most.
Health Savings Accounts
Your employer may offer you a health savings account (HSA) in place of or in conjunction with medical benefits.
A health savings account lets you save money tax-free out of your paycheck to put into a separate medical savings account.
This is a nice bonus because you don’t have to pay taxes on the money that goes into an HSA.
For added savings, you can pair your HSA with a high deductible plan. High deductibles, or the amount you’ll have to pay before insurance kicks in, usually carry low monthly payments.
You can use your HSA to save up for medical bills and carry a lower monthly premium.
Shopping for health insurance can be stressful. It takes time to call different insurers and compare rates.
But the health and safety of yourself and your family is vital! An extra hour on the phone could save you thousands of dollars each year.
That money could go into your emergency fund or paying down debt.
Don’t get discouraged if you don’t pick the perfect plan this year either. By and large, the insurance marketplace is mostly uniform.
That means that if it doesn’t work out with your current insurer, you can always switch next year!
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