It's important to consider types of coverage, eligibility, monthly cost, the types of plans, and enrollment period when choosing the right health insurance plan for you. Private insurance, Medicaid, Medicare, and Individual Health Insurance plans are all options you can consider.
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5 Things To Know Before Choosing a Health Insurance Plan
1. Type of coverage. There are many different ways you can obtain coverage. They can be grouped into four main categories:
- Government Based Health Insurance
- Marketplace Exchange
- Supplemental Plans
- Health Share Plans
2. Eligibility: Many health insurance plans have eligibility criteria. They depend on your income, age, employment, and where you live.
3. Monthly cost: The monthly premium for each plan can range from no-cost (Medicaid) to a few thousand dollars for a family Gold plan (individual exchange). Premiums must be paid monthly, regardless if you use the insurance or not.
4. Type of plans: Plans can have different pricing tiers and how broad or narrow the network is. This may also correlate with how high the monthly premium is. For example, a wider network may cost more.
5. Enrollment period: This is when you can enroll in a health insurance plan. Some plans have a specific time frame for when you can enroll, and for other plans, you can enroll any time of the year as long as you're eligible.
How To Pick the Best Health Insurance Plan for You
Picking the best-suited plan for you comes down to three things:
1) What are you eligible for? Try to determine what options you are eligible for. You may be qualified for more options than you think.
2) What are your healthcare needs? If you are relatively healthy, getting the top-tier plan may not make sense if you have to bear the cost. Meanwhile, if you have a chronic condition and need expensive treatments, getting a catastrophic plan may not be the best option for you. Most preventative care services like wellness visits and flu shots are covered at no out-of-pocket costs. A plan's summary of benefits might help you navigate if the plan is right for you in terms of your needs.
3) What can you afford? Of course, everyone wants to get the lowest-cost and most comprehensive plan, but healthcare is expensive. Look at your financial situation as a whole and see which options make the most sense from a financial perspective.
Health Insurance Penalty
Effective 2019 tax year, the individual mandate was repealed at the federal level. This means you will not be fined for not having or cannot afford health insurance.
Some states like Massachusetts, New Jersey, California, Rhode Island, or the District of Columbia reinstated this at the state tax level. The penalty itself is not an actual cash fine but a reduction of your annual tax refund (at the state level). In California, the tax refund reduction is $62 per month. There is no individual mandate or fine in New York State.
Average Health Insurance Cost Per-Person in 50 States
The table below is adapted from ValuePenguin on the Average Cost of Health Insurance in 2020. These costs are for a 21-year-old applicant.
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Health Insurance Options
Below we outline different health insurance options based on eligibility, cost, type of plans, and enrollment period.
Employer-Sponsored Health Insurance
Who is eligible: Typically, employees of companies with 50+ people will be eligible for private insurance. If you get laid off from a company, you will be eligible for COBRA, but you will be responsible for paying 100% of the monthly premiums.
- In 2019, annual premiums were $7,188 for single coverage and $20,576 for family coverage.
- Employers often pay for 80% of the cost, leaving the average monthly contribution for an employee at $100-$200 for an individual health plan.
Type of plans: Health Maintenance Organization (HMO), Preferred Provider Organization (PPO), Point of Service (POS), High Deductible Health Plan (HDPL)
- You are eligible to enroll when you start your job.
- Every year, there is an annual renewal. This period depends on your employer and usually lasts about 60 days.
Notable companies: Cigna, Aetna, UnitedHealth, Anthem & Blue Cross Blue Shield, Humana
Government-Based Health Insurance
Government-based health insurance plans are subsidized medical plans provided by the government to qualified individuals.
Who is eligible: Low-income individuals (typically <$20K annually), families, children, pregnant women, the elderly, and people with disabilities.
Monthly Cost: The cost depends mainly on the state, as each state has the option of setting premiums. Medicaid is often the lowest to no-cost option for health insurance.
Individuals on Medicaid that earn a higher wage, meaning those with incomes at or above 150% of the poverty level, may pay more for the following health services:
- For prescriptions, it's possible that states will charge coinsurance for up to 20% of each drug‚s cost to encourage the use of lower-cost drugs.
- Additionally, if individuals in this group use the emergency room in a non-emergency situation, they may potentially be charged up to the total price for care. In this case, it is up to the hospital‚s physicians to determine whether the visit was an emergency.
Type of plans: Public Medicaid and Managed Medicaid.
Enrollment period: Any time of the year as long as the individual or family is eligible.
Who is eligible: Citizens and residents aged 65+ and those with disabilities and people with End-Stage Renal Disease.
Monthly Cost/Cost-sharing: There are three types of Medicare coverage:
- Part A (for the hospital) is free if you paid more than 7.5 years of taxes.
- Part B (for doctor visits) costs, on average, $144 a month.
- Part D (drugs) costs on average $34 a month.
Type of plans: Public Medicare and Medicare Advantage.
Enrollment period: When an individual is first eligible for Medicare plans, they will have a 7-month Initial Enrollment Period to sign up for Part A and Part B. If they‚re eligible for Medicare when they turn 65, they can sign up during the 7-month period that:
- Begins three months before the month they turn 65.
- Includes the month they turn 65.
- Ends 3 months after the month they turn 65.
Individual Health Insurance
Who is eligible: Under the Affordable Care Act, Individuals who live in the United States and are U.S. citizens. Although anyone can enroll, the federal subsidy is available for those who make less than ~$48,000.
Monthly Cost: According to AARP, the average health insurance cost for single coverage premiums in 2020 is $388 per month.
Type of plans: Bronze, Silver, Gold, Platinum.
Enrollment period: The Open Enrollment period for 2021 is November 1, 2020- January 21, 2021. If you don't enroll during the Open Enrollment Period, you must wait for the next Open Enrollment period. There is also a special enrollment period if you recently moved or lost a job.
Notable companies: OscarHealth, Fidelis, Oxford Health Plan, Blue Cross Blue Shield
Who is eligible: Supplemental plans are additional plans that fill coverage gaps from your other health insurance plan. Anyone is eligible for a supplemental plan; however, there are different types of supplemental plans for varying needs. There are several supplemental plans for individuals with Medicare, such as Medigap plans and Medicare part D, and several plans for senior-specific needs.
Monthly Cost: Cost varies depending on the type of supplemental plan you are getting and what this plan covers. According to research from eHealth Medicare, in 2019, the average medicare supplemental plan premium was approximately $152.
Type of plans: There are many types of supplemental plans depending on your needs as a patient. Some of these options include membership with Mira, critical illness insurance, disability insurance, dental insurance, and life insurance.
Enrollment period: You can add a supplemental health insurance plan at any time and do not need to wait for the open enrollment period. They can be purchased from a private marketplace or an insurance company.
Health Share Plans
Who is eligible: Health share programs or ministries are groups of people who opt to share each other‚s monthly medical expenses. These groups are usually created based on religious organizations; however, there are now medical cost-sharing plans that do not require any religious affiliation.
Monthly Cost/Cost-sharing: The appeal of health shares is that they may cost families less each month. According to Kitces, on Healthcare Sharing Programs, these plans can cost families $300-$500 per month. This can save families up to 50% each month.
Type of plans: Medical cost-sharing plans are not insurance plans. Thus, legalities and terminology may differ from a typical health insurance plan. For more information on a sharing plan, it is best to contact an affiliate of the organization.
Enrollment period: There is no enrollment period for health sharing plans, as they are not insurance plans. For more information on when you can enroll in a specific sharing plan, contact the organization directly.
Notable companies: Christian Healthcare Ministries, Liberty Healthshare, Medishare, Zion, Trinity Healthshare, and Samaritan Ministries.
Four Misconceptions About Health Insurance
- Penalty without insurance: The individual mandate was effectively repealed for the 2019 tax year at the federal level. Some states like CA, NJ, MA, and the District of Columbia reinstated it at the state level. The penalty is not an actual cash penalty but a reduction of your annual tax refund.
- "$0 after deductible": Many health plans choose to use this phrase, but it can be misleading. $0 after deductible does not mean the service is free for you; you are still responsible for paying for the total cost or negotiated until the deductible is met. A deductible is an amount you have to pay out-of-pocket before your insurance starts paying.
- "Unlimited preventative care": Under the Affordable Care Act, certain preventative care services like wellness visits, flu shots, and STD testing are available at no cost. However, there are limits on how many you can use a year. For example, the first STD test may be free, but not if you want to be tested every other month. Sick visits like urgent care visits are not considered preventative care services.
- Medicare is free: There are three types of Medicare. Part A for the hospital is free, but Part B (doctor visit) and Part D (for drugs) have a monthly premium. Some Medicare Advantage plans (Medicare managed by private carriers) have low or no monthly premiums however, some.
How to Avoid Surprise Medical Bills
Regardless of which health insurance plan you choose, you may come across a surprise medical bill after receiving medical care or having to pay out of pocket before meeting the deductible. There are two common scenarios in which you would receive a surprise medical bill: insurance companies can deny a claim submitted by the hospital or determine that the hospital is out of your network.