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:
- Through a job: private insurance (Blue Cross Blue Shield, Aetna, etc.)
- Through the government: Medicare, Medicaid
- Through the individual exchange: "ObamaCare" plan
- Through lower-cost supplemental and short-term plans: healthcare (Mira).
2. Eligibility: all 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 tiers of pricing and/or how broad or narrow the network is. This may also correlate with how high the monthly premium is. For example, a broader 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 anytime of the year as long as you're eligible.
Sounds Complicated - so how do I determine the best plan for me?
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. Sometimes, you are 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.
Is there a penalty to go without insurance?
Effective 2019 tax year, the individual mandate was repealed at the federal level.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/month. There is no individual mandate/fine in New York State.
Is there an alternative if I can't afford any plans?
Last but not least, if you can‚t afford any plan, understand that being uninsured is not a shame but a financial decision. Depending on your monthly budget, getting a plan that is more expensive than rent and groceries bills may not be sustainable.
If you just go to the doctor once or twice a year, Mira may make a good option. Mira helps you get affordable doctor visits, lab tests, and prescription drugs without insurance, for $25-45/mo. Below you will find a guide that explains the basics of several types of health insurance and health care plans. Learn more.
Private insurance (employer-sponsored)
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 to pay 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
Who is eligible: Low income individuals (typically <$20K annually), families, children, pregnant women, the elderly and people with disabilities.
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Monthly Cost/Cost-sharing: The cost depends largely 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 in order 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 full 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: Anytime of the year as long as the individual or family is eligible.
Who is eligible: Citizens and residents aged 65+ as well as those with disabilities and people with End Stage Renal Disease.
Monthly Cost/Cost-sharing: There are three types of Medicare coverage:
- Part A (for 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/or Part B. If they‚re eligible for Medicare when they turn 65, they are able to sign up during the 7-month period that:
- Begins 3 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/Cost-sharing: 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 are also 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-sharing: 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 a 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.
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 article on Healthcare Sharing Programs, these plans can cost families $300-$500/month. This can save families up to 50% each month.
Type of plans: Medical cost sharing plans are not insurance plans. Thus, the 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, Medshare, Zion, Trinity Healthshare, and Samaritan Ministries.
Top 4 misconceptions when it comes to getting 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 phase but it can be misleading. $0 after deductible does not mean the service is free for you, you are still responsible to pay full cost or negotiated until deductible is met. Deductible is the 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 them 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 3 types of Medicar. Part A for hospital is free, but Part B (doctor visit), and Part D (for drugs) have a monthly premiums. Some Medicare Advantage plans (Medicare managed by private carriers) have low or no monthly premiums, however.
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 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.
You can read more about these bills and how to avoid them here.
Average Health Insurance Cost Per-Person in 50 States
The table below is adapted from the ValuePenguin article on Average Cost of Health Insurance in 2020. These costs are for a 21 year old applicant.