Here is a quick list of tips for getting the best health plan. No matter how you shop, this list will ensure you don’t over or under-buy health insurance.Shopping for health insurance used to be a lot harder. This video from before the ACA became law still has some smart advice. Be glad you no longer have to worry that your premium will triple because you were treated for hay fever once.
ObamaCareFacts.com Health Insurance Tips and Tricks
Health insurance is a big subject, so we suggest also reviewing our pages on how health insurance works, how to compare health plans, how to buy a health plan, and health plan types as well. We also suggest reviewing cost assistance, the Health Insurance Marketplace, and ObamaCare’s benefits for a full picture of health insurance under the ACA.
These tips go beyond simply buying a health plan, below is most of what you’ll need to know about shopping for a health plan under the Affordable Care Act inside or outside of the new Health Insurance Marketplaces:
- When you shop for coverage, make sure it’s minimum essential coverage. That is the type of coverage you need to avoid the fee.
- If you can’t afford coverage, you may be exempt from the mandate to obtain coverage and maintain it throughout the year or pay a fee.
- No matter what, if you are under 65, you are eligible to buy any private plan on or off the Health Insurance Marketplace if you can afford it. You can’t be denied for being sick in the past or charged more based on gender. Most people will have to Shop Around to find the best plan.
- Only a limited amount of factors affect what you pay for your health coverage. Aside from the few things insurers can base your cost on, many types of cost assistance can help lower what you pay for premiums and cost sharing. These include Tax Credits, Cost Sharing Reduction subsidies, Medicaid, and CHIP.
- Cost assistance is based on Modified Adjusted Gross Income (MAGI) and the Federal Poverty Level (FPL).
- Health Insurance has a few different costs. Premiums are what you pay up front. Copays are a set dollar amount you pay before your deductible, coinsurance is a percentage amount you pay after your deductible, all covered in-network costs go toward your deductible and out-of-pocket maximum. When you reach your maximum, your insurer pays 100%. This all resets each policy period.
- All plans provide services from at least ten essential benefit categories. All the essential care you’ll need if you break a leg, get cancer, need birth control, go into labor, need rehab services, or mental health services, drugs, etc. is included. Most services are subject to cost sharing, but a few like an annual wellness visit and key preventive care are free for you at the point of service.
- All plans have limits on maximum deductibles and maximum out-of-pocket maximums in a policy period (in 2017 $7,150 for an individual and $14,300 for a family). Since all plans limit the maximum amount you can spend out-of-pocket in a policy period, and your claims can never be denied due to reaching dollar limits, even the cheapest major medical plan covers you in an emergency.
- When you apply Cost-Sharing Reduction subsidies or if you have Medicaid or CHIP, out-of-pocket maximums and deductibles will be lower. If you get a higher premium plan, these cost sharing amounts can be reduced as well.
- Look at all of the medical services you and your family use in a year and their costs. On low deductible plans, make sure those services are covered by coinsurance or generous copays. On high deductible plans, copays are much more important. Remember copays are your cost before deductibles, coinsurance is your share of costs after deductibles. If you use a service often, a small cost sharing difference can be a big deal.
- If you know a family member is sick and will need expensive treatment, your primary concern should be finding a plan with a low out-of-pocket maximum and covered services that meet your needs. You can always ask your service providers which insurance types they think are best for your needs.
- Only covered in-network services count in full toward your in-network deductible and in-network out-of-pocket maximum. You could have separate out-of-network deductibles and maximums, services that aren’t “covered services” may not count at all. Networks are important, going out-of-network in an emergency can mean you are stuck with 100% of the costs.
- A plan’s network includes a drug formulary. This is the cost sharing amounts for drugs covered by your plan. If you take prescription medicine, make sure your plan has good cost sharing and includes your prescription on their formulary.
- If you get an HMO, you’ll need a primary care provider, and you’ll need referrals for care. You’ll tend to have a narrower network. PPOs have a larger network, but are less focused. For a family who knows where they will go for treatment, an HMO is a good choice. If you don’t know, a PPO may be a better bet.
- Individuals, especially healthy ones, can get away with a high-deductible low-cost plan. This will provide catastrophic coverage. On covered in-network services (most essential services you’ll ever need) you’ll never pay more than your deductible out-of-pocket before cost sharing kicks in and you’ll never pay more than your out-of-pocket maximum in a policy period (typically a year). Plus you get a few free benefits with no cost sharing to take care of your basic health.
- On high deductible plans, the money you save in premium payments can be put in a Health Savings Account HSA to help pay for treatment out-of-pocket when you need it. This money doesn’t get taxed, so that is a big plus. It also can help you lower your MAGI, meaning you could qualify for more assistance. Just keep in mind, you could owe up to the full out-of-pocket maximum in a short time in an emergency (although you can typically pay this bill over time).
- Pay attention to your deductible. In an emergency, you could owe your whole deductible at once after this coinsurance kicks in. Even then, expensive treatment could result in you owing your whole maximum at once. Once you reach your maximum your insurer pays 100%.
- It’s important to understand your premium buys you coverage, some cost sharing, and protection in an emergency. It does not simply pay for all of your care. In fact, some plans require you to pay for almost all of your care.
- Cost sharing is the main benefit of higher premium plans, but some higher premium plans will also have better networks and allow you to access more covered services more often. If you have a lot of medical needs, this could provide extra value.
- It’s often cheaper, in the long run, to keep your premium low and simply pay the deductible and maximum in an emergency. For individual plans, especially subsidized ones this is truer. Family plans have higher out-of-pocket maximums, so cost sharing and a low deductible becomes more important for families. If only one family member gets sick you could be out the full maximum on a family plan, if that same person had their own coverage that maximum would be less than half the amount you’d pay as a family. So if you have one very sick household member and only a few people in your household you could consider individual plans for everyone.
- If you get in a worse case scenario where you’ll need tens of thousands in care, no plan will keep you from paying your full maximum in a policy period. It is for this reason lower premium, catastrophic plans, are attractive. However, good coinsurance and a low deductible can keep you from owing large amounts at once, since the cost of your treatment will typically accrue slower with the insurer paying the majority of claims. Plans with lower maximums could provide the best value for some.
- For individuals and Families buying private insurance, you’ll base your plan choice on cost assistance. If you make less than 138% FPL, and your state expanded Medicaid, get Medicaid. If you make less than 250% FPL, get a Silver plan. If you make less than 400% FPL any Marketplace plan will work. However, if you make 300% or more FPL check-out both marketplace and non-marketplace options.
- As a rule of thumb, Silver plans with both premium and out-of-pocket assistance cost assistance provide the best value. They are the standard benchmark plan cost assistance is based on. They tend to be able to be paired with an HSA, which can be used to qualify for even more assistance. When paired with Cost Sharing Reduction subsidies specifically, they provide the best value health insurance on the market (due to the reduction in out-of-pocket costs). They aren’t perfect, but they are pretty close. With that said, those who don’t qualify for out-of-pocket assistance may find a better value with Bronze, Gold, or even Platinum plans.
- Beware high-end plans. There will be a 40% Excise Tax “Cadillac” on high-end Premium Health Insurance Plans starting in 2018. Unless you need some serious medical treatment, the added cost will often not be worth the benefits. A lot of price shock under the ACA is related to overbuying. “The best plan” isn’t always the most expensive, and it certainly isn’t always the cheapest. It depends just as much on your needs as it does the price tag.
- More than 50% of Americans get their coverage through work. If you have access to employer-based plan, make sure it meets affordability and minimum value guidelines. Also be aware your family may not be able to get cost assistance if you have an employer-sponsored plan. When in doubt, lower earning workers should pick the cheapest employer-based plan if they have the option.
- No one has to take the coverage their work offers them, but they will miss out on employer contributions.
- Sometimes group plans can offer the best value. Some employers offer self-managed group plans, but group plans aren’t limited to employers only.
- If you are over 65 you’ll need to navigate the private Medicare insurance industry. As a rule of thumb always get Parts A&B, and get Part D with Medigap, or Part C with a drug plan during your initial enrollment period. If you overbuy, you can scale back during your next enrollment period. If you don’t get the supplemental coverage, you could end up paying more down the road. We suggest using Medicare.Gov to shop for plans with the help of a local in-person agent.
- In-person agents will help Individuals and families to find the right plan, and it’s smart to utilize the fact this industry exists. Getting the right health plan is confusing and getting assistance from an expert is vital. Pitfalls are that some brokers have a limited selection of plans they can sell. Also, some agents may lack an understanding of your medical needs and your local networks.
- On that note, prices and networks depend on region. If you have a Primary Care Provider (PCP) simply ask them what coverage they think is the best for your family. That will typically narrow your coverage choices to a few plans. Doctors deal with insurers everyday; they know who the “insurer rock stars” of your region are.
- Getting it right the first time isn’t likely. Chances are you won’t find the perfect plan right away, that is OK. Every year you get a chance to shop around again. By knowing what wasn’t covered last year, you’ll be able to pick a plan that covers it this year.
- Whatever you do, don’t go without coverage. The number one reason for bankruptcy in America is bankruptcy related to medical bills. Your out-of-pocket maximum will save you from bankruptcy in an emergency and your plan will ensure that you get the care you need. Don’t put your wallet and life on the line by going without coverage. Even the cheapest bare bones Major Medical plan provides amazing coverage in the worst cases.
- By 2025 when all the ACA’s provisions have taken effect and the uninsured rate should be as low as it will get. 25% of uninsured will qualify for Medicaid and CHIP but will not fill out the form to get free or low-cost coverage. If you can’t afford coverage, make sure you don’t qualify for Medicaid before stopping the search.
Now that you’ve read our health insurance tips and tricks hopeful you have a better idea of what health plan will be right for you. Check out our top pick for best health insurance plan.