With the election (somewhat) behind us, it’s time to get back to the other pressing issues of our lives. And for a lot of you, that’s open enrollment.
Healthcare.gov officially opened on November 1st and will stay open until December 15th. Choosing a plan is a stressful process, and you may be looking for ways to avoid it. But don’t just automatically re-enroll in last year’s option. Instead use these tips to make the task a bit easier and make the most of your health insurance options.
Compare the total cost, not just premiums
The biggest pain point comes from having to compare different options. Even before you get to specific plans, the exchange offers three plan categories:
- Bronze: Lower monthly premiums but your deductible is higher and you pay more when you get care.
- Silver: Higher monthly premiums than Bronze but the deductible is lower and the plan covers more of your costs.
- Gold: Higher premiums than silver, but your deductible is lower and your plan pays more when you get care.
With so many options, it’s hard to know what to focus on. It’s tempting to just pick the plan that costs the least on a monthly basis and go with that.
But it’s important to look at these policies as a whole, rather than just focusing on premiums, or out-of-pocket maximums or your deductible. If those terms sound like mumbo jumbo to you, here’s a quick primer on what they mean:
- Premiums: What you pay on a monthly basis for your coverage.
- Deductible: The costs you have to pay before your plan begins helping out with covered services. It’s usually a fixed dollar amount and varies based on individuals, families and whether you receive care from an in-network or out-of-network provider.
- Copay: Like a deductible, your copay is a fixed amount that you pay for your care. However, you incur this expense when you receive a service or fill a prescription and have met your deductible. The amount of your copay fluctuates depending on the service or type of prescription.
- Coinsurance: Like your copay, coinsurance is your share of the costs of a health-care service. But instead of a fixed amount per service or prescription, you have to pay a percentage of a total charge for the service. You start paying coinsurance after you’ve paid your plan’s deductible.
- Your Out-of-Pocket Limit: Last but certainly not least, you need to pay attention to your total out-of-pocket limit. As the name suggests, the out-of-pocket limit is the maximum you can pay during a coverage period (usually a year) for your share of covered costs. In other words, this provision limits the total amount that you have to shell out in case of a catastrophic event like a terminal illness or car accident. Be careful though: this limit does not count premiums, balance billing amounts (i.e., billing from individual service providers) for non-network providers, other out-of-network cost-sharing, or spending for non-essential health benefits.
Healthcare.gov offers a function that gives you the estimated yearly total costs. This includes premiums, deductibles, and all out-of-pocket costs, based on the level of care you expect to use. You have to choose expected use before the function shows up, so make sure to edit that portion. You can then click the compare function, which puts the plans side by said so you can see the different parts and compare the against each other.
Use the filter function
The total costs and compare functions are super helpful, but sometimes you have too many options to compare easily. My Illinois clients, for instance, have to sift through more than 50 different plans. They get overwhelmed. A filter can help with that. Use one that narrows your options down to plans that have features that are important to you. You can filter according to variables including:
- Monthly premium
- Maximum deductible
- Health Savings Account (HSA) eligibility
- Plan categories
- Health plan types
- Medical Providers
- Prescription drugs
- Insurance Companies
Maybe your maximum deductible is most important to you. Or perhaps you want to make sure your current providers are covered under your plan. I like to have my clients focus on HSA eligibility. HSAs are the only savings vehicles that offer triple tax savings that could offset some high medical costs. They offer a tax deduction for your contributions. If you invest some of your funds, that money grows tax free. And you get a tax deduction for distributions that you spend on medical expenses.
There are four criteria to qualify for an HSA. The first of which is that you have to be covered under a High Deductible Health Plan (HDHP). While that definition seems self-explanatory (a plan with a high deductible, right?), the IRS adds a couple more caveats:
- Having a deductible of at least $1,400 for an individual or $2,800 for a family.
- The total out-of-pocket expense (including deductibles, copayments and coinsurance) can’t be more than $7,000 for an individual for an individual or $14,000 for a family.
- Except for preventative care, the plan not provide benefits for any year until the deductible for that year is met (this was expanded in 2019).
So even if your plan has a high-deductible — that is, what you must pay before insurance kicks in — but doesn’t any of the other two, it doesn’t qualify for an HSA. A client found this out the hard way when he selected a plan with a high deductible of $2,600, assuming that qualified him for an HSA. Unfortunately, his plan exceeded the max out-of-pocket limit, so he was stuck with a high deductible without the benefit of the HSA.
It turns out this is a common issue for people who get their health care on the exchange. The vast majority (83% based on 2016 data) of plans with a high-deductible still don’t qualify for an HSA because of the other two criteria.
Filtering for HSA eligibility is a prime example of a situation where using the right filter can save hundreds and even thousands of dollars. It also makes the picking process a bit easier. My client’s 52 options went down to two when he filtered for an HSA. We could compare the particulars of each plan and pick one that best suited his needs.
Keep in mind if you’re comparing the costs of an HSA plan with another that doesn’t qualify, don’t forgot to take into account your tax savings in your comparison. (The estimated yearly costs comparison on the site does not take that into account.) The easiest way to do that is multiple your expected contributions by your highest marginal tax rate.
Here are a few of other issues to weigh besides the total costs and the HSA:
- Accessibility: A lot of your decision may be based on accessibility. If you want to keep our current primary-care providers, and only the higher costs plan covers them, that access was more important than cost.
- Services: When considering the costs, you should also determine at what rate the services that you need — mental health care, prescriptions, etc. — are covered under each plan. You want the plan that covers most of your actual costs.
- Risk: Ask yourself how much risk you can accept and what you’ll pay to avoid it. A high deductible plan or one with a high out-of-pocket maximum could cost you a lot in the worst-case scenario. If that type of situation scares you, a higher premium for more coverage may be worth it to you.
Overall, you have to look at your specific situation and make sure that your plan covers what you need at the most affordable cost.
Don’t wait until the last minute
We all like to procrastinate, especially on things we don’t want to do. But choosing the right health insurance plan can make a big difference in the care you receive and your total costs savings. So, make sure to give yourself enough time to choose, in case you need to compare a lot of plans, call your medical provider to verify they are covered, and contact your insurer or the people at healthcare.gov if you need additional guidance.
You can find free, local Assisters on the Healthcare.gov site. These are trained and certified individuals whom are required to provide fair, impartial, and accurate information, as opposed to brokers who are paid by insurance companies. (You can filter out agents and brokers.)
Also don’t forget that the exchange isn’t the only place you can get insurance if you’re self-employed. Many unions and professional organizations offer insurance. You can also go directly to private insurances to check out their policies. There are also Health Cost Sharing programs like Liberty Healthshare, CHM, kNew Health to cover those who want affordable, no-frills healthcare.