Health insurance is one of the most important purchases you'll make all year. Comparing health plans and finding health insurance quotes and information has never been easy, and you have new rules and terms to learn in the wake of massive changes brought about by health care reform.
Take heart, though. You have important consumer protections on your side, brought to you by the Affordable Care Act, and with a little know-how and research, you can find a health plan to cover you and your family.
When to buy a health plan
Before 2014, you could buy a health plan at any time of the year. But now, except for special circumstances, you can purchase coverage only during the period known as open enrollment.
Open enrollment for 2016 health plans runs from Nov. 1, 2015 to Jan. 31, 2016.
You can buy a health plan outside the open enrollment period if you have a "qualifying life event," such as moving outside your insurer's coverage area, getting married or having a baby. You can also buy coverage outside the open enrollment period if you had a special situation that prevented you from enrolling earlier.
Qualifying life events that will give you a 60-day “special enrollment period” are:
- Getting married.
- Having a baby, adopting a child or placing a child for adoption or foster care.
- Becoming a U.S. citizen.
- Leaving incarceration.
- Losing other health coverage due to job loss, divorce, COBRA expiration or aging off a parent’s plan.
- Losing eligibility for Medicaid or the Children’s Health Insurance Program (CHIP).
- For people with a marketplace plan already, having a change in income or household status that affects eligibility for premium tax credits or cost-sharing reductions.
- Gaining status as a member of an Indian tribe.
You can sign up at any time of year for Medicaid or CHIP, federal and state insurance programs for low-income families.
Some health insurers sell short-term, or temporary, health insurance plans outside the open enrollment period. But these plans provide only limited benefits, and they do not count as sufficient coverage to meet the government's requirement to have health insurance. Remember, unless you qualify for an exemption, you pay a tax penalty if you don't have sufficient coverage for most of the year.
That fee is increasing in 2016 to 2.5% of your yearly household income or $695 per person ($347.50 per child under 18). You'll have to pay whichever number is higher.
You can’t be declined
Before health care reform, individual health plans varied widely in what they covered, and insurers could deny your application for insurance or boost your premiums if you had a health condition.
Now insurers have to cover you regardless of your health history, and they can't charge you more because of medical conditions. You qualify for health insurance even if you're pregnant, have a long-term condition like diabetes or a serious illness such as cancer. Health plans also can't cap the amount of benefits you receive, and they can't make you pay more than a certain amount out of pocket for health care each year. In addition, all individual health plans must cover a standard set of 10 benefits:
- Outpatient care (such as doctor's office visits)
- Emergency room visits
- Hospitalization (such as surgery)
- Pregnancy and maternity care
- Mental health and substance abuse treatment
- Prescription drugs
- Services and devices for recovery after an injury or due to a disability or chronic condition
- Lab tests
- Preventive services, including a variety of health screenings, immunizations and birth control. You pay nothing out of pocket for preventive care when you see health care providers in a health plan's network.
- Pediatric services, including dental and vision care for kids
Types of individual health plans
Although they must cover certain benefits, health plans still vary in how they are structured and how much of your health care costs they pay.
Health plans are divided into five categories to make comparing them easier. The categories are based on the percentage of health care costs the plans pay and the portion you pay out of pocket, including the deductible, copayments and coinsurance. The percentages are estimates based on the amount of medical care an average person would use in a year. The categories are:
- Catastrophic - These plans generally have high deductibles and pay less than 60 percent of your health care costs. Only people under age 30 or who have a financial hardship can purchase a catastrophic plan.
- Bronze - Pays 60 percent of your health care costs. You pay 40 percent.
- Silver - Pays 70 percent of your health care costs. You pay 30 percent.
- Gold - Pays 80 percent of your health care costs. You pay 20 percent.
- Platinum - Pays 90 percent of your health care costs. You pay 10 percent.
Generally, the less you pay out of pocket for the deductible, copayments and co-insurance, the more you pay in premiums for the coverage.
How to buy
Ready to shop? You have lots of choices: Comparison websites, going directly to a health insurance company via its website or call center, contacting a health insurance agent in your area or using your state’s health insurance marketplace (also called exchange).
Not all insurers sell plans through the government-run marketplaces, so you'll find more options by shopping both in and outside the marketplaces.
If you qualify for subsidies, you can get them only by buying through your state’s health insurance marketplace. Healthcare.gov has links to state marketplaces.
You could be eligible for a premium discount in the form a tax break if your income falls below 400 percent of the federal poverty level (for 2016 health plans, the 400 percent threshold is $46,680 for a single person). You qualify for a plan with reduced out-of-pocket costs if your household income falls below 250 percent of the federal poverty level ($29,175 for a single person for 2016 plans).
If you qualify for a tax break, you'll see the premium savings as you shop and compare plans on the marketplace website. Keep in mind that catastrophic plans do not qualify for subsidies.
- Comparing health plans
Think about your health care needs and budget, and then compare plans to find the best fit.
Here are questions to consider:
• How is the plan structured?
A health maintenance organization, or HMO, generally doesn't cover care outside its provider network, except in special instances. You must select a primary care doctor in the network who coordinates your care and pay a low copayment for each office visit.
A preferred provider organization, or PPO, also features a network of providers, but still provides some coverage when you see providers outside the network. You have more flexibility with this plan than with an HMO. You can see specialists, for instance, without a primary care doctor's referral.
A point of service, or POS plan, works like an HMO if you see providers in the network and get referrals from your primary care doctor to see specialists. But you can also see doctors and specialists outside the network.
A high-deductible health plan with a health savings account features a higher-than-average deductible and a lower-than-average premium. The accompanying savings account lets you set aside pre-tax dollars for out-of-pocket medical expenses. Unspent money carries over to the next year, and you can keep the account, even if you change health plans.
• Who is in the network?
Check the health plan's network to make sure it has a good selection of hospitals, doctors and specialists. Make sure the providers you want to see are included in the network.
• What is covered?
Check to see if the prescription drugs you take are included in the plan's list of covered medications. Compare other benefits. Some plans may go above and beyond coverage mandated by law.
• How much do you pay out of pocket for care?
Review the deductible, copayment and co-insurance amounts. The deductible is the amount you pay each year for covered benefits before the health plan pays anything (except for preventive care). The copayment is the fee you pay for each office visit. Not all health plans have copayments. Co-insurance is the percentage of covered health care costs you pay after you have met the deductible.
• How much do you pay for coverage?
Compare the annual premium among health plans with the same coverage.
• What's the bottom line?
Think about how much health care you will probably use in the next year, and compare how much it would cost in health insurance premiums and out-of-pocket expenses for each plan you consider. If you rarely go to the doctor, then you are probably better off buying a high-deductible health plan with a low premium than a more expensive plan with a low deductible.
Making a smart health insurance choice requires time and effort, but the homework you do now will pay off later when you and your family need care.