You need health insurance. What do you do? Where do you start?
Prepare to enter the new health insurance landscape, now undergoing its biggest change since Medicare was created in 1965. As major provisions of the Affordable Care Act go into effect, here are some basics for how to shop for an individual health plan. We also explain how costs and deductibles work and what common terms -- such as HMO, PPO and POS -- mean.
New health insurance marketplaces, also called exchanges, opened in every state Oct. 1. Although run by the government, the exchanges sell health plans from private insurance companies. You're not limited to shopping in your state's marketplace, but it's a good idea to start there to see if you qualify for tax credits or subsidies to lower deductibles and other out-of-pocket costs. You can get the discounts or subsidies only on coverage purchased through the marketplace. Here's what to do:
• Find your marketplace. Go to healthcare.gov and click "Apply now." Then choose your state to get a link to its online marketplace. You can also call 1-800-318-2596 to get contact information to apply by phone or in person.
• Gather information. You'll need Social Security numbers, employer and income information, policy numbers for any current health insurance you have and information about employer-based coverage for which you have access. The marketplace will use that data to determine if you're eligible for financial help. You qualify for a discount if your household income is under 400 percent of the federal poverty level ($45,960 for a single person) and lower deductibles and other out-of-pocket costs if your income is below 250 percent of the federal poverty level ($28,725 for a single person).
• Weigh the metals. Plans are standardized into four categories -- bronze, silver, gold and platinum. The categories vary by the percentage of health care costs the insurers pay. With a bronze plan, for instance, you pay 40 percent of your costs on average, and the insurer pays 60 percent. With a platinum plan, you pay 10 percent, and the insurer pays 90 percent. The more you pay out of pocket for health care, the cheaper the plan is. Less-expensive catastrophic plans are also available for people under age 30 or for those who have a financial hardship.
• Compare prices and coverage. You'll see discounted premiums if you qualify for a tax credit, and full prices if you don't qualify or you shop before you apply for financial assistance. Read about what the plans cover and how they work, and check the provider networks to make sure your doctors are included.
• Get help if you need it. Temporary consultants called navigators are available to answer questions about health insurance and help you sign up for coverage. You can also ask an insurance agent for help in choosing a plan.
Some big-name health insurers, such as United Healthcare and Aetna, aren't participating in many of the state marketplaces. Instead, they're selling plans through their own and other websites, retail stores, and through agents.
Don't qualify for discounts in the marketplace? Then don't limit yourself to shopping there. You'll have more choices outside the marketplace, and you might find better prices. Follow these steps:
• Think about your needs. What doctors do you see? How often and what kind of medical care will you need in the coming year?
• Get health insurance quotes from companies serving your area. You can get quotes directly from insurers, or from websites like Insurance.com, or by working with a health insurance agent. An independent agent can help you compare health plans from multiple companies. "Captive" agents can show you plans only from one company. The National Association of Health Underwriters website features a "find an agent" tool to locate professionals in your area.
• Compare costs. Besides the monthly premium you pay for coverage, you will also pay for some of the costs for care, including deductibles, copayments and coinsurance. Generally, the higher the deductible and other out-of-pocket costs, the lower the monthly premium.
• Compare the coverage. How is the plan structured? What is the difference between HMO, PPO and POS? A health maintenance organization limits you to a network of doctors and hospitals and typically doesn't cover care outside of the network. A preferred-provider organization pays a higher portion of your costs when you use providers in the network. A point-of-service plan is a little of both. Whatever plan you choose, make sure the network is wide enough to serve your needs.
None of these counts as coverage to meet the government requirement to have health insurance, but it's important to know what they are.
• Critical illness insurance
Generally these plans pay a lump sum of money if you're diagnosed with one of the covered illnesses, such as cancer, heart attack or stroke. The cash can help meet extra expenses, but you might be better off saving money in an emergency fund than paying premiums for a policy that kicks in under such limited circumstances.
• Disability insurance
Disability insurance replaces a portion of your income if you become too sick or disabled to work. Your ability to make a living is one of your greatest assets, and the chance of becoming disabled is bigger than you might think. Among today's 20-year-olds, 30 percent will become disabled and unable to work for at least three months, according to the Social Security Administration.
• Accidental Death and Dismemberment
AD&D insurance pays a death benefit to a designated loved one if you die in an accident, or pays a partial benefit to you if you lose a hand, foot, limb or eyesight. The policies are cheap because you're not that likely to die in an accident or lose a limb.
• Long-term care
Long-term care insurance pays for care when you can't do two of six basic activities on your own - bathing, toileting, transferring in and out of bed or a chair, eating, dressing, continence - or you have a severe cognitive impairment. Health insurance, including Medicare, generally doesn't cover long-term care for these needs. Without the coverage, you risk going broke paying for care and then having to rely on Medicaid to cover a nursing home. The best time to buy a policy is in your 50s and 60s.
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