7 Things to Consider When Choosing a Health Insurance Plan
Shopping for health insurance is an important task. However, as anyone who has ever attempted to look around for a new health insurance plan will tell you, it can be incredibly daunting. With ever-changing information, pricing, and policies, figuring out what kind of plan you need is certainly confusing. Though it’s a highly personalized endeavor, there are a few things that every would-be health insurance shopper should consider when hunting for a new plan.
If you’re currently on any prescription medication, you may want to dig deep into each potential new plan to see just what drugs are covered. You can do so by asking for the insurer’s “formularies,” or lists of covered drugs. Insurers typically have a categorized list of prescriptions that are placed into tiers. As Dr. Michael Bihari explained on VeryWellHealth, generics tend to have the lowest copay costs while brand name prescription drugs will likely cost more. This means you need to read the fine print of any potential insurance plan as some insurers may require patients to try lower-tier drugs before getting authorization to move on to brand name drugs. (Note: You could always pay for the cost out of pocket, but why?)
Love your current doctors? Then it’s crucial you find out if they will remain in-network for any insurance plan changes. If you don’t have a doctor you’re fond of you could check out the list of in-network providers in your new potential plan. Then, reach out to the new doc to ask about normal office hours, if they are seeing new patients, and for their credentials. This way, you know what you’re getting into before you switch. You can always take it a step further and check with the American Medical Association (AMA) for a provider’s information. If you happen to have a specific condition that requires you to see a specialist, make sure there is a specialist in the new network that you like and trust as well.
Some people really love stashing a little cash into a health savings account, or an HSA. An HSA acts just like a personal savings account that you can then use for medical expenses. An HSA could be ideal for just about anyone, including those who are young and healthy and want to put away money for a medical emergency or those facing retirement who want to offset some costs. Whenever you need to, you can withdraw money from an HSA for non-medical reasons before the age of 65, Mayo Clinic explains. But, HSAs do come with restrictions.
According to US News and World Report, in 2019, singles can make up to $3,500 in tax-deductible contributions to an HSA while those on a family plan can contribute up to $7,000 tax-free. Those 55 and older can add an additional $1,000 in catch-up contributions.
Only specific plans allow users to make contributions, though, so if you’re looking to add one, ensure your new plan would qualify. As US News and World Report explains, only high-deductible health insurance plans are eligible to contribute to an HSA. In 2019, qualified plans include those with minimum deductibles of $1,350 and maximum out-of-pocket costs of $6,750 for coverage for a single person. Family plans have a slightly higher minimum deductible of $2,700 as well as a much higher maximum out-of-pocket cost of $13,500.
Yes, health insurance can be expensive, but the government may be able to help. The IRS offers what is known as the "premium tax credit," which is a “refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange.”
How large of a tax credit someone receives depends on his or her income. As the IRS explains, those who have a lower income get a larger credit to help cover the cost of insurance, while those with a higher income may receive a small credit, if they receive one at all.
Don’t worry, if you decide to enroll in health insurance through the Exchange you can choose to have the Exchange compute an estimated credit for you. That credit could then be paid to your insurance company, which in turn lowers your monthly premium. Of course, you can choose to get that money for yourself in the form of a credit when you file your tax return.
So, who gets a credit? Well, the math is a little confusing. “In general, individuals and families may be eligible for the premium tax credit if their household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line for their family size,” the IRS explains. While this number may change, in 2017, that meant a single individual making between $12,060 (the poverty line) up to $48,240 (400 percent above the poverty line) would qualify for a credit, while a family of four making between $24,600 to $98,400 would qualify.
Yes, it’s extremely easy to get sticker shock over the monthly premiums (the price you have to pay each month to maintain your health insurance), but it’s crucial to take a look at the plan’s deductible (the price you pay before your insurance company will pay a claim) as well.
“I would caution people to look at all the plans and really think about: Is it worth paying a lower premium or paying a little bit more in order to have much lower out-of-pocket costs if something happens?” Louise Norris, health care expert and author of The Insider’s Guide to Obamacare’s Open Enrollment, shared with Real Simple.
According to Norris, a generally healthy person may be OK choosing a high deductible but the low premium plan because that person may not ever need to use the insurance for emergency reasons. However, someone who is already facing a health challenge–say, battling cancer–may also want to go for a higher deductible but a lower premium plan. That’s because a person battling cancer is likely going to hit that deductible no matter what but could save a bit of money by paying a lower premium instead.
It’s those in the middle, with moderate healthcare costs such as an upcoming surgery or medical expenses, who need to put in the work.
“They're the ones who are oftentimes best served by one of the more mid-range plans,” Norris said. “They really have got to drill down and personalize their plan to their own situation. I always advise people, look at the total premiums you're going to pay over the whole year and look at your total out-of-pocket costs. Then, calculate a worst-case scenario, and then consider your total out-of-pocket costs in a medium range scenario. And decide on a plan from there.”
Health insurance plans aren’t just there for emergencies. Many plans and providers also offer wellness programs and incentives that help keep their members healthy and out of a doctor’s office.
According to US News and World Report, those perks can include gym memberships, rides to doctor appointments, free counseling sessions, video conferences with doctors any time, and even legal consultations.
If all of this feels overwhelming, well, that’s because it sort of is. But that’s OK because there are people who can help. Those people, Norris noted, include insurance brokers in your community.
“I think the first thing to do when looking for a new health insurance plan is to ask yourself: 'Do I feel comfortable doing this on my own?’” Norris said. “If you don't, which an awful lot of people don't, I think seeking help is honestly a good first step. That way, you're getting help from someone who has done this lots and lots and lots of times before.”
Get started on your quest for a new health insurance plan and find one of those extremely helpful people at healthcare.gov.