How to Navigate Health Insurance as an Overwhelmed Post-Grad
Open enrollment is the necessary evil to end all necessary evils. (Don't worry, we'll walk you through it.)
For any young professional who’s been overwhelmed by open enrollment and sorting through healthcare plans—take a deep breath. We spoke to Erin Hemlin, the National Training Director for Young Invincibles, to figure out how to buy the perfect plan, what exactly is covered, and what to do once you've finally purchased insurance. Here, Hemlin shares a few key points to help narrow down your options and decide which plan is right for you.
Know Important Health Insurance Terminology
You won't know what’s going on until you get familiarized with some of the industry lingo. Here, a few key words to know.
Premium: The fixed dollar amount you pay monthly to remain on a health insurance plan. If you’re enrolled in an insurance plan through your employer, you can often elect for your premium to be taken directly and automatically from every paycheck.
Deductible: The amount of money you would have to pay out of pocket for medical expenses each year before your insurance kicks in to help cover the rest of it. For example, let’s say you end up with a hospital bill of $3,000, and your deductible is $1,000. You would have to pay that $1,000, and your insurance will cover the remaining $2,000. (In many cases, a higher premium means a lower deductible, and vice versa).
Co-Pay: A fixed amount of money you’re responsible for paying at the time of medical services, for things like prescriptions, check ups with your primary care physician, physical therapy sessions, or dermatologist visits. Part of your visit or medicine is covered, but you do share some of the bill with your insurance company.
Coinsurance: A type of insurance where, once you’ve hit your deductible, you split the cost of medical expenses with the insurance company. Costs can be split 80/20 (where insurance covers 80 percent for covered medical services and you cover the remaining 20 percent) or even 50/50, depending on the plan.
Out-of-Pocket Maximum (or Out-of-Pocket Limit): Plans include a fixed maximum amount of money you would ever have to pay for covered medical services within a plan year. If you reach it, your insurance will pay for the rest of your covered healthcare costs.
Marketplace: The online site where you purchase plans outside of your employer. If you're getting health insurance through the marketplace, you will likely be eligible for "tax credits," which are designed to help a wide range of incomes—those with lower incomes will qualify for higher credits, which help make the plans more affordable.
Effectuated Coverage: This means you’re not technically enrolled in your plan until you’ve paid your first premium. Once enrolled, you can begin creating online profiles with your provider and finding doctors in your network to set up annual exams. Tip: Under the Affordable Care Act, many preventive health screenings and immunization vaccines, are free with no co-pay, even if you haven’t met your deductible.
How to Choose the Right Health Insurance Plan for You
Healthcare plans are not one-size-fits-all. The plan you choose will depend on many factors, such as how healthy you are, whether or not you have dependents, whether or not you’re attached to your current doctor(s), how often you visit medical specialists, how many prescriptions you need, your salary, and more. A good rule of thumb: An "affordable" plan through your employer will cost less than 9.5 percent of your income.
If you already have a doctor (like a primary care doctor, dermatologist, or dentist) you love, make sure that doctor takes the particular insurance you're looking for. Also make sure any medications you take regularly are covered in your plan—you can consult the drug formulary to see how much your insurance company will pay versus how much you will pay.
It also helps to devise hypothetical scenarios to see how different plans might cover you. For instance, if you’re relatively healthy and only visit the doctor for routine checkups, think to yourself: Okay, X plan has a super-low monthly premium that I can actually afford with my entry-level salary, but if something bad were to happen, my deductible would be crazy-high—which might not be worth the risk. Instead, you might go with Y plan with the next-cheapest premium, which costs slightly more each month, but would offer more coverage (thanks to a lower deductible—the amount you would have to chip in) in the event of an unexpected, expensive bill.