Why Cheap Health Insurance Isn’t Better Insurance

Purchasing the ideal healthcare plan for you and your family comes down to not only calculating your monthly budget, but being able to realistically look at your projected medical needs for the next year. For individuals that are eligible for cost assistance on their health plan in the form of a tax subsidy, getting coverage for a low monthly rate can be attractive. However, simply looking at the monthly cost alone doesn’t mean you will have the right coverage for your medical needs.

Here is how you can shop smart and get the best health insurance coverage for you and your family:

Understand Metal Plans

You might be familiar with HMO or PPO health insurance plans, but the plan types under the Affordable Care Act are best known by the color of their metal level: Bronze, Silver, Gold or Platinum (Catastrophic is also a metal level, but it is only for individuals under the age of 30 and is not eligible for a tax subsidy). As a rule of thumb, Bronze plans are the least expensive, but they only pay for an average of 60% of healthcare costs overall, leaving 40% of medical costs the responsibility of the consumer. The amount the health insurance company will pay increases the higher the metal level. A Platinum plan pays an average of 90% of medical costs. So, if you have a chronic medical condition, a richer metal level plan might cost more each month, but over the course of a year, might pay for a substantial amount of medical bills and reduce your out-of-pocket costs overall. It pays to do the math.

The Network is a Big Deal

After you decide which metal level is best for you, look at the network – and remember that metal plans can have different networks. For example, one Silver plan might have a network for an urban region of a city only, while another Silver plan could have coverage for nearly the entire state. Again – you have choice. If you have settled on a specific metal level, decide if you are okay with a narrow network or need a wider network to get all of your doctors covered.

Shop on All Marketplaces

The biggest myth today is that you can only buy from your state exchange or the federal marketplace. Not true. There are website entities like HealthCare.org and others who offer the same plans the federal marketplaces do, and offer health insurance plans that can’t be found on the federal marketplace. To qualify for cost assistance in the form of a tax subsidy, you need to buy a federal plan, but most web entities identify if a plan is on- or off-exchange. If you do not qualify for a subsidy because your income it too high, there might be plans better suited to your medical lifestyle on the private marketplace (which means, they are not available on the federal marketplace). These plans are still qualified Obamacare plans. They just don’t offer a subsidy, which is why they are not featured on state or federal websites.

Understand What Deductible Level You Can Afford

Deductibles are rising every year, and individuals who buy their own health insurance will have to pay thousands out of their own pocket before the health insurance company is responsible. This is a fact of life in the healthcare space. While there are ways to avoid medical debt when your insurance deductible is high, it’s critical to gage whether you can afford to pay for medical costs until your health insurance deductible is met.

Coinsurance Comes After Deductible

Another calculation to put in your final overall tally is coinsurance. Once you meet your insurance deductible, you will most likely still be responsible for a percentage of your medical costs. For example, if you have met your $2,000 deductible and have a $200 doctor office visit, your insurance company will most likely not pay the entire amount. Typically insurance plans have a coinsurance rule of 80/20 or 70/30. If you have 80/20 coinsurance, then you have to pay 20% of the $200 doctor bill ($40 dollars). It’s another equation to place in your yearly medical budget.

Out-of-Pocket Maximum

The good news? You have an out-of-pocket maximum built into your health insurance plan. The out-of-pocket maximum amount is the most you will have to pay for medical expenses in during the course of the plan year. That means, once you have met your deductible and paid coinsurance up to the out-of-pocket amount, your health insurance company will begin paying 100% of in-network medical expenses.

How to Pay Less for Healthcare Before You Meet Your Deductible

Study after study has revealed that one of the top concerns Americans have is paying for healthcare. And for good reason. While wages have risen a modest 10% since 2010, healthcare deductibles have risen 67% in the same time period for American workers.

Instead of skipping treatment because the first $2,000, $4,000 or $10,000 of the expense would be completely out of pocket until your deductible is met, there are ways to shop smart for healthcare and save a few extra dollars along the way.  

Telemedicine

Telemedicine is not a new practice, but has gained popularity as technology has become easier and faster, delivering a doctor or nurse over the phone or through video chat for immediate consultation. The average urgent care visit is $250, and takes hours away from home when the patient could be resting. Telemedicine visits are typically $40-$50, and can treat nearly all urgent care needs, and prescribe medications.

Health Savings Account

With certain qualifying high deductible health insurance plans, health savings accounts can be an added benefit to put away money for future healthcare expenses. Typically health savings accounts are available through your employer, but if they don’t participate in a program or you purchase health insurance on your own, you can open one up at your local bank. Health savings accounts allow you to save pre-tax money from your payroll deduction or direct deposit, and you are never taxed for withdrawing money.

Shop Pricing in Advance of Care

Medical costs can be an anomaly. It’s a given that a doctor office visit at the Cleveland Clinic is going to cost more than a doctor office visit in Boise, Idaho. But remarkably, costs can vary in the same city from provider to provider for the exact same procedure, and cost hundreds of dollars more than someone else with an office just 10 miles away. Healthcare Blue Book can provide estimated “fair value” costs in advance of care so you know if your doctor or medical facility is in line with the average cost in your area, and change to a most cost appropriate doctor or facility if need be.

Stay In-Network

Health insurance plans traditionally have networks of providers for you to choose from, resulting in an “in-network” visit, which is less money than an out-of-network visit where predetermined pricing hasn’t been negotiated. Some plans have wider networks than others. For example, some healthcare plans have smaller networks of just local doctors in your region, and other plans have state-wide networks. It’s important to make sure any health insurance plan you are analyzing has your doctor in-network before purchasing a plan.

Negotiate Your Bills

The “total amount due” on your medical invoice isn’t necessarily the final price. Many times a provider will negotiate your medical bill if you contact them immediately and state that you cannot pay the full amount, but want to work out terms with them. It is far more advantageous for medical providers to collect some money in stages than send a bill to collections. Some providers will even give an automatic 10% discount on any new service if the total is paid in full within 30 days. Always check with your provider to see what you can negotiate.

Shop For a New Health Insurance Plan

Each year, whether you are an employee or buy health insurance on your own, you have the option to purchase a new health insurance plan during the open enrollment period. Typically, employees don’t have as many options as self-insured individuals, but both groups can shop for new plans each year. During open enrollment, look at the amount of healthcare you need and determine if a high deductible plan might work for your few medical needs, or upgrade to a richer plan that will cover more medical expenses, keeping more dollars in your own pocket.

Buy Supplemental Health Insurance

Do you have a high deductible health insurance plan, but can’t afford to pay several thousand dollars out of pocket if an unexpected accident or critical illness arises? Supplemental health insurance can cover the gap between paying your first medical bill, up to meeting your deductible amount. For illustration, imagine that you are in a car accident and suffer a broken wrist. After the ER visit, seeing a doctor, X-ray and setting the broken bone, the final bill can be between $1,147-$6,065, depending on your location. If you have a $6,000 insurance deductible, nearly all of the expense is your responsibility. But with a supplemental health insurance plan, you would receive cash to pay for your injury, and be able to pay off your medical debt immediately.

High deductible health insurance plans are not always ideal for individuals with limited income or high medical bills, so it pays to look for alternative ways to save money on your healthcare.

Why Health Insurance is Important

Getting hurt or sick isn’t something a person wants to happen, but unexpected medical events do occur. Having a health insurance plan helps pay for some of those unexpected costs, and provides financial protection against ongoing large medical bills. Here are some of the advantages of health insurance:

  1. With the passing of the Affordable Care Act, or Obamacare, there is no longer a limit on how much your health insurance will pay.  Before Obamacare was law, health insurance policies had a lifetime maximum of $1 million, $2 million, or sometimes $5 million dollars. Someone with ongoing cancer surgeries and treatment could hit that $1 million mark easily, and then be left without health insurance unless they enrolled in an expensive, high risk insurance program. Today those barriers are gone, and individuals who need health insurance to treat chronic illnesses are able to get the care they need without worrying about hitting a maximum amount on their healthcare plan.
  2. Health insurance companies can no longer cancel an individual’s health policy because they have a chronic disease, or discriminate against individuals with a critical condition and charge them more for health insurance. There is equality for all under the Affordable Care Act.
  3. Anyone with a pre-existing condition can still buy health insurance, and should buy health insurance, to help combat conditions that need extra medical care, and provide some financial backing to help pay for doctor and hospital visits.
  4. Insurance companies offer network services that cost far less that out-of-network physicians and hospitals, making healthcare more affordable for policyholders.
  5. Preventive services are now covered for free under the Affordable Care Act mandate. This is especially helpful for screenings, vaccines and checkups, and you don’t have to meet your deductible in order to get these services at no cost.
  6. Cost assistance is available to help lower the monthly expense of health insurance. Know as a tax credit or tax subsidy, federal money helps those that make between 100%-400% of the Federal Poverty Level. (For an individual that is between $11,770 – $47,080, depending on the state.) With cost assistance, individuals paid an average of less than $100 a month for a plan on the marketplace in 2015. That is a $268 savings each month.
  7. If you carry a qualified health insurance plan, you won’t have to pay a penalty for not having health insurance. In 2016 the fine for failing to have health insurance is $695 per person in the household, $347.50 per child, or 2.5% of your total household income, whichever is greater.

There are many great advantages of health insurance insurance, and money-saving opportunities to get covered.  

Qualifying Life Events That Allow You to Buy Health Insurance

News Flash: The health insurance landscape has changed.

Individuals who once could buy health insurance whenever they wanted are now forced to act like traditional company employees, and only enroll in a health insurance plan during an annual open enrollment period. However, life can throw curve balls, and leave an individual without health insurance outside of the open enrollment period. Then what?

The structure of the Affordable Care Act doesn’t leave these individuals without coverage. Anyone with qualifying life events can enroll in a healthcare plan outside of the open enrollment period. This special life circumstances include:

  • Losing your employer insurance coverage
  • Having COBRA coverage expire
  • Getting married
  • Getting divorced
  • Having a baby (or adopting a child)
  • Moving to a new ZIP code
  • Turing 26 and losing coverage through a parent’s plan
  • Gaining U.S. citizenship
  • Leaving incarceration
  • Losing Medicaid or CHIP status
  • Being discharged from the Armed Forces
  • Gaining status as a member of a Native American tribe or Alaskan native

It is critical to know that you must enroll in an individual plan within 60 days of losing coverage. If you fail to meet the deadline, you will not be allowed to purchase health insurance and could suffer paying a fine for failing to comply with the Affordable Care Act mandate that states all Americans must have health insurance coverage for a minimum of nine months of the year. The fine would be paid along with any federal taxes you might owe. If you typically receive a refund, the total amount of the fine will be withheld from your refund dollars.

For illustrative purposes, let’s look at a family of four, with two adults and two children. The mother decides to leave her job and move the family back to her home state so she can assist her parents in their senior years. The mother carried health insurance coverage for the entire family through her employer. When she leaves her job, she decides to sign up for COBRA coverage so no one is left uninsured. However, COBRA coverage is expensive and is immediately a strain on family savings as they look for new jobs and try to buy a home. In this instance, the family of four is eligible to apply for health insurance for two reasons:

  1. They have lost health insurance coverage
  2. They are moving to a new ZIP code

Anytime you have a major life event and find yourself without health insurance, remember to investigate health insurance through your state exchange, the federal marketplace, or through a website entity like HealthCare.org to get covered.

Health Insurance Facts: Tax Subsidy and Tax Penalty

The Affordable Care Act ushered in a new level of benefits and complexity for individuals and families that purchase their own health insurance. On the positive side, anyone who falls between 100%-400% of the Federal Poverty Level (a family of four that makes between roughly $23,000 and $95,000 on average, depending on their state of residence), is most likely eligible to receive a tax subsidy on their health insurance premium. The subsidy provides cost assistance to lower the overall cost of health insurance each month. The IRS requires the completion of an additional tax form if a subsidy is granted (form 1095-A helps you complete the required 8962), but the extra paperwork can be well worth the time to save money on a healthcare plan. The average marketplace enrollee with an Obamacare plan paid an average of less than $100 for health insurance in 2015. It totaled an average of $268 savings each month.

To qualify for a tax subsidy and receive cost assistance on your health insurance plan, the IRS requires the following:

  • You must be in the 100%-400% percentile of the Federal Poverty Level to qualify for a tax subsidy (if you make less than 138% of the Federal Poverty Level and your state expanded its Medicaid program, you could be eligible for Medicaid assistance instead).
  • You must file a joint tax return. (There are certain exemptions for those who have suffered domestic abuse or spousal abandonment. If you believe you might qualify, ask your tax professional.)
  • You cannot be claimed as a dependent of another individual.
  • You are not eligible for health insurance through an employer.
  • You are not eligible for any other government program, like TRICARE.
  • You must be up-to-date with your IRS tax filings.

It is vital that you contact your state exchange or the federal marketplace during the year if you have a life situation that changes your household size or income status. If you receive a pay raise but fail to tell the marketplace your total household income has changed, you could owe the IRS money at tax time. If you have a baby or adopt a child, your household size increases, and you might be eligible for additional subsidy dollars to lower your health insurance cost. Communication with the marketplace over these types of life changes will reduce financial consequences.

What is The Affordable Care Act?

When you hear the term “ACA”, it’s the same thing as Obamacare. This healthcare law is still relevant today and affects you in many ways.

The Affordable Care Act (ACA) has been around for several years, but it’s still a hot topic among political circles and everyday Americans. You may wonder what was the purpose behind this healthcare law, how it changed the healthcare system, and how it affects you? In a nutshell, the ACA removed many barriers that made it difficult for some people to get affordable coverage, especially those who didn’t have access to health insurance through their employer. It also made it easier for individuals, families, and small business owners to compare and shop for plans, get financial assistance, enroll in benefits, and renew their healthcare coverage.

What is the Affordable Care Act?

Officially called the Patient Protection and Affordable Care Act, the ACA is a comprehensive healthcare reform that gives Americans more rights to access quality, affordable health insurance. The Affordable Care Act is nicknamed Obamacare after President Barack Obama who signed this healthcare bill (H.R.3590) into law on March 23, 2010.

Purpose of the Affordable Care Act

Before the ACA, nearly 32 million Americans went uninsured.1 And if you had a pre-existing condition, health insurance plans were allowed to deny you coverage. These are among the reasons why the Affordable Care Act was created.

In fact, there are three main goals that the ACA was designed to accomplish:2

  1. Make affordable health insurance accessible to more Americans. This was done by offering premium tax credits (called subsidies) to households with incomes between 100 to 400 percent of the federal poverty level.
  2. Expand the Medicaid program to include coverage for those with incomes at or below 138 percent of the federal poverty level. Hawaii and Alaska have different federal poverty levels. (Not all states have decided to expand Medicaid.)
  3. Improve the quality of healthcare delivery in efforts to lower the overall cost of care.

The Affordable Care Act Over the Years

The Affordable Care Act contains numerous laws that took years to be fully implemented. Below are some of the main ACA provisions that took effect over the years.

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– Eliminated lifetime and annual limits on coverage – Extended dependent coverage on parent’s plan up to age 26 – Prohibited carriers from canceling coverage, except for cases of fraud – Prohibited coverage exclusions to children with pre-existing conditions– Eliminated exclusions and higher premiums for pre-existing conditions – Implemented the individual mandate requiring most people to have qualified coverage or pay a penalty – Implemented the employer mandate requiring employers with 50 or more full-time employees to offer qualified coverage or pay a fine– Repealed the individual mandate penalty in most states

How the ACA Changed the Way Health Insurance is Offered

Some of the main ways the Affordable Care Act (Obamacare) changed the way health insurance is offered include:

1. Created Healthcare Exchanges to Buy Coverage

ACA provisions in 2014 implemented a federal exchange via Healthcare.gov as well as state-based health insurance exchanges4— collectively known as the Health Insurance Marketplace.6 The ACA also created the Small Business Health Options Program or SHOP Marketplace for small employers with 49 or fewer full-time employees.

HealthCare.com lets you access health insurance plans off the exchange that’s basically identical to subsidy-eligible plans sold in the Marketplace—except cheaper.

2. Created an Annual Enrollment Period 

Most states have an Open Enrollment Period that runs from November 1 to December 15 each year. This applies to plans sold through the exchange and off the exchange in the private marketplace. Once you enroll, the Marketplace automatically renews your coverage each year by December 15.7 But it’s a good idea to review your coverage annually before open enrollment ends to make sure it still meets your needs and update any changes to your application for accurate subsidy results.

3. Created Plans With Different Metal Tiers

Both Marketplace and non-Marketplace plans have different metal tiers that reflect the percentage of your costs (called coinsurance) the health insurance plan covers.5

  • Bronze: Covers 60 percent of your healthcare costs and is often the cheapest plan.
  • Silver: Covers 70 percent of your healthcare costs and is usually the most popular plan.
  • Gold: Covers 80 percent of your healthcare costs.
  • Platinum: Covers 90 percent of your healthcare costs and has the highest premium of all metal plans. Platinum plans are not commonly offered.

4. Made Minimum Essential Health Benefits Mandatory

All ACA-compliant health insurance plans, including catastrophic health plans, must offer the following 10 essential health benefits to be considered “qualified coverage”:

  1. Chronic disease management, wellness services, and free preventive care
  2. Emergency services
  3. Outpatient care
  4. Hospitalization (inpatient care)
  5. Laboratory services
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Pediatric services, including dental and vision care for children*
  9. Pregnancy, maternity and newborn care, including breastfeeding services
  10. Mental health and substance use disorders, including behavioral health treatment

*ACA health plans are not required to offer dental and vision coverage for adults.

How the Affordable Care Act Affects You

If you buy health insurance through the Marketplace, you’ll be able to check your eligibility for Obamacare subsidies, Medicaid, and the Children’s Health Insurance Program (CHIP) through a single application.6 Subsidies are based on your previous year’s income. To complete your application and make sure you report the correct income, you’ll need information such as birth dates, social security numbers, tax returns, and paystubs.

If you miss open enrollment, you may not be able to get health insurance and apply for subsidies until the following year. However, year-round enrollment is available if you have a qualifying life event that makes you eligible for a Special Enrollment Period.

If you can’t afford private health insurance, you’ll likely qualify for Medicaid if your income is below 100 percent5 of the federal poverty level (FPL) or up to 138 percent2 of the FLP if your state has expanded Medicaid. If your income is too high to qualify for Medicaid, you can get low-cost health insurance for your eligible children through CHIP as well as coverage for yourself if you’re pregnant (depending on your state).

If you already had health insurance or offered health coverage to employees prior to March 23, 2010, when the Affordable Care Act became law, you can keep your plan under the law’s “grandfathered” rule. Grandfathered plans don’t have to meet all of the ACA’s requirements, such as providing essential health benefits and offering free preventive care. However, grandfathered plans are required to cover your dependents up to age 26 and they must adopt ACA rules to eliminate exclusions on pre-existing conditions for adults and children.3

If you’re a small employer with 25 or fewer full-time employees, you may qualify for the Small Business Health Care Tax Credit if you enrolled in coverage through SHOP. The tax credit is worth up to 50 percent of the cost toward employee premiums or 35 percent if your business is a non-profit.

Sources:

1. National Conference of State Legislators. The Affordable Care Act: A Brief Summary.

2. Healthcare.gov. Affordable Care Act (ACA).

3. Kaiser Family Foundation (KFF). The Coverage Provisions in the Affordable Care Act: An Update.

4. Democratic Policy and Communications Committee. The Patient Protection and Affordable Care Act: Detailed Summary

5. HealthCare.com. What is Obamacare?.

6. Healthcare.gov. Health Insurance Marketplace.

7. Healthcare.gov. Automatic re-enrollment: Keeps you covered, but it’s better to update & shop 2020 plans.