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What do I look for when buying health insurance?

To sum it up...
  • Know when you can enroll in a plan or change your plan
  • Look for a plan that your doctor takes
  • Understand all of the costs and what you spend on healthcare

Buying health insurance can be challenging. There are so many options available, and everyone’s needs are different. When you’re shopping for health insurance, make sure you keep these things in mind.

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Understand Open Enrollment

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There are open enrollment periods for the health insurance exchanges established by the Affordable Care Act
and for your employer-sponsored health insurance. This is the one time per year when you can choose a new insurance plan. It’s important to understand that you can only change your coverage or plan during the open enrollment period. After that, unless you have specific circumstances described below, you will need to keep your plan until the next open enrollment period.

After that, unless you have specific circumstances described below, you will need to keep your plan until the next open enrollment period.

After that, unless you have specific circumstances described below, you will need to keep your plan until the next open enrollment period.

You can also choose a new plan when you have a so-called ‘qualifying event.’ A qualifying event could be the loss of your previous health plan; a new job that offers health insurance; a marriage, divorce or the birth of a child; or some other event that requires that you change insurance.

Open enrollment happens once a year. Make sure you know when it is, because it’s a good time to compare health insurance plans and make sure you have the best plan for your particular situation.

Check the Coverage

Make sure your coverage satisfies the requirements set forth by the ACA (sometimes referred to as ‘Obamacare’). If you have health insurance that does not meet these minimum requirements, you could be subject to a penalty on your income taxes.

Look for Your Doctor and Your Medications

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If you have a doctor you would like to continue to use, make sure they take any insurance plan you are considering. This is particularly important if anyone in your family has a chronic disease or condition they receive regular treatment for.

If you or anyone in your family regularly takes prescription medications, check to see how these are covered under each plan you are considering. Some plans will pay for the cost of generic drugs but not for name brands, so if you take a brand-name drug, ask your doctor if a generic will suffice.

Know How You Use Healthcare

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Getting the most from your health insurance budget starts with knowing how much you spend on care. Take a look at all of your healthcare related expenses over the past year, or even two or three years if you have your records.

Look at the full cost of your doctor visits, prescriptions, and any hospitalizations. Project your costs for the upcoming year based on previous costs that are likely to recur, plus any upcoming costs you know about, such as a scheduled surgery or a pregnancy.

Next, look at what each of the plans you are considering would pay, and how much you would have to pay out of pocket. Add your out-of-pocket costs to the premium cost and compare them for each plan. This should show you which plan should be the cheapest for your family.

Some plans will cover a large percentage of the cost of health care, and come with a correspondingly high premium. These plans may be best for someone who spends a lot on healthcare, due to a chronic condition or frequent surgeries.

Other plans have a lower premium, but much of the initial cost for office visits, prescriptions and hospitalization must be paid by the policyholder. These are known as high-deductible plans, since you have to pay quite a bit out of pocket before your insurance coverage takes over and starts paying for care. These plans are a good choice if you tend not to have a lot of medical expenses, and if you have some savings you could tap to pay for a medical emergency.

Clearly, this is not an exact science since no one can predict the future. But it’s better to make an educated guess that to just choose the first plan that comes along.

Know Your Options

If your family earns less than 400% of the Federal Poverty level, you may qualify for a health insurance subsidy
under ACA. The subsidy can reduce the cost of your health insurance premium if you purchase your insurance from a state health insurance exchange. Even if you qualify for this subsidy, however, you should still consider all your options. You may be able to find a lower priced plan or one that has better coverage, than what you would be offered by your state health insurance exchange.

Keep in mind that the amount of your subsidy is determined by your income the previous year, but based on the income you earn in the year you have the coverage. So if you get a subsidy based on last year’s income, and your income goes up this year, you may have to pay some or all of the subsidy back when you file your income tax return next year.

Likewise, if your employer offers a health insurance plan but it is not affordable for you, you may be eligible for a subsidy so that you can enroll in the plan. However, if you and your family are healthy, you may be able to purchase a less expensive plan on your own. Employer plans have to be prepared to cover everyone in the company, so premiums are set based on what it costs to insure the average person.

If your health is above average, you may be better off with a plan you buy yourself that requires an application and medical exam.

Understand These Terms

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As you research and compare different health insurance plans, you will hear some terms you may not recognize. Here’s a quick glossary that may help.

– Copay

The amount you pay when you go to see a doctor or specialist, or when you have a prescription filled. Co-pays may count toward your deductible, but they may not, so verify this. For example, when you go to your primary care physician for your annual check-up, you may pay a co-pay of $20. Your insurance company pays the rest.

– Coinsurance

The percentage you pay for medical services. If your policy includes 20% co-insurance, and you have a procedure that costs $500, you would pay $100 and your insurance company would pay the remaining $400. (This assumes you have already met your deductible.)

– Deductible

The amount of money you have to pay out of your pocket before your insurance company starts to pay. Some insurance plans have a high deductible which enables them to lower their premium. A plan may have a per-person deductible as well as a family deductible.

If your plan has a $1000 deductible, and you have a surgery that costs $3000, you pay the first $1000 and the insurance company pays the remaining $2000.

In this case, you would have satisfied your deductible for the year, so any subsequent costs would be paid by the insurance company.

Generally, if your family is healthy and your medical costs are generally low, and you would be able to pay the deductible if the need arose, a high-deductible plan may make sense for you.

This may be particularly true if you can contribute to a Health Savings Account whereby you save pre-tax money to fund an account used for health care expenses. Some employers offer a similar plan called a Flexible Spending Account.

– Network

Some healthcare plans pay a greater portion of the costs for certain doctors and hospitals that are in the plan’s network. You can still use doctors and hospitals outside the network, but you’ll pay more of the cost out of your pocket.

Find the Right Plan for You

Comparing health care plans may seem like a lot of work, but with the cost of care and insurance rising rapidly, it’s well worth it to do your homework. Since many plans change their premiums or terms every year, it makes sense to compare plans annually or every time you have the opportunity to make a change.

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