The time has come to make 2015 health insurance decisions. For many of us, cash is tight and the options can feel overwhelming—and overwhelmingly similar. It’s tempting to simply select the most affordable monthly premium and cross our fingers that we won’t need much care. However, such tunnel vision may result in buyer’s remorse, at best. At worst, it can result in financial distress. Low-cost doesn’t necessarily mean best fit.
We’ve talked a lot about comparison shopping and what to consider when looking at plan details, but what about your personal details? It is also important to take stock of your own situation and compare the past year to the year ahead. Before you renew your health insurance plan for 2015 or select a new one, assess your health and finances. What do we mean when we say this? Here are ten questions to help guide you:
What is your financial outlook for the year ahead?
Overall, what does your financial situation look like in 2015? Will your income fluctuate much from 2014? Determine your income tax status for 2015 and see where your household size and income place you in the federal poverty level guidelines.
Consider your monthly expenses as well as any added expenses (i.e. college tuition, a wedding, vacation). Will you have additional revenue sources? When considering your total expenses for the year, what will you be able to contribute to your healthcare costs?
Are you eligible for Medicaid or an exemption?
If your income is low, you may be eligible for Medicaid or a hardship exemption that prevents you from owing a tax penalty should you go without qualified health insurance coverage.
In states with Medicaid expansion, adults who earn up to 133 percent of the federal poverty level—also this is also reported as 138 percent of the federal poverty level due to how eligibility is calculated.
Exemptions may apply if your income is too low to file a tax return, the lowest-priced coverage available costs more than 8 percent of your household income, or your state did not expand Medicaid and you are not eligible under its current guidelines, among other circumstances.
Visit your state’s exchange or the federal marketplace to find out more about Medicaid or an exemption.
Will you be eligible for tax credits and cost-sharing subsidies? At what amount?
Financial assistance may impact your plan selection. If you make between 100 and 400 percent of the federal poverty level, you may qualify for premium tax credits when enrolling in private health insurance coverage through a state-based or federally facilitated exchange.
Taking your income into consideration, use a calculator tool to determine your premium tax credit. This amount may vary from 2014 depending on your household income and size and how premium rates have changed in your region.
Additionally, if you earn up to 250 percent of the federal poverty level and buy a silver plan through the exchange, you may qualify for cost-sharing subsidies that reduce deductibles, copayments, coinsurance and out-of-pocket spending limits.
Will you add or drop a family member from your health insurance plan in 2015?
This may impact your financial assistance. A higher household income or fewer family members may reduce your subsidy amount and a lower household income or more family members may increase your subsidy amount.
We can’t emphasize enough the importance of reporting financial and household size changes to your exchange. To ensure you receive the correct subsidy, these changes should be reported not only at open enrollment, but throughout the year. Failing to do so may mean owing the IRS money when filing your income taxes or missing out on additional financial assistance.
Does your adult child have more affordable health insurance options?
You may keep children on your health insurance plan through age 26; however, their income may mean they are eligible for lower rates if they go it alone.
In states where Medicaid was expanded to individuals making up to 138 percent of the federal poverty level, adults 18 and older may be eligible for low-cost or no-cost health insurance. Based on the 2014 federal poverty guidelines, an individual whose annual income is up to $16,105 may qualify. Visit your state’s exchange or Medicaid program website to apply.
If your adult child makes more than that or lives in a state that did not expand Medicaid, he or she may still find more affordable coverage away from your plan as a result of income-based premium tax credits and cost-sharing subsidies.
For example, in 2014, a 24-year-old non-smoker in Denver, Colorado, who made $18,000 a year before taxes paid as little as $43.26 per month for an exchange-based bronze plan—that’s with a subsidy.
Again, these only apply to plans purchased from the state-based and federally facilitated exchanges. Estimate your child’s subsidy amount using your preferred subsidy calculator tool, and then check your state’s exchange to find 2015 plan rates.
Have you seen the doctor lately?
If you haven’t had an annual health checkup, try to schedule one prior to selecting 2015 coverage. This visit may alert you and your healthcare provider to new conditions or concerns that will require ongoing care or medication—expenses that may impact which metal plan you select.
This visit may even be free. Under the Affordable Care Act, qualified health insurance plans cover many preventive services at no additional cost to you. Preventive screenings help ensure you are in good health and is a way physicians can diagnose problems early on when they are typically more treatable and less expensive. If you use your health insurance for nothing else throughout the year, you may as well take advantage of preventive care—you are paying for it.
Have your healthcare needs changed?
Maybe you already know you need a certain surgery in 2015, or perhaps you expect to give birth. You might find switching to a higher metal level with a lower deductible and a higher percentage of covered metal expenses paid by your insurance plan makes sense.
In 2012, the average cost by inpatient hospital stay, not including physician costs, was as follows
- Surgical = $21,200
- Medical = $8,500
- Maternal / neonatal = $4,300
In 2014, deductible averages by metal plan were as follows, based on Healthcare.com internal proprietary database:
- Bronze: Individual deductible was $5,072 and family deductible was $10,327
- Silver: Individual deductible was $2,829 and family deductible was $5,889
- Gold: Individual deductible was $1,251 and family deductible was $2,773
- Platinum: Individual deductible was $291 and family deductible was $578
You must typically meet your deductible before plan benefits kick in. If you have ongoing medical needs or anticipate major expenses, be sure you can afford your plan’s deductible and coinsurance percentages. It may be possible the additional monthly premium involved with moving from a bronze to a silver plan—and so on—will be less than you would pay toward your deductible. The numbers shown above provide a glimpse at national averages, you should consider the cost of the specific care you need and plan rates and benefits available to you.
What medications are you taking and will you continue to take in the year ahead?
Prescription drug formularies change, and so do benefits. Check 2015 drug formularies to see A) if your medications are covered and B) at what amount.
What are your anticipated net healthcare costs?
Tie it all together and look at the big picture. Use the formula below to estimate what you will pay for healthcare in 2015.
Premium – possible subsidy = net cost of insurance + expected out-of-pocket healthcare costs = net cost of healthcare
Do you have enough savings to cover the unexpected?
If not, you may want to start setting aside money in 2015. If you buy an HSA-compatible high-deductible health insurance plan, you can pair it with a health savings account. Funds placed in it may be used for qualified medical expenses. There is no minimum contribution amount, you claim a deduction for any contributions you make, and the money grows—tax-free.
These funds roll over year after year—“use it or lose it” does not apply to HSAs. You can use them qualified medical expenses throughout the year or let them accumulate and use them later—even for retirement.
In 2015, a high-deductible health insurance plan is one with a deductible of at least $1,300 for self-only coverage and $2,600 for family coverage.
Once you have a clear idea of your healthcare needs and financial situation, you can narrow your plan options and compare benefits. You generally have through December 15 to enroll in a new health insurance plan and begin coverage on January 1. If you change your mind, you can switch plans until open enrollment ends.
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 Moore B (Truven Health Analytics), Levit K (Truven Health Analytics), Elixhauser A (AHRQ). Costs for Hospital Stays in the United States, 2012. HCUP Statistical Brief #181. October 2014. Agency for Healthcare Research and Quality, Rockville, MD. http://www.hcup-us.ahrq.gov/reports/statbriefs/sb181-Hospital-Costs-United-States-2012.pdf.
 IRS. Publication 969. http://www.irs.gov/publications/p969/ar02.html#en_US_2013_publink1000204020.