With just two months left in the year, one’s attention can be focused on school field trips, upcoming holiday time with family or projects that need to be completed by the end of fourth quarter. Renewing health insurance policies for the coming 12 months can get knocked further and further down on the list when schedules are already overbooked. However, there are little-know facts about the health insurance open enrollment period that can leave individuals and families either in the lurch, or not optimizing their opportunity to save money on healthcare. Here are five myths about buying health insurance you need to know right now:
Automatically renewing your healthcare plan is the easiest route
While letting your current health insurance plan roll over to the next year might seem like the simplest course of action, you will have to work harder in order to pay the monthly premium. Why? The monthly cost of health insurance has gone up in nearly every state, and some are experiencing double digit increases. Take into account that while health insurance companies might state their rates only increased 8% for the next year, increases are actually made plan by plan. So while an insurance carrier might raise rates 8% on average, your plan might have gone up 19%. Shopping for a new plan is the most cost effective way to keep premiums stable, either by switching to a new health insurance company or changing to a different tier of insurance that is comparable to coverage you have.
Buying a plan on the federal marketplace or directly from an insurance company is the same thing
This isn’t true by a mile. Health insurance companies file a set number of plans on their state exchange or on the federal marketplace, but they don’t place every plan they offer on the government exchanges. There is more choice buying “off-exchange” where the number of healthcare plans available are more abundant. It pays to compare plan options not sold on the federal or state marketplace to see what additional health plans might be available with better benefits.
Provider networks are the same on federal or state marketplace plans and off-exchange plans
This might be one of the biggest myths of all. Many times health insurance plans on the federal or state marketplace have the same plan name as plans offered on web entities like HealthCare.com or directly through insurance companies. While the cover appears identical, the network on state and federal plans can be much narrower. This helps insurance carriers keep costs low, providing affordable coverage options as mandated by the Affordable Care Act. In the state of Minnesota, we found two identical plans from the same insurance company: one on the state exchange and one listed on the insurance company website. However, there was a $20 difference each month between the two identical plans. The reason? The plan on the state exchange has an extremely narrow network of providers. The plan that costs $20 more each month has access to over 900,000 providers nationwide. For some families, having a wider in-network system to cover bumps and bruises while they are traveling or while children are in school can far outweigh the $20 per month cost savings.
Tax subsidies are the only way to save on monthly health insurance premium costs
While this statement is true for many individuals and families, millions of Americans qualify for cost-sharing reductions that lower the price of their deductible, coinsurance and copayments on top of the subsidy they receive for purchasing insurance. To qualify, you must have income between 100%-250% of the federal poverty level. Cost savings are set on a sliding scale based on income, which for a family of four, can be as much as $60,000 of household income a year.
All health insurance websites are created equal
Not all state or online web entities are mobile friendly, and you can lose your application or get stalled midway through the enrollment process if the website is not compatible with your mobile device or web browser. Health insurance enrollment takes some time, so it’s best practice to complete your health plan application on a desktop or laptop computer.
The health insurance open enrollment period runs November 1, 2015-January 31, 2016. In order to have coverage beginning January 1, you must sign up for coverage or select a new health insurance plan by December 15, 2015. Failing to do so will result in a gap in coverage until February.
If recent health insurance price increases are now beyond your monthly budget, there are several options you can consider:
- Before determining you can no longer afford health insurance, make sure you have re-calculated what your plan subsidy will be for the new year. Higher prices on health insurance also equate to more cost assistance to help cover the cost of your plan.
- Pay the fine for not carrying health insurance. In 2016 the penalty will be $695 per person, per household, $347.50 per child, or 2.5% of your total household income, whichever is greater. Not having health insurance is a great risk, but a personal decision.
- Sign up for a short term health insurance plan until you get back on your feet. Short term medical plans are an affordable alternative to Obamacare coverage, typically costing half the price of individual health insurance. The catch: You can only go without an Obamacare-mandated health insurance plan for three months of the year, and will have to pay the above mentioned tax penalty if you fail to obtain individual coverage during the year. Some argue that buying a short term healthcare plan and paying the penalty is still cheaper than carrying a major medical health insurance policy. Again, personal choice.
The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.