Shopping for health insurance ranks high on our list of hated activities. Two-thirds of Americans recently polled by Bankrate Health Insurance Pulse said shopping for health insurance is at least as bad as having a tooth filed. More than 7 in 10 said it was at least as bad as doing their own taxes.It can be mentally painful and overwhelming, to be sure. I know more than a few people who recently scanned their marketplace options, became flooded with anxiety, and retreated to their former coverage for another year.
However, choosing the wrong health insurance plan can have expensive consequences. Too much coverage often means spending more than you need to on monthly premiums. Too little coverage can mean significant financial strain if you accrue medical bills. Those are just two broad examples.
Fortunately, a little knowledge can help a lot. Here are seven things you should never do when shopping for health insurance. Read up and keep them in mind when making decisions about 2015 coverage.
When shopping for health insurance, you should never:
1. Neglect to shop around
Automatic plan renewal through state-based and federally facilitated health insurance exchanges can be quite tempting. Even if you are happy with your benefits and have not experienced any changes to your healthcare needs, at least investigate what the state and federal exchanges and private marketplace have to offer.
New plans become available, and others disappear. Premiums fluctuate. Networks and drug formularies change. What seems like the right fit for your budget and health one year may be less ideal the next.
2. Give the most decision-making power to premium costs
We all focus on premium. Why wouldn’t we? It’s what we must pay month after month just to have health insurance. That recurring charge is only one piece of the pie. Carefully consider what you will actually pay if and when you do need medical care.
Look at the annual deductible, prescription drug deductible, copay amounts, coinsurance percentages and other out-of-pocket spending requirements. Most benefits won’t kick in until you’ve reached your annual deductible. When comparing health insurance plans consider whether or not you can afford to pay entirely out of pocket until you hit that amount. After that, you will be responsible for a percentage of costs. Certain benefits may require copayments at the time of service. This is all in addition to your monthly premium.
Calculate your expected net healthcare costs throughout the year. This will help you determine which plan is the best value for your situation. Here is a formula HealthCare.com CEO Jeff Smedsrud offers:
Premium – possible subsidy = net cost of insurance + expected out-of-pocket healthcare costs = net cost of healthcare
Is the number at the end of the equation something you can afford? Try it with a few plans and potential healthcare scenarios for the year.
If you need to estimate your premium tax credit, use our subsidy calculator. Keep in mind you will have apply for financial assistance through a state or federal exchange and then buy coverage through that exchange to receive it.
3. Buy without researching if your favorite doctor or hospital is in-network, drugs you take are on the preferred list (known as a formulary) and other details
Once you narrow your options to a plan or two, dig in further. Really compare the costs and the benefits.
- Note the network type—HMO (can be a more limited network) or PPO (typically larger and broader in your area)?
- Look at the prescription drug formulary—are the medications you take included and how are they covered?
- Check the provider network—are your preferred doctors and hospitals included? If you do not have a preferred healthcare provider or hospital, you should still look at the plan network. Will you have access to providers and facilities that are conveniently located? After reading about these providers and facilities, do you feel they are a good match for your healthcare needs?
Whether you use a website such as HealthCare.com or visit the state or federal health insurance exchanges, you should be able to search drug formularies and providers when shopping and comparing plans. You may also do so through health insurance company websites. If you have questions or want to confirm what you find online—this information is not always up to date—contact the health insurance company directly.
Even if you intend to stick with the same health insurance plan, check networks, drug formularies and benefits. They often change from year to year.
4. Pick a high deductible health plan and skip the Health Savings Account
If you enroll in a high deductible health insurance plan, you may as well enroll in one that is health savings account (HSA) compatible. Then, enroll in an HSA, too.
Health savings accounts allow you to save pre-tax dollars for later use on qualified medical expenses. They roll over from year to year, and unused funds earn interest. Then, when unexpected medical expenses arise, you may have accrued a nest egg to help pay them. There is no minimum deposit required; just set aside funds as you are able.
5. Fail to report family and income changes
If you buy from a state or federal exchange and receive financial assistance, make sure you keep your income and family size up to date. This applies when you enroll and throughout the year.
If you fail to report such changes, you risk losing out on subsidy funds or receiving too much. If the latter, you will likely have to pay the IRS back at tax time.
6. Opt out of health insurance all together
The Affordable Care Act requires most Americans to buy health insurance. Those who do not secure healthcare coverage, either on or away from a state or federal exchange, will owe tax penalty known as the shared responsibility payment. The shared responsibility payment for skipping coverage in 2015 is the higher of these amounts:
- A flat dollar amount of $325 per adult and $162.50 per child under 18, up to a family maximum of $325
- 2 percent of your household income above the tax return filing threshold for your filing status
If you choose to go without coverage, you can calculate your Obamacare tax penalty fee in advance. Tax penalties and exemptions aside, going without health insurance can be a financial gamble. If you require medical care, you will be responsible for the cost entirely out of pocket. Those concerned about affordability should find out if they are eligible for Medicaid or exchange-based financial assistance.
7. Struggle through the process without help
If you have any questions while shopping for health insurance, ask them. Don’t be shy. Health insurance terminology and benefits can be confusing. Make sure you know the difference between an HMO, PPO and EPO and why one might be a better fit than another. If you don’t get how deductibles and coinsurance work, let a professional explain it. Understanding what has previously mystified you can go a long ways in helping you select the right coverage—and saving you time.
The same goes for the enrollment process and financial assistance application: Ask questions. Contact a licensed agent or exchange-based helper. Call the health insurance company’s customer service hotline.
Avoid making these mistakes during 2015 open enrollment—or anytime. Check out HealthCare.com’s interactive examples on how to select coverage that’s right for you.
If you need personal assistance, call 877-275-0485 to talk to a licensed agent from one of our trusted health insurance partners.
 MacDonald, Jay. “How Bad is Shopping for Health Insurance?” Bankrate. Dec. 2, 2014. http://www.bankrate.com/finance/insurance/health-insurance-poll-1114.aspx.
 Internal Revenue Service. “The Individual Shared Responsibility Provision.” Last reviewed Nov. 28, 2014. http://www.irs.gov/uac/Individual-Shared-Responsibility-Provision.
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