With open enrollment 2016 nearly upon us, millions of individuals who purchase their own health insurance will be gearing up for another year of comparing healthcare coverage, and experiencing paperwork and sticker shock. The monthly cost for health insurance is expected to go up 7.5% on average nationwide. Some individual carriers are keeping costs contained and won’t get near this average, while others are increasing rates up to 50% or more. So how does a typical consumer watch their overall healthcare costs to keep out-of-pocket expenses under control?
Automatically re-enrolling in a current healthcare plan can be a natural reaction to avoid starting from scratch with the shopping process. But consider this: A late-2014 HealthCare.com white paper study compared health plans from year to year to determine if shopping for a new health insurance plan during each open enrollment period could result in any costs savings on monthly premium. The study revealed that in every instance, a consumer who compared health insurance plans could find at least one other plan with the exact same benefits for a lower rate than what they had paid the year before. At the top end of health insurance plan comparisons, consumers could save an average of $700 a year on healthcare by taking the time to re-shop during open enrollment. During the last open enrollment period, shoppers on HealthCare.gov who switched to an identical health insurance plan saved nearly $400 for the year – but fewer than one-third of enrollees took the time to re-shop their plans and save money.
With steep rate increases, lowering a monthly health insurance bill might not feasible for all plans in the same tier, such as Bronze or Silver. However, comparison shopping for health insurance plans could reduce the total amount of an overall cost increase. Example: Health Insurance Company A is raising your rates 22% in 2016. Health Insurance Company B, which offers the exact same plan, is only increasing rates by 5%. Even though Health Insurance Company A was cheaper in 2015, its steep rate increases actually makes Health Company B’s plan less expensive.
Additional Tips on How to Save on Health Insurance
Always Look at The Deductible
No one has a crystal ball to predict the future so don’t get frustrated if you don’t feel you can predict your healthcare expenses for the coming year. Focus on the deductible first. Does the plan have one deductible for both medical care and prescription drugs? Or is there a separate deductible for each? Depending on how much medical care you use, or prescriptions you fill, calculating how much money you will have to pay out-of-pocket for one or both services will help you determine if one or two deductibles will help you keep out-of-pocket costs from getting out of hand.
Don’t Forget About Coinsurance
Once you have had enough medical claims up to the point of your deductible, you’re not home free from healthcare expenses. A varying range of coinsurance, depending on plan type, is also included with your coverage. Look for coinsurance ratios like: 70/30, 80/20 or 90/10. The ratio included with your plan means that after your deductible is met, the health insurance company will pay 70 or 80 or 90 percent of your medical bills, and you are responsible for 30, 20 or 10 percent of the remaining cost. Typically the richer the benefit, the lower your coinsurance out-of-pocket expenses are.
Penalty For Not Having Health Insurance Coverage
The fine for not having insurance in 2016 will sharply increase to $695 per person per household, $347.50 per child, or 2.5% of your income, whichever is greater. For a family of four making $100,000 a year, that equates to a $2,500 tax penalty that will have to paid back to the IRS at tax time. If you qualify for a tax subsidy (cost assistance) because your income falls between the 100%-400% sweet spot of the Federal Poverty Level, it could pay to investigate buying health insurance for yourself or your family. In a Dallas suburb, a family of four living on less than $60,000 a year can get an affordable health insurance plan for $208 per month after cost assistance, for a total of $2,496 per year. While it’s about the same price as the fine – the Texas family at least has health insurance to show for it.
There’s No Risk
Approximately 15.7 million who are currently uninsured are eligible for Medicaid or cost assistance on coverage because of the Affordable Care Act. Many don’t realize that government subsidies are available and can make health insurance a low cost option. Others are afraid they cannot afford coverage, even though the average monthly cost for health insurance is less than $100 a month.
Before you shop this healthcare open enrollment season, take the time to better understand what kind of health insurance you need, and how much you can save by enrolling in a new plan or switching to a different plan for 2016.
The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.