Until a few years ago, buying health insurance was like buying a vacation package in the 1980s. In the 1980s, you went to a travel agent, talked about where you might like to visit, and,once you decided on a destination, the travel agent booked your trip.. Buying health insurance was similar. You called your health insurance agency and they walked you through your plan options;upon his or her recommendation, you bought a healthcare plan. All of this came to an abrupt halt with the passing of the Affordable Care Act, also known as Obamacare.
Today, health insurance is purchased like travel – online and with little assistance. Consumers are responsible for researching and buying their own health insurance plan, either on their state-based exchange, the federal marketplace or through the private marketplace. Considering consumers have never had to buy health insurance on their own before, the process can seem daunting.
Here is a checklist for choosing and buying a health insurance plan that will help ease the burden of buying a product that can be complex.
- Take inventory of your healthcare needs. Do you visit the doctor for more than preventive care? Do you wind up in the ER at least once a year? Be honest about how much you use the healthcare system over the course of 12 months.
- Now that you’ve taken inventory, make a list with at least two columns. In the first column, outline every doctor you saw in the previous year, and how many times you visited a hospital or urgent care clinic. If you take prescriptions, put each one on your list as well. Then, in the second column, total up how much each service cost. At the bottom of the list, calculate a grand total of all of your medical expenses. Surprised?
- Next, make a list of the doctors that you want to see and the hospital and clinics you prefer. You will want to make sure your doctor or clinic is considered “in-network” with the healthcare plan you ultimately choose.
- Now look at your monthly budget. Remember that health insurance plans that pay for more of your medical bills have a higher monthly cost. If you are healthy and only use preventive care, a high deductible health insurance plan will cost less money per month, but will require you to pay a larger chunk out of your own pocket if an accident occurs. If you have Type 2 diabetes and see a doctor numerous times during the year and have several prescription medications, a more expensive healthcare plan might actually cost less out of pocket overall since more medical claims are paid for by the health insurance company.
Armed with this information about your healthcare use and budget, you are ready to begin looking at a health insurance plan. Here are some terms that will help you better understand what your plan will pay for, and what is your responsibility.
Catastrophic plan – This is health insurance for millennials. If you are under the age of 30, you are eligible for Catastrophic insurance, which is low cost, high deductible health insurance. This plan is a great option for healthy 20-somethings that don’t plan to use their health insurance for more than preventive care. It is not eligible for a tax subsidy, so it’s smart to run a health insurance quote for both Catastrophic plans and other plans to see if your income level qualifies you for less expensive insurance than what a Catastrophic plan can offer. (Of note, Catastrophic plans are also available to those with a hardship exemption.)
Bronze plan – Obamacare plans are set up by metal level. Bronze plans are the most inexpensive, but typically carry the highest out of pocket expenses. That means after the cost of your monthly premium, deductible, coinsurance and copayments, a Bronze plan pays 60% of your healthcare bills, and you are responsible for 40% of the costs.
Silver plan – The next Obamacare metal level, Silver plans pay an average of 70% of your healthcare costs, which include monthly premium, deductible, coinsurance and copayments, and you are responsible for 30% of the costs.
Gold plan – Gold plans pay an average of 80% of all healthcare costs, including the monthly deductible, and you are responsible for an average of 20% of the costs.
Platinum plan – The most versatile metal plan, Platinum plans pay an average of 90% of healthcare costs, leaving the policyholder with just 10% of the bill, on average.
Deductible – This is the amount you have to pay out of your own bank account before your health insurance kicks in. That means, if you have a $6,300 deductible, you will have to pay the first $6,300 out of your own pocket for medical services that are not preventive care.
Coinsurance – Some healthcare plans include coinsurance, so it’s an important term to factor in during your research. Coinsurance is the percentage you have to pay for medical services. If you have 80% coinsurance on your health plan, your insurance company will pay for 80% of the services rendered, and you must pay for the remaining 20%.
Copay – Copayments are set fees for medical services. You might have a $35 copay for a covered doctor office visit. With a copay, you typically have to pay the set amount at the time of service.
Ready to start shopping? Visit HealthCare.com and run your free health insurance quotes.