As they join households, a lot of couples combine health insurance coverage. Getting married is considered a qualifying life event that grants you access to a special enrollment period. That means you have 60 days after saying “I do,” to buy or switch healthcare plans. Time may be ticking, but that doesn’t mean you should make a shotgun health insurance purchase.
While you get to check the “married” box, you may want to keep your health insurance plan status as “single.” It might seem counter-intuitive. Surely, family health plans save money? Not necessarily. Sometimes going it alone with your health insurance makes more financial sense. This is often true when people meet the love of their lives, but find their healthcare needs differ. If one of you typically requires more medical services than the other or has a health condition that needs frequent and ongoing care, keeping your health insurance policies separate might save you money.
Before buying new health insurance coverage on or away from the state-based or federal health insurance exchanges—or hopping onto your new partner’s employer-based coverage—make sure it’s the right move. Carefully consider the following when comparing your healthcare coverage options:
If you both expect a lot of healthcare costs, you may select two individual plans with lower deductibles as opposed to a family plan with one large family deductible. This will take some number crunching, of course, to make sure it’s truly a value.
If you and your spouse have different medical needs, you may still come out ahead if one of you selects a high-deductible health insurance plan and the other a plan with a lower deductible. This can obviously backfire if you both use a lot of medical care in one year. However, if one of you historically uses health insurance for preventive care alone and rarely dips into your deductible while the other always meets his or her deductible, you might come out ahead.
When healthcare needs are disproportionate between spouses, it may seem obvious to select a low-deductible family plan that minimizes out-of-pocket costs. However, it is typical that a lower deductible comes with a higher monthly premium. Buying separate health insurance plans can help mitigate this amount.
The healthier spouse may decide a bronze plan, which tends to have the lowest monthly costs, best meets his or her needs, while the spouse that requires more healthcare opts for a gold plan, which tends to have lower out-of-pocket costs.
Here is an example, using a hypothetical 35-year-old couple from Denver, of how a couple may save on monthly premium and deductible by getting individual plans as opposed to a family plan:
The healthier spouse chooses an HSA-qualified PPO bronze plan with a $6,250 deductible. It costs $212 per month without an Obamacare subsidy. The enrolled member pays no coinsurance for covered care after the deductible has been met.
The spouse with more healthcare needs chooses an HSA-qualified PPO gold plan from the same company. It has a $2,000 deductible and costs $317 per month without an Obamacare subsidy. The enrolled member pays no coinsurance for covered care after the deductible has been met.
Over the course of one year, this couple will pay $6,348 in health insurance premiums. What they pay toward deductibles will depend on how much healthcare they require. However, if the healthier spouse only uses preventive care as is typical for her, it is possible the couple will pay no more than $2,000 in deductible for the year.
The couple decides to buy an HSA-qualified PPO gold plan from the same company in scenario A. They will pay $7,596 a year in health insurance premiums—$1,248 more than if they’d chosen separate plans according to their healthcare needs. This plan also requires no coinsurance payment for covered care after the deductible has been met. The annual family deductible is $4,000.
One of you may opt for a traditional copay plan that charges flat rates for certain covered care while the other decides to enroll in a high-deductible health insurance plan paired with a health savings account. It could be the best of both worlds. Copay plans may be a bit more expensive in terms of monthly premium, but they can save you money if you have frequent doctor visits. If you rarely see the doctor, a high-deductible plan that requires you to pay 100 percent out of pocket for covered care until the deductible has been reached will have lower monthly costs, thereby saving you money on premium. Put that savings to use by pairing your HDHP with an HSA. The tax-free funds you set aside can come in handy for qualified medical expenses—the routine and the unexpected—for both you and your spouse.
Prescription drug deductibles
As with annual deductibles, having separate health insurance plans may help you lower what you pay toward prescription drug deductibles. If one of you doesn’t take any medications and the other does, consider selecting plans that appeal to these needs. These deductibles are in addition to your annual deductible.
You may each have a preferred health insurance company, provider or hospital, and this is worth taking into account when choosing a health plan. A single plan may not include each of your preferred doctors or hospitals in its network. Even if it costs you a bit more out of pocket or in premium, you may decide it’s worth it to have access to this care.
Ultimately, every couple should consider their options (e.g., employer-based, state-based exchanges, the federal marketplace, the private marketplace). Think about your typical healthcare needs and any that may come up in the year ahead (e.g., surgeries, starting a family). Then, compare individual vs. family health plan costs and benefits. If you need help making a decision, talk to a health insurance agent or broker, and possibly your financial adviser.
On a final note, though married couples can have individual health plans, they are required by law to file a joint tax return if they want to lower their monthly premium with an Obamacare subsidy. To qualify for the premium tax credit, you must meet income requirements and buy health insurance through a state-based exchange or the federal marketplace. Subsidies may be applied across multiple health plans.
To figure out cost estimates for joint family and single plans, you can run free quotes at HealthCare.com.