If you don’t receive health insurance from an employer, getting covered can be a daunting process, especially with dependents. Many people consult a broker or an agent, but before making any choices, it’s important to do your homework. To help you sort out the complex options, we spoke to health care experts about how best to choose a plan.
Know the Timing for Health Insurance Open Enrollment
The most important thing to remember when it comes to buying health insurance is there is a limited period of time each year—open enrollment season—when you are able to enroll in a new plan (or make a change, such as being added to a spouse’s plan).
One of the most common mistakes people make is they miss this window, says Lisa Zamosky, spokesperson for private online health insurance exchange eHealth and author of Healthcare, Insurance, and You: The Savvy Consumer’s Guide. “The window has shortened in the last two years. It’s now just a month and a half,” she says.
In our area, open enrollment runs from Nov. 1-Dec. 15, 2019, with coverage beginning Jan. 1, 2020. Open enrollment periods for employer plans vary. Remember: It’s impossible to enroll at any other time, unless you have what qualifies as special enrollment—a change of circumstances, such as losing your job, getting married, or having a baby. New York is one of the only states in the U.S. that considers pregnancy a special enrollment event.
Decide What Health Insurance Coverage You Need
Some folks may qualify for Medicaid and/or Child Health Insurance Protection—visit health.ny.gov for more information. Most people, however, will have to choose a plan depending on their individual medical needs. This can get confusing. “One of the most common mistakes people make is focusing exclusively on the monthly premium,” Zamosky says. “That’s really important. It’s got to fit into your budget. But it’s also really important to understand how the things that you need are covered.” For example, consider how often you go to the doctor, your medications, and what you seek in preventative care.
Brittney Castro, Certified Financial Planner and expert at Investopedia.com has this advice: “Anytime you shop for insurance…start with looking at the policy offer (what is it covering?) and the benefits you want,” she says. “Start there and see what the cost comes out to be, then compare it against your budget and see if that’s realistic. Then you can start to eliminate certain bits of the coverage to get that premium down to a level that you feel you could afford.”
Types of Health Insurance Plans
Don’t just choose a plan at random. Make sure you weigh the pros and cons of each, then select the best one for you and your family. Here is an overview of the various health insurance plans available.
If you are married, check if your spouse’s employer offers coverage as part of his or her benefits package. You can be added to the plan during the open enrollment period or under special enrollment. If you aren’t married, many employers also offer domestic partner benefits to their employees. This can be tricky: Domestic partner benefits are not tax-free like the premiums paid for a spouse; on the other hand, employers may help cover the cost of these premiums.
Before you go this route, Zamosky recommends checking the numbers. “More often than not, it’s a better and more cost-effective choice. But there are certainly scenarios where that may not be the case,” she says. “It costs you nothing to go online and take a look at the plans.”
If adding everyone to one policy is too expensive, you can search for a new family plan on the Affordable Care Act marketplace, or private exchanges such as eHealth. You may qualify for financial help. Unfortunately, due to a rule colloquially called the “Family Glitch,” even if you qualify for subsidies based on your family income, the system may still count you as having access to an affordable plan because the calculation is based on the individual premium, not the family premium. This means you might not always be eligible for assistance, even if adding your whole family to the plan is unaffordable.
If you recently quit or lost your job, you can keep your old insurance for a limited period thanks to the Consolidated Omnibus Reconciliation Act, COBRA for short. This federal law allows you to continue paying for your old plan. The catch? You now have to pick up the entire cost, so it is often very expensive. Plus, you only have 60 days to sign up after your job coverage ends, so you need to move quickly.
You can also use COBRA to get coverage if you get a divorce, your insured spouse dies, or you become too old to be on your parents’ plan. The maximum amount of time you can get coverage this way is 18 months, and you can opt out at any time.
Another option is buying a plan on an exchange and, thanks to the ACA, every state now has an insurance marketplace, where you can compare plans and choose the best one for you. Each is guaranteed to comply with the ACA’s rules, such as covering pre-existing conditions and preventative care, and no cap on annual benefits. There are also many subsidies you can apply for. You can buy a plan from the marketplace online, on the phone, via a paper form, through a private exchange, or direct from a broker or agent. Again, you can only do this during open enrollment or special enrollment.
What many people don’t realize is the state marketplace doesn’t include all ACA-compliant plans offered by insurers. “If you don’t qualify for subsidies, it’s a good idea to have a look at something like eHealth or speak to a broker, because there may be a plan that isn’t on the state marketplace that could be good for you,” Zamosky says.
Small Business Owners
One exception to the open enrollment period rule is available to small business owners. If you run a small business with two or more full-time employees, you can buy something called small business plan insurance. These are ACA-compliant and often work out to be very good value, Zamosky says.
If you don’t have your own business, there are many business associations that offer health insurance plans. For example, if you are one of the 57 million freelance workers in the United States, you can buy a plan through the Freelancer Union. There are 450,000 members nationwide, and it’s free to join. Association plans like this can only be joined during open enrollment or special enrollment.
High-Deductible Health Plans
With HDHPs, you pay a lower monthly premium because your deductible is high. They are often offered by employers alongside a Health Savings Account they contribute to, but HDHPs can be bought individually. Before deciding on one of these plans, it’s very important to figure out if it makes sense based on your specific medical needs. According to Zamosky, there are two types of people who this plan suits: those who rarely visit the doctor and so save money with the low premium, and those who anticipate high costs (such as people planning surgery in the next year) who benefit from the cap on the out-of-pocket expenses.
Whatever path you choose, don’t opt out. No insurance means you won’t be able to take care of your health with regular check-ups and preventative care. You won’t be prepared in the case of an accident if you need medical attention or hospitalization. Medical bills can quickly add up if you don’t have insurance, and are a leading cause of bankruptcy, according to a recent study by the American Public Health Association. “I would never recommend that as a financial planner—or as just a citizen,” Castro says.