Monday, February 22, 2016

How To Get Yourself The Right Health Insurance

Health insurance isn't cheap, but it's really important. In addition to subjecting yourself to a potentially hefty fine if you don't enroll, an unexpected medical emergency could result in medical bills running into the six figures — which you'll be on the hook for.
The end of the health care open enrollment period is fast encroaching (January 31st!).  If you're still unclear on how to get yourself insured and what you should be looking for in a health plan, here's a quick primer. 


First, Understand Your Situation

Got employer insurance?
Congrats! Getting insurance through your employer makes your life a lot easier, but employers often offer different plans, and it's not always clear which makes the most sense for you. Check the terminology guide down below to start figuring out what works for you. 

On the market by yourself?
Before you do anything, check if you're eligible for Medicaid and/or subsidies, using this tool
If you're not eligible for Medicaid, then HealthCare.gov — or, if your state has set one up, your state marketplace — is your best bet, though not your only one: eSuranceHealthSherpa and others offer marketplaces that also allow you to search for plans. 

Losing your employer-based insurance?  
If you leave or lose your job, COBRA — which allows people to continue their old job-based coverage, at a higher cost — used to be the best option, but these days you're better off on the exchanges: 
Because people have to pay the entire premium plus a 2 percent administrative fee, however, [COBRA] coverage can be a financial hardship for people who are scrambling to keep up with expenses after losing their jobs. Many of these people will likely be better off buying a plan on the state health insurance marketplaces, also called exchanges... Signing up for COBRA instead of an exchange plan could have serious financial repercussions.


Then, Understand The Terms

Health insurance plans are a lot of things. One of those things is not "easy to understand." Terms are often vaguely defined (HMO?) or seem to have similar meanings (how are deductibles and out-of-pocket maximums different, again?). Here's a breakdown of the some of the most important (and most confusing) terms:  

What's In Health Insurance? 
The key parts:
Network coverage: Different healthcare providers (doctors, hospitals, etc.) accept different insurance companies. If you go to a healthcare provider that's not in your insurance company's network, you'll probably end up paying more of the cost.  
Premium: What you pay per month. 
Deductible: The amount you have to pay before your insurance company starts paying. This differs from the out-of-pocket maximum (see below). 

HMO vs. PPO vs. EPO
HMO (Health Maintenance Organization) and EPO (Exclusive Provider Organization) plans differ mainly from PPO (Preferred Provider Organization) plans in how strict they are about covering doctors outside the insurance company's network. 
Here's a quick breakdown of the main features of each, and Nerdwallet put together this helpful chart:


Of course, insurance companies being insurance companies, these rules aren't set in stone:
Some plans labeled as PPOs don’t offer out-of-network services at all, experts say. On the other hand, some HMOs have an out-of-network option that makes them seem similar to PPOs.

Deductible vs. out-of-pocket maximum
If you look up "deductible," chances are the definition will read something like this:
A deductible is a dollar amount your health insurer may require you to pay out-of-pocket each year, before your health plan begins to pay for covered medical expenses.
But then you look at your insurance options and see that the deductible and out-of-pocket maximum amounts are... different. Here's why: 
[Out-of-pocket maximum] is the most you will ever have to pay out of your pocket for health care during the year, not including premiums, but definitely including the deductible AND the copays and coinsurance you will continue to pay after you hit the deductible. If you hit your OOP for the year, your insurance will pick up 100 percent of costs thereafter.

Copays and coinsurance
As the "co" implies, these are payments that you share with your insurance company. Copays are the (relatively) small fee you pay during doctor's visits, and they are generally separate from your deductible — though not always, so make sure to check. 
Coinsurance is the payment plan that kicks in once you've paid your deductible: 
Let’s say you have a policy with 20% coinsurance. That means the insurance company will pay 80% of covered services after your deductible has been met and you pay the remaining 20%. But you won’t have to pay that 20% forever. You pay until you reach your out-of-pocket maximum.

Catastrophic coverage
A "catastrophic" insurance plan isn't a plan that offers more coverage than the average plan — it offers a lot less. Catastrophic plans take the tradeoff of a high-deductible plan to the extreme:
Catastrophic health insurance plans have low monthly premiums and a very high deductible — $6,850. They may be an affordable way to protect yourself from worst-case scenarios, like getting seriously sick or injured. You pay most routine medical expenses yourself.


Finally, Figure Out What's Right For You

HMO, PPO, or EPO? 
Consider what your wants and needs are:
If you prefer to have your care coordinated through a single doctor, an HMO plan might be right for you. If you want greater flexibility or if you see a lot of specialists, a PPO plan might be what you’re looking for. And if you're interested in saving money by using a smaller network of doctors and hospitals, an EPO plan might be a good fit.

Since different HMOs, PPOs and EPOs vary in what they actually offer, evaluate plans according to these questions: 
- Is there out-of-network coverage?
- Does that out-of-network spending accrue toward the member’s out-of-pocket maximum? Legally it doesn’t have to, but some plans include it.
- Do members need a primary care physician gatekeeper?

High-deductible or low-deductible? 
Choosing between a high-deductible plan and a low-deductible plan is one of the most important decisions you'll make when purchasing insurance. High-deductible plans have lower monthly premiums, but if you do run into major medical expenses, you'll be on the hook for a lot more money before your insurer takes over.
On the other hand, if you're generally healthy, paying the high monthly premium for a low-deductible plan might not make sense. Recent changes to preventative care pricing under the Affordable Care Act also make high-deductible plans more affordable:
Because preventive care is free under the Affordable Care Act, and many policies allow you to see your primary care doctor with a copay rather than paying toward the deductible, a few visits to the doctor per year won’t be a financial setback for an otherwise healthy person.

Does a catastrophic plan make sense for you? 
In most cases, probably not. While these plans do offer the cheapest premiums, you're looking at a $6,850 deductible if anything goes wrong — and you're not eligible for subsidies:
[U]nlike the metallic plans, catastrophic plans don't offer potential discounts through tax subsidies... Even though they seem more expensive, bronze plans may still be a better deal not only because of the potential financial assistance available through the subsidies, but also because those plans must cover "essential health benefits," including emergency services and prescription drugs, which catastrophic plans may not cover until the deductible is met.

With that said, a catastrophic plan is, of course, better than no insurance at all. You'll still be paying the fine for not being insured — and you won't have any protection in the case of a medical catastrophe. 

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