When shopping for health insurance, you may be tempted to purchase the plan with the lowest premium because you think it will save you money. However, there are several other factors to consider when selecting your coverage so that you can make the best choice for you and your family’s financial and physical health.
To compare plans objectively, familiarize yourself with these key terms:
Premium– The monthly fee you pay for your insurance plan
Co-Pay– The fee (usually fixed) for a healthcare service that you are required to pay; the insurance company pays the rest
Deductible– The amount you must spend before your insurance company will pay for your health care services
Covered Services – The healthcare benefits that your insurance company will pay for
Out-of-Pocket Maximum– The amount that your out-of-pocket expenses must reach before your insurance company pays 100% of your care costs
Higher vs. Lower Cost Premiums
Before you compare plans, evaluate your current healthcare needs here. The following questions will give you a good sense of the level of coverage you need:
- Are you usually healthy or do you require medical care on a consistent basis?
- Do you or your family have any required treatments or medications?
- Do you anticipate specific healthcare needs, such as the birth of a child or a surgical procedure?
As a general rule, when you have a lower premium payment, you will have higher copays and deductibles. If you are healthy, this is a good option given that you will only have out-of-pocket expenses when you actually use a healthcare service.
On the other hand, higher premium plans have lower copays and deductibles. Beyond the monthly premium, you will be pay less for out-of-pocket expenses. This type of plan is better if you require ongoing medical support from physicians or other providers. Although the premium costs are higher, you will save money on out-of-pocket expenses and you will pay less overall.
Before selecting a plan, you should determine if the services or prescriptions you need are included in it. Many services and prescription drugs are expensive and you will save money by purchasing a higher-cost plan that includes these benefits.
The Costs of Not Having Insurance
There are many costs associated with not having health insurance. The least of these could be the penalty you are required to pay under Obamacare if you are uninsured. In 2016, the penalty was the higher of 2.5% of your income or a cost per person of
- $695 per adult
- $347.50 per child under 18
The total cost per person within the household cannot be more than $2,085. These penalties have increased every year since 2014 and are expected to do so again in 2017.
Not having insurance can also be very expensive on it own. Many major medical plans include benefits such as health screenings, immunizations, and preventative services that are provided at little to no cost. For example, a visit to the ER can cost up to $1400 without insurance, but costs around $118 if you have insurance. SImilarly, having surgery for a broken arm can cost up to $16,000 if you are uninsured, but costs about a quarter of that with insurance. Flu shots and allergy medication cost nothing with most insurance plans, but without insurance, you will pay for them. In total, 1 in 4 people without insurance in the US will lose their savings to manage their healthcare needs.
Identify Healthcare Scams
Sometimes the cheapest insurance policies seem too good to be true; that’s because they are. If you are bombarded with flyers and telephone calls from an “insurance representative,” it is potentially a scam. If you do not recognize the name of the company, check with your state insurance department to see if the company is licensed. Be suspicious if the “agent” is evasive or doesn’t answer your questions. Legitimate companies will provide concise and complete information about your policy and you will receive a copy of that policy and an enrollment card immediately. Shop around- if an agent is quoting you a price that is 30-50% lower than every other insurance agent you have spoken to, it is likely a scam.
Other Healthcare Options
If after doing your homework and contacting several companies, you find you still cannot afford healthcare insurance, you may still be able to avoid paying the penalty.
- Medicaid. For 2016, the Federal Poverty Level threshold is under 138% to qualify for Medicaid. If you meet this requirement, you can apply for coverage.
- Obamacare Assistance. If you make between 100%- 400% of the Federal Poverty Level, you may qualify for premium-tax-credits/premium tax credits on the Health Insurance Marketplace. These programs can reduce the cost of your monthly premiums and out-of-pocket expenses.
- Catastrophic Care Plans. These plans have very low premiums and very high ($6,850) deductibles. If you are under 30 years old or have a hardship exemption, you can purchase this plan.
- Exemptions. If you qualify for an exemption, you don’t have to pay the penalty or have health insurance. Several factors may qualify you for an exemption and there is an easy-to-use tool to see if this is an option.
When selecting your insurance plan, remember that the cheapest is likely to be the most expensive in the long run. Knowing your current and anticipating your future healthcare needs are your best bet for determining a good option for you. You can purchase plans through the federal Marketplace, major medical insurance providers, and online sources such as Healthinsurance.net.