November 1 marked the beginning of the six-week open enrollment season.
From November 1 to December 15, those of us in the individual health insurance market can browse plans through healthcare.gov, a state-run health insurance marketplace, or any health insurance provider that sells individual plans.
As you shop for health insurance, it’s good to know a few of the basics.
Exchange plans are categorized or “metalized” into three levels: gold, silver and bronze. Gold plans are designed to pay between 80% and 90% of your health care expenses (the plan’s “actuarial value”); silver is 70-80%, and bronze 60-70%.
Having an insurance plan pay 90% of your expenses sounds great, doesn’t it? But you pay for it up front with considerably higher monthly payments (premiums).
Subsidies are available to individuals and families making between 150% and 400% of the federal poverty level (FPL).
Health insurance terms to know
The premium is your monthly payment for the plan.
Depending on your state, your premium might be higher depending on the county in which you live, whether you are a smoker, or if you are older. Insurers can charge older individuals up to 3 times as much as younger individuals.
The deductible is the amount you pay towards your medical expenses before the insurance coverage kicks in. High-deductible plans on the individual market can be several thousands of dollars per person.
In general, higher-deductible, lower-premium silver and bronze plans are a good choice if you are healthy and usually spend very little on health care. Lower-deductible, higher-premium platinum and gold plans are a better choice if you anticipate very high health care expenses.
Health savings accounts (HSA)
HSA plans are approved, high-deductible health plans that allow pre-tax earnings to be put into a health savings account. That money can be used for “qualified” medical expenses. Savings roll over from year to year.
Co-pays are the small fees, usually $15 to $50, you pay up front for an office visit or a prescription. Higher co-pays, $60 to $250, might be required for a visit to a specialist, the emergency room, or for brand-name drugs. Not all plans have co-pays.
Co-insurance is the percentage the health insurance company pays of your expenses until the out-ofpocket (OOP) maximum is met. Most gold plans will be 80/20; that is, after you have met your deductible, insurance will cover 80% of your expenses until the OOP maximum is met, then it will pay 100% of your expenses. Lower-cost silver and bronze plans might be 70/30 or 60/40.
Out-of-pocket maximum (OOP)
The OOP is the upper limit you will have to pay before your insurance company covers 100% of your costs. For 2020, the OOP is $8,200 for an individual and $16,400 for a family. Gold plans typically have a lower OOP, while bronze plans have the highest.
The OOP does not include out-of-network costs or any other expenses the insurance company deems “uncovered.” Read your benefits booklet carefully!
In-network and out-of-network
These terms weren’t often seen before the Affordable Care Act. To make costs more manageable, insurance companies set prices with specific hospitals and physician groups. Patients must use these providers or get a larger medical bill.
Unfortunately, these networks can change every year. So even if your insurance is not changing, make sure your doctor/hospital is still in-network!
Alternatives to traditional health insurance
There are a few alternatives to traditional (and expensive) health insurance policies.
None is a perfect solution to our health insurance problems. But if you’ve been priced out of health insurance, one of these options may work for you.
Health-sharing ministries are not insurance; they are pooled resources among a large group of like-minded individuals and families.
The top five health-sharing organizations:
Each is set up a little differently, but in general the pros of a health-sharing ministry include:
- lower monthly costs
- no open enrollment period
- no provider networks
- no denial of coverage for pre-existing conditions
The cons of a health-sharing ministry include:
- caps on annual or lifetime spending
- limits on coverage, such as no prescription medications
- more paperwork (patients pay up front and then submit a claim for reimbursement)
- not regulated by a state’s insurance commissioner.
Short-term health plans
Short-term health insurance plans were popular before the Affordable Care Act. In short (haha), these plans provide coverage for less than one year. They are a type of indemnity plan. You pay up front and submit a claim for reimbursement based on what your plan covers.
The ACA limited short-term plans to no more than 3 months, or just as a bridge between coverage. They were not considered qualified health insurance, so anyone using them suffered a penalty at tax time.
In 2018 the administration changed the rules to allow 6-month and 12-month plans, too.
The benefits of a short-term plan include:
- very low monthly costs for the young & healthy
- low deductibles
- no open enrollment period
- no provider networks
The cons include:
- no coverage for pre-existing conditions
- limits on coverage, such as no maternity care, prescriptions, etc.
- more paperwork
Association health plans
In 2018 the administration also deregulated association health plans (AHPs) to make them more accessible to more people.
AHPs allow individuals or small businesses to band together by industry to buy health coverage. AHPs were another popular type of health insurance before the ACA. Realtors, musicians, actors, writers, and farmers, for example, were able to combine their purchasing power and negotiate lower premiums.
If you belong to an industry that may be eligible for an AHP, check with your group’s professional organization, your local chamber of commerce, an insurance broker, or the National Association for the Self-Employed.