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Health insurance guide

Health insurance could be overwhelming especially if not provided for your by an employer, or you are a self employed. Here, you can find a lot of useful information  that will help you decide which health insurance plan is the right for you.

Table of Contents

What is health insurance

Health insurance is a type of insurance that pays for your medical bills that occurred from sickness, accidents and injuries, and preventative care and wellness.

It is critical to have health insurance for a few reasons, but the main one is – unexpected medical bills can truley get you into deep financial trouble if you don’t have coverage. The most common reason for banckrupcies in America is medical bills. Now try to wrap your head around it, no matter how you feel about health insurance, you need it.

You also should note, that you are still required by law to have health insurance. And yes, you no longer have to pay a penalty (In some states you still do) for not having health insurance, but the mandate is still there. 

Who needs it

Everyone, but depends on your situation, the way you enroll into health insurance plan may differ. Here is are some common situations of how people buy coverage.

  • If you are self employed: You may buy coverage through the health insurance marketplace or profession based organizations that offers health coverage to their members.
  • If you are work for a company that offers health insurance: You probably should enroll in your employer plan, especially if your company offers to pay a portion towards your premium for you and your family. If your employer group plan is too expensive, you should compare plans with the marketplace and see if there are more affordable plans for you.
  • Low income individual and families: If your income is low or you are unemployed, you should contact your state Medicaid. If you are eligible based on your income and assets, you may may qualify for health insurance for little to no cost. If you applied and got rejected, then you should apply with the health insurance marketplace,  you are likely to get subsidies on your health insurance plan.

Types of health insurance

There are quit a few  types of health insurance platforms which you can obtain coverage from, here are the most common once:

On exchange

This is where individuals and families can but their own private insurance. You can compare, apply, and enroll in plans on exchange through healthcare.gov (Also known as the Health insurance marketplace) or through other web brokers that integrate with the marketplace. (Note, some states are running their own marketplace. If you live in one of them, you have to apply on their site)

Features:

  • You can qualify for subsides (Tax credits).
  • You can qualify for cost sharing reductions (CSR), which can lower your healthcare costs.

Off exchange

Like on exchange plans, meant to serve individuals and families. Only you can enroll directly with insurance companies or insurance brokers. You still have to enroll during open enrollment unless you are qualify for spacial enrollment.

Features:

  • You can apply directly with insurance companies or brokers and skip the process on the On-exchange platform. (Less paperwork).
  • You cannot qualify for financial assistant if you apply with an Off- exchange plan.

Group employer plans

This option is been offered to individuals and their families through their jobs. Reach out to your employer or your HR department to find out if they offer group benefits and how you can enroll if they do offer.

Medicare

Medicare is a federal health insurance program for seniors (over 65) and individuals with certain types of disabilities and illnesses. To learn more go to Medicare.gov

Medicaid

Medicaid helps individuals and families with low income to obtain health insurance with little to no cost. Typically Medicaid agencies are been run by the states individually and eligibility requirements vary between states.

Medicaid may also cover pregnant women’s or children’s without their parents on the Children health insurance program (Or CHIP).

How health insurance works

Health insurance policies are structured in a way that will protect you from high and unexpected medical bills, there are few components inside a policy that will help to limit the cost of healthcare if you have to utilize your plan. Here they are:

Maximum out of pocket

Maximum out of pocket is probably the single most important component on your plan. This number represent the highest number you will pay from your own pocket on medical bills. If you meet your maximum out of pocket, your covered expenses will be payed at 100% by the insurance company, from that point to the end of the calendar your.

 

As mentioned, all the medical bills you pay goes towards your Max out of pocket. But in most plans, you don’t have to pay your bills on your own until you are competently covered, the insurance company will share the cost of healthcare with you until you meet your yearly maximum.

They will share the cost on a few ways:

Deductible

Probably the most common concept in insurance. Your deductible on your health plan is on  an annual base, and you have to meet it before the insurance company will start pay on your bills. This is why many consumers are after low or zero deductible plans.

 

Now, there are services you won’t have to meet your deductible to receive benefits, like preventative care and services provided in exchange for Copay. If you have to pay a copay on your medical bill, you usually don’t have to meet your deductible before receiving that benefit.

Co-pay

Co-payments are another form of out of pocket cost. It is a fixed dollar amount that you pay for services (typically basic services). Many policies offer Co-pay on doctor visit, prescriptions, x-rays and more.

Coinsurance

Coinsurance is one of the most misunderstood concept. Coinsurance is simply a way to divide your medical bills to a preset structure, means the insurance company pays X% towards your expenses and you pay Y%  . This is a step that usually take place after you meet your deductible.  The present amount on every procedure is vary on every policy. But for the most part, coinsurance level will work based on Tier system. (Check the next section to learn about the Tier system).

Health insurance out of pocket expenses illustration

Tier levels

Once shopping for health insurance, You may see that plans are categorized by metal types, Bronze, Silver, Gold, and platinum. The more precious the metal, the better the quality of your plan (In most cases).

Here is an highlights of the tier levels:

Bronze plans

Bronze is the basic tier level and usually the most affordable one. Bronze level usually means that in a case you are responsible for coinsurance, the insurance company will pay 60% of the bills and you are responsible for the remaining balance. You may find in your area plans called "Extended Bronze" and they can be more competitive than a regular bronze since they usually have more co-pays options than normal bronze.

Silver plans

If you choose a silver plan, your coinsurance will typicality be 70%  of your medical bills are the responsibility of your insurance company and you are responsible for the rest. Silver plans and CSR (Cost sharing reductions): If you are eligible for Cost sharing reduction, Which is another level of financial help that will help cut your out of pocket cost. You may choose a silver plan, since CSR is only compatible with silver plans.

Gold plans

With gold plans, your coinsurance responsibility is expected to pay 20% and the insurance company 80% (Unless the policy mention other numbers on certain procedures). Some gold plans, will offer lower maximum out of pocket than other typical plans.

Plantinum plans

The highest and rarest level. On those plans, usually your coinsurance responsibility is only 10%, your insurer will pick up 90% (Unless other numbers indicated on certain procedures)

Catastrophic plans

This is usually the most affordable plan, but not everyone can buy it. You need to be in a financial hardship or under 30 usually to buy that plan. Like the name suggest, this plan is design to cover mainly catastrophes.

Type of plans

The type of plan you choose can dictate how you use your healthcare. It is important you understand how different plans works, as one of them is likely to meet your individual needs.

HMO (Health maintenance organization)

HMO is a very common type of health insurance. It is a more restrictive type of plan. Your healthcare will be coordinated by the insurance company and your providers, but it will usually cost you less to buy.

Here are some features:

  • You must stay In-network for you healthcare services (except for emergencies).
  • You typicality have to choose a primary care doctor at the time of enrollment.
  • You need a referral to see a specialist.

PPO (Preferred provider organization)

PPO  is a plan that allows you to use an Out-of-network providers, but they are more expensive than other types of plans

Here are some features:

  • You don’t need to be assigned to primary doctor.
  • In-network providers are recommended because you will pay less out of pocket. You may use Out-of-network providers, but usually at higher cost.
  • There is no need to obtain referral to see a specialist.

HMO VS PPO

HMO PPO
✗ No coverage for out-of network providers except for emergencies. ✓ Can use out of network providers at higher cost.
✗ Primary care need to be assigned. ✓ Primary care provider does not have to be assigned.
✗Need referral to see a spacialist. ✓Referral is not required to see a spacialist.
✓ Focus on preventative care. ✗ Can be costly.
✓ Healthcare is coordinated. ✗ Not availble in all states and regions.

EPO (Exlusive provider organization)

EPO is kind of a hybrid between HMO and PPO. 

Here are some features:

  • You must stay In-network for you healthcare services (except for emergencies).
  • You don’t need to be assigned with a primary care physician.
  • You don’t need a referral to see a specialist.

POS (Point of services)

POS is another type of hybrid between HMO and PPO. Generally, POS plans will cost you less overall.

Here are some features:

  • You may need to select primary care doctor.
  • Healthcare services will cost you less if you utilize an In-network providers.
  • Healthcare services will likely to cost you more if you use Out-of-network provider.

HSA (Health savings account)

HSA is more like a feature than a health plan type. Health savings account is a saving account that has tax benefits, and if you choose a High deductible health plan (HDHP), you will be eligible to open an HSA account.

Here is how it works:

  • You can invest money into the account up to the annual limit, the funds invested are tax free.
  • You can only use the funds to pay for eligible medical bills (Like you deductible and you co-pay for example), as long as you stick to eligible expenses, then you don’t need to pay taxes on the amount you pull to pay those bills.
  • You may earn interest on your money that is in your savings account, the growth is not taxed. 

What is covered

All qualified health plans must cover all preexisting conditions. Also, this plans must provide comprehensive coverage that covered the following ten essential benefits.

  1. Ambulatory patient services: This is an outpatient benefit, without the need to be admitted to hospital.
  2. Emergency services: If you have true emergency, you will not be required to get any Prior approval from you insurance company. You should go to your nearest emergency room even if it’s out of network – your insurance company can’t charge you out of network fees.
  3. Hospitalizations:  Hospital admission must be covered under your plan for surgeries, hospital stay, etc.
  4. Maternity and new born care:  Every qualified health plan and Medicaid Must cover check ups and screening during the pregnancy to keep you and your baby safe and healthy, the delivery and hospital stay and new born care.
  5. Mental health: Every qualified health plan must cover Behavioral health like counseling and psychotherapy, behavioral and Mental health inpatient services and substance abuse treatment.
  6. Prescription drug coverage: Prescription drugs must be covered on all plans. However keep in mind that every company have slightly different formulary, so if you take prescription you want ask about the covered drug list (fomulary) before enrolling.
  7. Rehabilitative and Habilitative services and devices: The benefit helps the insured with chronic condition or disability, injuries and mental illnesses.
  8. Laboratory services.
  9. Wellness and preventative care: There are 3 types of care 1. Adult care,  annual check ups screening services and more 2. Women care , well women visits, screening, birth control and more. 3. Child care, Well baby & child visits, immunizations vision screening  and more.
  10. Pediatric services including oral and vision: Dental and vision services are not for adults, since considered essential for children only. But you can buy your own dental and vision plans individual.

How to buy health insurance

How you can enroll into a health insurance plan will vary depends on your situation.

If you are a self employed

As a self employed you most likely don’t have a group employer plan offer on the table, but you do have options.

  • You may enroll through the health insurance marketplace (On-exchange) or your state based marketplace if applicable.
  • You may enroll through off exchange plans.
  • If you belong to any profession based association you can look up if they offer any health benefits.

If you retires early

If you retire early you may find yourself in gap, as you may be shy a few years from been eligible for Medicare.

  • You may buy a short term plan, if your state approves them. Make sure you do your research and read some fine print because those plans have restrictions and limitations.
  • You may enroll through the health insurance marketplace (On-exchange) or your state based marketplace if applicable.
  • You may enroll through off exchange plans.

If you lost your job health plan

If you lost your health insurance through your employer, you may enroll in COBRA (Consolidated Omnibus Budget Reconciliation Act) which is continuation of your health insurance plan, but usually the cost on your end will be a lot higher.

While cobra is temporary situation so you can bridge the gap until you find a new health plan, you may keep it 18-36 months.

  • You may keep your COBRA coverage.
  • You may enroll in a marketplace plan.
  • You may enroll in an Off-exchange plan.

If your income is low

There is plenty of help available for low income individual and families when it come to healthcare. The main two ways are:

  • Apply for benefits with your local Medicaid agency.
  • Apply through the Health insurance marketplace or your state based equivalent. You may qualify for subsidies and  lower out of pocket on silver plans.

If you are pregnant

Maternity is covered by all qualified health plans, the way you obtain it may vary.

  • You may qualify for a designated plan for pregnancy through Medicaid (Availability varies from state to state).
  • Apply for health insurance through the health insurance marketplace.
  • Apply for an Off exchange plan.

If you are a senior

Seniors over 65 that worked and payed their taxes for 10 years are eligible for Medicare. Medicare is a federal health insurance program.

When to enroll

Health insurance enrollments are restricted by limited period for when you can sign up.

Annual open enrollment

Generally annual open enrollment starts at November 1 and ends the following January 15. During that period you can either enroll into a new health plan, switch your existing insurance or renew your current policy.

If you enroll in health insurance plan after January 15, usually your effective date will be February 1.

Spacial enrollment (SEP)

Spacial enrollment allows you to enroll into health insurance outside of the annual open enrollment, but you do have to qualify for it.

If you qualify, you typically have 60 days window to enroll from the time you’re eligible.

As mentioned, you need to qualify for SEP,  and you may qualify if you have a Life changing event. Here are few examples of what triggers  a life changing event:

  • Changes in your household size: Changes such as marriage, divorce or adding a new born to the family.
  • You recently moved: You will qualify for a spacial enrollment if you moved away from your plan service area, or moved back from relocation in another country.
  • You lost your employer health plan: You may will qualify for SEP and you will need to enroll withing 60 days of the termination of your group plan.
  • You lost your Medicaid status: If your Medicaid plan terminates (Usually because your income got higher).
  • You recently gained eligible immigration status: If you recently got a green card, employment authorization or a US citizenship.

Other types of health insurance

There are some alternatives for health insurance that are working differently than traditional plans. Also there are some supplements plans that can help you offset your cost on healthcare services through your main insurance.  Here are a few examples.

Short term plans

A short term is a medical insurance plan that typically cover you for limit services (usually emergency and only medically necessary procedures), and only for a limited period of time (3 months to about a year).

Short term plans are not subject to the Affordable care act and are not considered traditional insurance. Therefore, most plans will exclude coverage for preexisting conditions and you will be asked medical questions on the application to be approved for purchase.

Short term plans may be best for individuals who are:

  • Waiting for employer health insurance to start.
  • Missed the annual open enrollment.
  • Waiting for Medicare to start

Accident coverage

Accident coverage is affordable great way to supplement your main health plan, it will help offset your deductible and other health related expenses. The way it works is, in a case that you incurring medical bills due to accident or an injury, you may file a claim with your accident coverage insurer,  and get reimbursed for some or all your of your expenses (payouts deepens on your policy benefits and terms).

Hospital indemnity coverage

This coverage typically helps you pay your deductible co pays and out of pocket expenses on your main health insurance in cases like hospitalizations. It does that by Paying a daily fixed benefit for things like hospitalization, surgeries physician fees and more.

Critical illness insurance

The plan will pay you a lump sum upon getting diagnosed with a life threatening sickness and few more conditions.

Disclaimer:

This guide is only for general information and general education purposes. We do our best to audit our blogs periodicity and make sure information is accurate and up to date.