How to choose health insurance
If you are looking to change your health insurance plan, you can compare plans online or call different insurers directly. If you decide to renew through the Health Insurance Marketplace or sign up for a new plan, open enrollment periods usually run between November and January, with new coverage beginning February 1.
It’s easy to look at healthcare plans quickly and choose one that seems fitting without doing further research. But then when it comes time to make a claim, you may find some unexpected costs.
By taking the time to consider the different aspects of healthcare, you could ensure the most cost-effective health insurance for you and your family.
|In this article, we may use some terms to help you when selecting an insurance plan:
Deductible: This is an annual amount you must spend out of pocket, within a certain time period, before an insurer starts to cover costs.
Coinsurance: This is a percentage of a service cost that you will need to cover yourself.
Copayment: This is a fixed dollar amount that you pay when receiving certain services, including filling prescriptions.
How to choose health insurance
Whether you are choosing a private health insurance plan or using the Health Insurance Marketplace, you may want to consider a few factors before deciding on a plan.
Estimate medical costs
It’s a good idea to try to anticipate your future healthcare needs and estimate any associated upcoming healthcare costs. This may include any major health events, preexisting conditions, or upcoming surgeries.
You can calculate your medical expenses from the past year, which may give you a good indication of what to expect the following year.
Many health insurers will have specific networks of doctors, healthcare professionals, clinics, and hospitals that are contracted to charge agreed fees. These are considered in network.
If you choose to receive your healthcare out of network, you may have to pay higher out-of-pocket costs — and sometimes, your insurer may decline coverage altogether.
It may help to contact your local hospital, doctor’s office, and clinics to check which insurance plans they will be working with in the following year, as sometimes they may change networks.
Out-of-pocket costs beyond annual premiums
When selecting a health insurance plan, you should also consider choosing a plan with a deductible that best works for you.
Plans with lower premiums often come with higher deductibles, and higher deductibles take longer to meet. This typically results in more out-of-pocket costs for you.
Consider a health savings account (HSA)
One way to potentially save money on your healthcare is to consider signing up for a health savings account (HSA). An HSA is a tax-free medical savings account that you can contribute to and use for eligible medical expenses.
HSAs work alongside high deductible health plans (HDHPs). If you have an HDHP, you will likely have high out-of-pocket costs initially, with low premiums. These plans may work best for people who do not have any chronic or preexisting health conditions and do not foresee any large medical expenses.
While you cannot use HSAs for premium payments, HSAs are a great way to offset the associated high deductible costs. You can use the accounts to pay for a variety of healthcare-related expenses, including out-of-pocket doctor and hospital bills, as well as dental and vision care costs.
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Marketplace plan types
If you are considering searching available Health Insurance Marketplace healthcare plans, you may want to consider the different types of plans available when choosing the right one for your needs.
The plans are divided into four different categories. While they have different levels of out-of-pocket costs, it does not affect the quality of care you will receive.
The plans cover costs in the following ways:
|60% of eligible costs
|40% of eligible costs
|70% of eligible costs
|30% of eligible costs
|80% of eligible costs
|20% of eligible costs
|90% of eligible costs
|10% of eligible costs
Bronze plans have the lowest monthly premiums, while Platinum plans have the highest. But low premiums can mean that your out-of-pocket costs run into thousands of dollars each year if you have high healthcare expenses. So these plans may work well for you if you do not anticipate needing extensive medical care or have any preexisting conditions.
If you do anticipate greater medical needs, a higher tier plan may work better for you.
When you purchase a plan through the Health Insurance Marketplace, you will be advised on whether you are eligible for premium tax credits based on your annual household income. If you’re eligible, the Marketplace will send your tax credits to the insurer directly, making your monthly premiums lower.
Marketplace open enrollment dates
Open enrollment is the period you can confirm a current health insurance plan, make changes to it, or sign up for a new one. The open enrollment period is the same each year and runs from November 1 to January 15.
- If you register for insurance between November 1 and December 15, your health coverage will begin on January 1 of the following year.
- If you register between December 16 and January 15, your coverage will begin on February 1.
- After January 15, the special enrollment period comes into effect. You are eligible for special enrollment following specific life events, including:
- losing another form of coverage
- moving home
- having a baby
- getting married
If you are able to plan around these dates, it will mean you can get the best and most cost-effective coverage without having to wait for another enrollment period to begin.
Are there penalties for not having health insurance?
There used to be a federal penalty if you didn’t sign up for health insurance. But as of 2018, this is no longer the case.
As of 2023, though, some states still require you to have health insurance. So before deciding not to enroll in a plan, know that the following states still have financial penalties:
- New Jersey
- Rhode Island
- the District of Columbia
Vermont also has a requirement for its residents to have health insurance, and they must report their coverage status on state tax returns, but there is no financial penalty for being uninsured.
Choosing a new health insurance plan can be a daunting task, but it’s an important decision that can have a financial effect on your year ahead.
Before deciding whether to continue with your current plan or decide on a new one, it’s important to consider your healthcare needs — both current and future.
Take your time and shop around. It may take longer to look through all your healthcare information and calculate your estimated health spending for the year ahead, but ensuring what works best for you and your family is the most important factor.
- Health savings account (HSA). (n.d.). https://www.healthcare.gov/glossary/health-savings-account-hsa/
- How to pick a health insurance plan. (n.d.). https://www.healthcare.gov/choose-a-plan/plans-categories/
- Norris L. (2021). Is there still a penalty for being uninsured? https://www.healthinsurance.org/faqs/is-there-still-a-penalty-for-being-uninsured/#penaltystates
- Open enrollment period. (n.d.). https://www.healthcare.gov/glossary/open-enrollment-period/
- Saving money on health insurance. (n.d.). https://www.healthcare.gov/lower-costs/save-on-monthly-premiums/