How to pick a health insurance plan that works for you
There is no mistaking the fact that health care costs are rising. With the rise in health care costs and the uncertainty surrounding COVID-19, it’s even more important to select a plan that works best to meet your coverage needs.
Open enrollment for 2021 health insurance plans has started. If you are looking to change your plan or sign up for a new one, most likely you will only have a few weeks to make your decision. Plans for next year go into effect as early as January 1. So if you’d like your coverage to begin by then, now is the time to start making decisions. Many people rush through selecting a health care plan and then halfway through the year, when they incur some sort of health cost, they discover they made the wrong choice for their circumstances. Avoid this by taking the time to review all the things you should take into account when selecting a plan. Here are a few items to keep in mind while insurance shopping:
Know open enrollment dates
This year’s open enrollment deadlines have changed, which will affect when your 2021 coverage will start:
- If you sign up for insurance between November 1 and December 15, 2020, your health insurance plan will go into effect on January 1, 2021.
- If you sign up between December 16, 2020 and January 15, 2021, your plan will not begin until February 1, 2021.
- And if you sign up between January 16, 2020 and January 31, 2021, your coverage won’t start until March 1, 2021.
If you would like your coverage to start on January 1, 2021, you will have to plan accordingly. And keep in mind that if you miss open enrollment, you may have to wait a full year before you can sign up again.
There are 4 health care plan categories in the health insurance marketplace
Health care plans are divided up into different categories. Bronze plans have the highest deductible and cost sharing. This means that if you go with this type of plan, you will be spending more money out of pocket. Silver plans have lower cost sharing than bronze and gold plans are even lower than silver. If you choose a platinum plan, you will end up with the smallest deductible and far cheaper copays. As a general rule of thumb, the more you pay in monthly premiums, the less your cost sharing will be.
Estimate your upcoming health care costs
Before deciding on a plan, it’s a good idea to estimate what your upcoming health care costs will be for 2021. Make note of any major health events that you will need to possible plan for. For instance, are you planning to have a baby? Schedule a surgical procedure? Julie Stich, Research Director for the International Foundation of Employee Benefit Plans suggests that people calculate what they spent last year, including copayments and coinsurance.
Another tool for planning for health care costs is the AARP Health Care Costs Calculator. Having a ballpark figure of what your costs will be can really help when trying to figure out what you want your annual deductible and monthly premium to be. If you go to the doctor often to manage an existing health condition, for instance, you’ll most likely want to opt for a plan with lower copays and deductibles. These plans tend to have higher monthly premiums. If you are relatively healthy and only go to the doctor for things like annual checkups and procedures, you may be okay with selecting a plan with a lower monthly premium but higher usage cost.
Consult with your doctors
In order to save yourself from high out of network bills, it’s important to make sure that you select a plan that is in network with your providers. Prior to selecting a 2021 healthcare plan, give your doctors’ offices a call to find out which insurance companies and plans they will be taking in the new year. You should also reach out to your local hospital and do the same. Don’t assume that just because your doctor takes your plan this year that they will next year. To keep up with rising insurance premiums, doctors themselves will often switch which plans they accept on an annual basis.
Analyze the out-of-pocket costs beyond the annual premium
When selecting a plan, don’t just look at how much your monthly premium will be; you’ll also want to make sure that you pick a plan with a deductible that best works for you. Keep in mind that plans with lower premiums often come with higher deductibles. And higher deductibles take longer to meet, which typically results in more out of pocket costs for you.
Consider a Health Savings Account (HSA)
One way to potentially save yourself health care dollars is to consider signing up for a Health Saving Account (HSA.) An HSA is a tax-advantaged medical savings account that you can contribute to and withdraw money from for medical-related expenses on a tax-free basis. These accounts can be used to pay for a variety of health care-related expenses including out-of-pocket doctor and hospital bills, as well as dental and vision care costs. They can’t, however, be used to pay monthly insurance premiums. Many high deductible plans are HSA compatible and make a great way to offset a high deductible.
There may be penalties for not having health insurance
There used to be a penalty if you didn’t sign up for health insurance, but there is no longer a federal penalty for the uninsured. However, there are some states that still mandate health insurance, so before you decide to forgo signing up for health insurance, check to see if your state requires it. Otherwise you might end up paying a fee.
Where to preview health care plans
Before you begin an application process, preview 2021 plans and price estimates based on your income and geographic location at healthcare.gov.
Choosing a new health insurance plan can be a daunting task but it’s an important decision that can have a major financial impact on your year ahead. Before deciding whether to continue on with your current plan or opt for a new one, make sure that you sit down and thoroughly consider all the factors above. Take your time, shop around, and find what works best for yourself and your family. It may be a bit of a hassle to look through all the information and calculate all of your estimated health care spending for the year ahead but when 2021 comes around and you have to pull out your insurance card, you’ll be glad that you took your time and chose your plan wisely.