There is no mistaking the fact that health care costs are rising. The Department of Health and Human Services recently issued a report that analyzed the premiums attached to 2017 marketplace coverage and they confirmed that yes, plans are increasing in the new year. The HHS revealed that the benchmark silver plan, upon which federal subsidies are based, is set to cost an average of $296 a month next year. That figure is based on prices for a 27-year-old enrollee in the 39 states that use the Healthcare.gov exchange (plus the four states and Washington D.C. that have their own exchanges. And workers at large companies can expect to pay 5% more for their 2017 premiums. With the rise in healthcare costs, it’s even more important that consumers select a plan that works best to meet their coverage needs.
Open enrollment for 2017 health insurance plans has officially started. So if you are looking to change your plan or sign up for a new one, you will have until January 31, 2017 to make your decision. Plans for next year will go into effect as early as January 1st. So if you’d like your coverage to begin by then, now is the time to start making decisions. There are many things to take into account when selecting a plan. Here are a few items to keep in mind while insurance shopping:
Know the dates
This year’s open enrollment deadlines have changed and this will affect when your 2017 coverage will start:
- If you sign up for insurance between November 1, 2016 and December 15, your health insurance plan will go into effect on January 1, 2017.
- If you sign up between December 16, 2016 and January 15, 2017, your plan will not begin until February 1, 2017.
- And if you wait until January 16, 2016 to January 31, 2017, your coverage won’t start until March 1, 2017.
If you would like your coverage to start on January 1, 2017, 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 four plan categories in the insurance marketplace
Healthcare plans are divided up into four 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 co-pays. 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 sit down and do your best to estimate what your upcoming healthcare costs will be for 2017. 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 co-payments and co-insurance. 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 doctors frequently 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 2017 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
One way to potentially save yourself healthcare dollars is to consider signing up for a HSA account. A Health Savings Account 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 healthcare 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 are penalties for being uninsured
If you were planning on forgoing the option to sign up for health insurance for 2017, you might want to reconsider. In 2016, people that didn’t sign up for health insurance had to pay 2.5 percent of their income or $695 per adult (whichever amount is more). You are also penalized if your children are not insured. In 2016, parents with uninsured children had to pay $347.50 per child. The maximum penalty amount is $2,085. For the 2017 year, the rate will remain at 2.5 percent, however, the flat and maximum dollar amounts will adjust for inflation.
Take your time
A lot of people rush through selecting a healthcare plan and then find out halfway through the year, when they incur some sort of health cost, that they made a bad choice. The 2016 Aflac Open Enrollment Survey revealed that 58% of baby boomers spent under a half hour looking at healthcare plan options during the last open enrollment. And 93% of them opted for the same exact plan year after year without researching possible better options. Choosing the right plan could mean a difference in thousands of dollars of out of pocket costs so take your time when deciding what works best for you.
Where to preview plans
Before you begin an application process, you can preview 2017 plans and price estimates based on your income and geographic location. Follow this link to do so.
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 healthcare spending for the year ahead but when 2017 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.