By Camille Barron
Between the pandemic and the election, we are all more concerned about our health insurance than ever before. The Supreme Court recently heard oral arguments in a lawsuit that seeks to overturn the Affordable Care Act (“Obamacare”).
In addition, with millions of people having lost their jobs due to layoffs or shutdowns — and the associated employee benefits that come with those jobs — more people than ever are seeking insurance for themselves and their families in the Health Insurance Marketplace®. If this includes you, today’s newsletter reviews some of the most important factors to consider when choosing a policy for the coming year.
First, some basics…
Health Insurance Costs Are a Three-Legged Stool
When most people think of the costs of insurance, they think about premiums. These are the fixed costs that must be paid to keep insurance in force. While premiums are important, they are just one aspect of insurance costs. Deductibles and other out-of-pocket costs matter too. When you evaluate a health insurance policy, you’ll want to consider all three.
Despite the chaos caused by the pandemic, premiums for next year have remained relatively stable. Whether they shift beyond that remains to be seen.
Next year’s offerings feature higher deductibles to help minimize steep premium increases. (As a general rule, policies with higher deductibles charge lower premiums, and vice versa.)
In some cases, carriers have eliminated low deductibles altogether. Others have expanded both low and high deductible options, so it’s really a mixed bag.
Higher deductibles are one way to save on insurance premiums, particularly if paired with a Health Savings Account (HSA).
#3. Out-of-Pocket Costs
In addition to premiums and deductibles, other costs include copays and coinsurance – those fees you pay as you utilize medical services. As you’d expect, the lower the premiums, the higher these out-of-pocket costs tend to be.
PPO plans (explained further below) have different costs for in-network versus out-of-network services. In-network costs are lower than out-of-network and typically are flat dollar amounts called “copays.” Out-of-network costs are often percentages of the fees for medical services; these are known as “coinsurance.”
Beyond these essential three legs of the stool, there are additional factors which will have an impact on cost:
The degree to which you use the healthcare system matters. If you are in good health, with few doctor visits beyond the basics (e.g., annual physicals, yearly screenings, occasional visits for miscellaneous issues), your expected utilization would be low compared to those with significant medical conditions.
As a result, your overall health and expected frequency and type of care are important factors in determining which combination of benefits and associated costs are best for you.
Maximum Out-of-Pocket Limit
Of course, none of us knows before the fact what our actual healthcare costs will be. That is why most insurance policies set an annual limit on the amount you would have to spend on total, out-of-pocket costs. This is a safety net against a worst-case scenario; it protects you from the devastating financial impact of serious medical treatments and prescriptions.
Beyond choosing the most cost-effective option that matches your expected utilization, make sure you also have some funds available to cover unanticipated medical expenses up to your maximum out-of-pocket limit.
HMO or PPO?
HMOs (Health Maintenance Organizations) are a good option if you are willing to see providers that belong to your plan’s network. Visits outside that network are not covered and referrals to specialists are required.
PPOs (Preferred Provider Organizations) allow you to see both in-network and out-of-network providers. Out-of-network visits have higher costs, but many people like the flexibility of choosing where they seek care.
Whichever you choose, the key is to determine if your providers are in-network. Even if you are making no changes from this year’s coverage, check to make sure your providers are still in-network, as it is not uncommon for medical practices to reevaluate their network participation year to year. You can do this on the plan’s web site or by calling the insurance company in question.
Mergers, acquisitions, or consolidated products are common in the insurance industry. When these happen, the insurance companies reassign policyholders from their original plan to one of its new plan offerings.
At that point, costs and coverage will be similar — but not identical — to the plan you are losing. Make sure to evaluate the proposed new plan as if it were any other policy under consideration! Don’t assume that the newly assigned plan’s costs and coverages will be the same as those of the policy you are losing.
Employer-Sponsored Coverage and COBRA
All the factors discussed above apply in choosing an employer-sponsored plan.
If your employment is terminated, in most cases, you will be eligible for COBRA benefits. Typically, this allows you to choose from one of several options that will cover you for the next 18 months.
Keep in mind, however, that with a COBRA plan, there is no employer subsidy. You’ll have to pay the full premium, plus an additional 2% for administrative fees.
Additionally, if you are over the age of 65 when terminated, there are intricacies between Medicare and COBRA that must be understood.
Affordable Care: Public vs Private Exchanges
The ACA exchanges/marketplace, including the federal healthcare.gov website and those established by some states, remain a source of affordable health insurance. Once you register, you’ll find out if you:
- Qualify to save money when you enroll in a medical insurance plan
- Qualify for Medicaid
- Qualify for the Children’s Health Insurance Program (CHIP)
Most ACA exchange policies are HMOs, covering in-network providers only.
If you qualify, you must enroll via the exchange. If you do not qualify, you can still enroll via the exchange, but you may want to consider other options.
To find out if you are eligible for a subsidy, visit healthcare.gov or your state’s health exchange.
Finally, keep in mind that the choice of insurance plans in these public exchanges is somewhat limited compared to the open market/private exchanges in which private insurance companies provide coverage directly to consumers. Information about these plans is generally available on the private insurer’s website. Because additional options beyond HMOs may be available, be sure to compare and contrast with options available on the public exchange.
Open Enrollment comes just once a year. It’s your opportunity to evaluate your circumstances and make changes (or not) best suited to your personal preferences.
As we always say at Healthassist, an informed healthcare consumer is a more satisfied one!