"It's complicated," said your ex about breaking up with you.
Or were they talking about health insurance?
Health insurance has lots of terminology and specific processes that can be daunting and difficult to understand at first. Luckily, there is plenty of information available regarding health insurance terms and how health insurance works.
“Although the United States is considered a leader as it relates to delivering healthcare services to our populous, we typically lack in providing the basic education on how the health care ecosystem as a whole operates. From a customer perspective, this becomes increasingly confusing and overwhelming during the Open Enrollment Period,” says Austin Ridgeway, HGS Director of Sales Support and Business Development.
Open Enrollment is one of those terms. So, here’s a quick definition: the time period you have to enroll in a health plan for the following calendar year. Open Enrollment typically runs November 1 through December 15.
Buying health insurance also presents its own challenges. To make an educated choice and find the best fit for your situation, you need to be able to analyze and understand your options properly.
So, here are five things that can cause confusion during Open Enrollment:
- Open Enrollment vs. Medicare Annual Enrollment
- Enrollment deadlines
- Where to shop
- Plan classifications
- Plan costs
Open Enrollment vs. Medicare Annual Enrollment
Medicare has an Annual Enrollment period that allows Medicare beneficiaries to review their current coverage to make sure it will meet their needs and make changes as needed.
It wouldn’t cause so much confusion, except that sometimes it’s also called Medicare Open Enrollment. It also usually runs October 15 through December 7. The overlapping time frames and unclear references don’t help prevent the confusion, but now you know.
Another point of confusion: the deadlines.
“Many people assume you should just be able to enroll, but there are very good reasons to not have ongoing open enrollment,” says Jason B. Ball, CFP® ChFC® CLU®.
However, this confusion is understandable because health insurance didn’t always require enrollment during a specific annual period.
“Before the Affordable Care Act, plans could deny people based on pre-existing conditions and therefore if someone wanted to apply say in April, they could, but the company could deny them due to a pre-existing condition or pending surgery. The enrollment period is put in place to discourage people from trying to game the system by applying for coverage only when needed since companies would have to accept them,” says Lorena Tomasini, owner of the MALM Life and Health Insurance Agency.
While having deadlines can be one more thing to keep track of, it also benefits health insurance shoppers and helps keep enrollment stable for health insurance companies.
Repeat to yourself: Open Enrollment is November 1 through December 15. Say it three times.
Set a reminder on your phone so that you don’t end up without coverage next year.
But, if you miss Open Enrollment or lose your current health insurance coverage, you may be able to buy health insurance outside of Open Enrollment if you have a Qualifying Life Event. These events trigger Special Enrollment Periods.
“People can apply outside of open enrollment if they have a special enrollment period. This can be triggered due to recently (past 60 days) getting married, having or adopting a child, a death, losing health coverage (such as changing jobs but not because they missed payments), obtaining a legal immigration status (parole, work permit, residency), change in address (not within the same county) or going to happen in the future (60 days) will lose health coverage in the next 60 days,” says Tomasini.
Where to shop
With the all the resources available on the internet and licensed insurance agents willing to help, it can be difficult to know the best way to find a good health insurance plan.
Health insurance carriers also can change plan offerings and features year-to-year. Even if you liked your plan this year, it may not still be a good health plan for you next year.
So, you should know your options. If your employer offers health insurance as part of its benefit package, you can enroll in that. You can also look for options in the Health Insurance Marketplace. These plans also also called on-exchange plans.
“Some individuals are also confused about whether they can still purchase health insurance through the ACA. With the repeal of the individual mandate and the subsequent ruling that it is unconstitutional, some are not sure an ACA plan is still an option,” says Dr. Nicole T. Rochester, Your GPS Doc, LLC CEO and Founder.
Even with all of the political changes and challenges to the Affordable Care Act, the Health Insurance Marketplace still exists. You can find plans that cover the Essential Health Benefits and offer affordable premiums on HealthCare.gov. Most states use HealthCare.gov to list on-exchange health plans in their state, but some states have a separate site.
In addition to on-exchange plans, you can consider off-exchange plans. These plans are not required to meet the same coverage requirements that on-exchange plans must, though some do. Be sure to understand the covered services included with these plans before enrolling. Off-exchange plans that do not offer the same coverage as on-exchange plans include short term health plans and health sharing plans.
“Most are unaware that you can find decent, affordable health insurance choices off the exchange. Off-exchange websites, like Kind, offer more choice for families and individuals shopping for health insurance and choice allows you to pick a plan that is more customized to your needs,” says Nick Soman, CEO of Decent.
Whether you’re looking for an on-exchange or off-exchange health plan, you can use health insurance comparison websites, work with an insurance agent, or reach out to insurance carriers directly yourself.
However, as you research and evaluate plans, you should know the limits of each source.
“You can use a broker to find the right plan, but they are typically a sales person who may have an ulterior motive, like higher sales commissions, for you to select a particular plan,” says Ridgeway.
Check with the insurance agency to see how they pay their insurance agents. Are they commission-based or salaried?
Even if you’re just looking at commercial health insurance comparison websites, like HealthCare.com, it’s important to pay attention to the order in which the site displays available health plans in your area. In some cases, these sites prioritize plans based on contracts with insurance carriers.
“You can ask your friends and family what options they use. This typically will give you an unbiased review of their plan, but, as described above, they are not typically experts within the health care industry and are typically given based on a singular point of view, which is harder to get a complete picture from," says Ridgeway.
Online reviews have similar issues. However, online reviewers likely represent a more diverse range of health needs than your friends and family. It’s not easy to pin representation down, but if you look at ratings and reviews in aggregate, they can help you identify a good insurance company from a bad one.
“There are aggregator sites and applications that bring together a number of nonbiased user reviews of health plans and the services they provide. Although a great option, to get a number of individual opinions through this channel, users have been jaded by 'fake' reviews often provided by the company themselves to ensure that they appear more favorable to the general public,” warns Ridgeway.
If you’re looking at online reviews, check a few review sites and read how each one vets reviews before publication.
While Best Company doesn’t list specific health plans from various carriers, it does offer customer reviews of health insurance companies. Each review is vetted to prevent fake reviews from being published.
Ridgeway recommends doing your health plan research by diversifying your sources.
“My advice would be to find a hybrid approach that will combine all of the above: speak with family and friends, do your research, and possibly speak with a broker about what options are available that fit your particular situation.
No matter what route you choose, always remember to be informed as to what your family needs and how much impact the selected plan will have on your life because you will not be able to choose another plan until next year’s Open Enrollment Period,” he says.
Understanding plan classifications and costs will help you determine whether a plan meets your needs.
“While there have been concerted and successful efforts to improve the HealthCare.gov website, many continue to be confused about open enrollment. This is largely due to the sheer volume of information you have to sift through and interpret while searching the site. In some cities, there are more than 40 available plans from which to choose. Understanding the differences between the various metal levels (Bronze, Silver, Gold) and the meaning of all of the terminology (deductibles, coinsurance, etc.) is daunting, even for those of us in the health care field,” says Rochester.
Understanding health plan classifications is the first step to being able to evaluate and choose a health plan.
Health plans are classified several different ways to indicate the kind of plan they are, the kind of network offered, and how plan costs are broken down.
Here are two common abbreviations for classifying plan-type:
- CDHP — Consumer-Directed Health Plans. These plans tend to have lower premiums and come with accounts to set aside money for medical expenses. These accounts include Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Accounts (HRAs).
- HDHP — High-Deductible Health Plan. These plans have high deductibles that put a greater responsibility for out-of-pocket costs on the policyholder. These plans often have low monthly premiums and can include HSAs, FSAs, or HRAs.
Here are a few common abbreviations for classifying network type:
- HMO — Health Maintenance Organization. These plans typically offer coverage for care received in-network. If your doctor is not included in the plan’s network, you’ll fully pay those costs yourself.
- PPO — Preferred Provider Organization. These plans offer coverage in- and out-of-network. However, there are separate deductibles and cost-sharing rules for in-network and out-of-network coverage. Out-of-network care typically places greater cost-sharing responsibility on the policyholder.
In addition to plan-type and network categorization, the Affordable Care Act created metal tiers to show how total plan costs were determined.
“The most confusing part of buying health insurance for most people is understanding the tiers of coverage: bronze, silver and gold,” says Lev Barinskiy, SmartFinancial CEO.
While there is a variety of plans and costs within each tier, the costs fit the following trends:
- Bronze — These plans have the lowest monthly premiums and highest out-of-pocket costs. Policyholders are typically responsible for 40 percent of care costs out-of-pocket.
- Silver — These plans have higher monthly premiums and lower out-of-pocket costs than Bronze plans. Policyholders are usually responsible for 30 percent of medical expenses.
- Gold — These plans have higher monthly premiums and lower out-of-pocket costs than Silver plans. Policyholders are generally responsible for 20 percent of their medical expenses after the plan pays 80 percent.
- Platinum — These plans have the lowest out-of-pocket costs and highest monthly premiums. Policyholders are responsible for about 10 percent of their medical costs.
Keep in mind that these tiers typically only apply to health plans offered on the Health Insurance Marketplace. As you’re shopping for cost-effective plans, these tiers can help you evaluate the overall cost of a plan. Understanding these costs and your health needs, will help you find a good fit.
“You can't compare a bronze plan with a gold plan, but this tends to leave many people wondering which to choose. Your premium may be lower with a bronze plan, but you'll likely pay more in doctor visits and for care from specialists. If you see several doctors and anticipate continuous care, it may cost less to buy the more comprehensive gold plan," says Barinskiy.
While the tiers can help you understand how costs are spread out in a health plan, it can still be tricky to understand how much a health plan actually costs.
“People are typically most confused by what plans will end up saving or costing them when trying to project out-of-pocket expenses along with premiums, deductibles, and prescriptions,” says Vinay Amin, health and wellness expert and Eu Natural CEO.
It’s important to analyze each plan you consider, including the deductible, out-of-pocket limit, copays and coinsurance, and monthly premiums.
Because there are different kinds of costs to consider, how much a health plan costs is tricky to pin down. It also can vary based on your health needs.
Talking to your health care providers can help you understand your health needs.
“The best approach is to plan ahead and have a talk with the right people, notably your doctor and your pharmacist. Your pharmacist is familiar with your medications and is an ideal source of consultation regarding a plan for prescriptions. Your doctor knows your medical history. Review your options with the appropriate medical professionals and don't wait until the last minute,” suggests Amin.
Once you can anticipate your health needs, you can ask the insurer to project out-of-pocket costs for services you may need.
Soman recommends asking the following questions when considering health plans:
- Do you have access to free primary care?
- If not, how much is your copay to see a doctor when you’re sick?
- What about telemedicine options?
- What is your prescription medicine benefit?
If you focus too much on lower premium costs instead of the overall cost and coverage of a plan, you may end up with higher out-of-pocket costs and more limited coverage.
“Choosing skimpy short term or health sharing plans may be cheap in the short-term but carry a big risk if you get ill or are injured,” warns Soman.
If the premiums or out-of-pocket max for a better plan are difficult to fit into your budget, you should investigate the Advanced Premium Tax Credit (APTC) and the Cost Sharing Reduction (CSR).
The APTC subsidizes monthly premiums based on your projected income for the following year. When you file taxes for that year, the difference between the subsidy you took and the actual subsidy you qualify will be reconciled.
“The Cost Sharing Reduction (CSR) also known as ‘extra savings’ means that a family not only qualifies for the tax credit, but if they choose a silver plan will also benefit in lower deductibles, copays, and out-of-pocket maximums,” says Tomasini.
Open Enrollment success and clarity
It’s complicated. So what?
It doesn’t mean you can’t understand health insurance and navigate Open Enrollment successfully.
Understanding the processes, terminology, costs, and coverage will help you analyze health plans. The clearer your health needs are to you, the better you’ll be able to identify a health plan that will fit your coverage and financial needs.
Doing your research using the help of licensed insurance agents, online reviews and tools, and talking with friends and family will allow you to gather more information from a variety of perspectives. This variety will help counterbalance the shortcomings of relying on one source for information.
Ready to find a good health insurance company? See the top carriers in your state.
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