Top Consumer Choice
Top Consumer Choice
Some people may balk at the cost of insurance, but it makes costly medical services significantly less expensive. When you buy health insurance, you’re protecting yourself financially in the event of a medical emergency.
Health insurance providers build networks of doctors and hospitals. Within each provider network, insurance companies have negotiated prices lower than the normal cost of service. The health insurer also covers a certain amount of a service.
People with health insurance get discounted prices and only pay what their insurance plan doesn’t cover. Health insurance provides discounted medical services.
These discounts and cost-sharing provided by health plans are especially important because health care costs are on the rise.
The first step to finding affordable health care is finding an affordable health insurance plan. Fortunately, the government subsidizes health insurance for qualifying individuals and health insurance companies offer several kinds of health insurance plans that each have different costs and benefits.
Health insurance is also important to have because the Affordable Care Act requires everyone by law to have health insurance. The penalty for not having insurance coverage was assessed on 2018 taxes. The new tax reform law that went into effect in 2019 repealed the penalty tax for not having insurance.
We’ve created this health insurance guide to help you understand the industry and what your options are when purchasing your own insurance.
Annual Deductible: This is the amount you have to pay for health care before your insurance company starts contributing to your out-of-pocket costs.
COBRA: The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows individuals to continue benefits with their employer after they have ended their employment. The individual extending their coverage becomes responsible for 100 percent of the health insurance premium.
Coinsurance: This is the percentage of cost that individuals pay out-of-pocket for health care services.
Copay (Copayments): When you go to the doctor or hospital, the copay is the set amount they will charge you at the time of service.
EOB: This is the Explanation of Benefits (EOB). It outlines the network price negotiated by the insurance company, how much the insurance company covers, and the remaining balance to be paid.
Exchange: Health insurance plans are sold in marketplaces called exchanges. Each state has its own health insurance marketplace or exchange. Plans sold at the exchanges are sometimes referred to as on-exchange plans. These plans have to meet higher requirements to be sold on-exchange. There are also off-exchange plans. These plans still have to meet the basic requirements set forth by the Affordable Care Act, but they have more flexibility.
Group health insurance: Group health insurance rates tend to be cheaper because a large group is insured. The rates are consistent. Group health insurance is most often offered by employers to their employees. Finding a job with good health benefits is one way to find good coverage at affordable rates.
Health insurance premium: A health insurance premium is the monthly cost of health insurance.
Health Savings Account (HSA): A health savings account is money set aside before taxes to pay for health care services. The funds in health savings accounts can only be used for medical expenses or paying medical bills. Many high deductible plans come with the option to put money aside into an HSA. Unlike a Flexible Spending Account (FSA), the funds in a health savings account can be used year to year. Once you turn 65, the savings account starts working like a traditional IRA. As long as the account is used to pay for medical expenses, it is tax-free. HSAs are a great way to save money while paying for health care.
Network: The network is a group of physicians and hospitals that accept the health insurance company’s insurance. They have discounted the cost of medical services for the health insurance company.
Open enrollment: Open enrollment is the time period in which you can enroll in a health insurance plan for the following calendar year. There are great ways to prepare for open enrollment and some pitfalls to avoid. Open enrollment is November 1 through December 15.
Out-of-pocket expenses: This is how much you pay for health care after your insurance company has been billed.
Out-of-pocket maximum/Out of pocket limit: This is the maximum that you will pay for health insurance in one year. It includes co-payments and the deductible. Once this amount is met, any additional health services covered under your plan are fully covered by the insurance company. If your health plan has a maximum benefit amount, your insurer will cover up to that amount for your medical bills.
PCP: A primary care physician is the general doctor who takes care of your most essential and basic check-ups and health needs. PCPs can refer you to specialists if necessary.
Pre-existing condition: These are health conditions or illness that existed prior to an individual seeking health insurance. Conditions that an individual has already seen a doctor for are usually considered pre-existing medical conditions.
Qualifying health insurance: Health insurance plans have to meet certain coverage and cost requirements to be considered qualifying health insurance under the Affordable Care Act. Minimum Essential Coverage (MEC) is another term used to describe qualifying health insurance.
Special enrollment period: If you experience a qualifying life event, like having a baby, you are allowed to update or change your health insurance plan without waiting for the next open enrollment period.
Subsidies: If your income is between 100 and 400 percent of the federal poverty line, you may qualify for a tax credit subsidy on your insurance premium. It helps make a monthly premium more affordable.
VA health benefits: The government provides health insurance to military veterans through the Veterans’ Affairs Office and its hospitals.
Need more help with health care acronyms?
The Affordable Care Act or Obamacare made many changes to the health insurance industry. Court cases can affect the interpretation and implementation of certain laws. New laws can be passed to make additional changes. Federal laws are consistent throughout the United States, while state laws can vary state to state. It is important to be up to date on the health insurance industry before choosing a health insurance provider and plan.
Under the Affordable Care Act, all health insurance plans must cover the following:
These kinds of medical care are considered essential health benefits. States may also have their own additional health insurance rules.
When purchasing a health insurance policy, you can choose from two categories: on-exchange plans and off-exchange plans.
The government runs health insurance marketplaces, or exchanges, in each state. Plans must meet certain criteria to be offered on the exchange. Government subsidies are accepted by plans on the exchange.
Off-exchange plans are not sold on government-run health insurance exchanges. They still have to meet some federal requirements and must be qualifying insurance. There are more plan options off the exchange.
HMO: Health Maintenance Organization (HMO) health insurance plans have especially good health care coverage for preventative care in network. All of your health care needs go through a Primary Care Physician (PCP). If you need to see a specialist, your PCP must refer you to one first. The premiums for HMOs tend to be low, though out-of-pocket costs can be higher.
PPO: Preferred Provider Organization (PPO) health insurance plans provide coverage in-network and out-of-network. In-network coverage is usually greater than out-of-network coverage. PPO plans offer greater flexibility in seeking care and generally have larger networks. No referral is needed to see a specialist.
PPO premiums tend to be higher than HMO plans, but the overall coverage is greater. This means, there are greater discounts and insurance pays more for health care services.
EPO: Exclusive Provider Organization plans offer some of the flexibility of a PPO plan while offering lower premiums. EPO plans only cover in-network service. A referral is not needed to see a specialist.
POS: Point of Sale plans offer in-network and some out-of-network coverage. POS plans require referrals to see specialists.
Other kinds of plans are more specific in their coverage. Short term health insurance plans can provide health insurance coverage for brief periods of time. If you’re changing jobs or need short term coverage while you wait for other insurance to kick-in, then short term plans are a good option.
Short term medical plans do not have an enrollment period for guaranteed coverage. Instead, these plans are medically underwritten before an applicant can enroll.
The coverage offered by short term health plans is more limited. In some cases preventive care and prescriptions are covered. Short term health insurance mostly offers coverage for emergency situations.
Read "Short term health insurance: What top companies offer"
Catastrophic plans were made available under the Affordable Care Act. They are only for people under 30 years old. These plans have low premiums and a high out-of-pocket limit.
Most employers offer health insurance as part of their benefit package for full-time employees. Some offer employer-sponsored health insurance for part-time employees as well. If you already have insurance through your employer, you probably do not need additional coverage.
CHIP: The Children’s Health Insurance Program is a government program to provide children 18 years or younger with health insurance coverage. It is for families who do not qualify for Medicaid and cannot afford private health insurance.
Medicaid: Medicaid is government-provided health insurance targeted for people who are low-income and meet other requirements. Medicaid covers low-income families, the elderly, and people with disabilities.
Medicare: Medicare is government-provided health insurance for people 65 years old or older. There are plan options within Medicare. Parts A and B of Medicare cover preventative care, hospitalization, hospice, and other medically necessary procedures.
Parts C and D provide additional coverage. Part D provides prescription drug coverage. Before receiving care, double check to make sure it’s covered.
Medigap: Medigap is supplemental health insurance coverage from private companies for people 65 years old or older. It provides additional coverage to people on Medicare to help with copays, deductibles, and coinsurance.
Subsidies: The Affordable Care Act offers financial assistance for qualified health plans to low-income people. These subsidies make it easier to find affordable health insurance. The subsidies apply to the monthly premiums.
Consider the following when evaluating your health coverage options.
If you have insurance through your employer, you don't need to purchase additional health insurance.
If you or your family have significant health care needs, then paying higher health insurance premiums for more coverage may be the best option for you.
If you travel often, you may want to opt into a policy with some out-of-network coverage. That way, in the event of an emergency on a trip, you have some coverage.
Children can stay on their family’s health insurance policy until they turn 26 years old. If you are away from family, the coverage may not be as good because you’re out-of-network. Understand what your family’s health insurance covers before determining if and what kind of additional health insurance you need.
Evaluating your health insurance options from government sponsored plans to comparing plans and rates from private insurers will help you find the best deal on the coverage level you need. There are several health insurance comparison websites that allow users to view and compare health insurance plans from multiple companies. These comparison tools help clients find the best health insurance company for them. It is especially nice for finding self-employed health insurance.
Once you've selected the health insurance company and plan that you want, it's time to enroll or apply for health insurance.
Most major health insurance companies offer plans for employers. Offering a good health insurance plan helps attract and retain employees. It also shows the company's concern for employee health and well-being. In most cases, employers must contact the company directly to learn more about health plan options, insurance premiums, and coverage available to their company.
Fortunately, some companies list small business health insurance plan options from several health insurers. This makes it easier for small business owners to shop for affordable health benefits to offer their employees.
BlueCross BlueShield is the best health insurance company on our list. It earned this spot due to the quality of its services and customer reviews.
Health insurance reduces the cost of medical services. Health insurance companies negotiate prices for medical services with health care providers. These health care providers are included in the network. Individuals with health insurance are charged these discounted prices when they receive care in-network. Health insurance companies pay a portion of the bill, and the rest is the responsibility of the policyholder. This includes the deductible, out-of-pocket expenses, and copays.
It is a good idea for everyone to have health insurance. To determine if you should purchase health insurance, ask yourself these five questions.
Medical treatment can be quite expensive, especially for specialized care, emergency room treatment, hospitalization, and medical procedures. Unanticipated medical needs can put you in debt quickly if you do not have medical insurance. Having health insurance can significantly defray the cost of medical care.
Under the Affordable Care Act, all health insurance plans are required to cover preventative care, prescriptions, emergency services, mental health, hospitalization, physical therapy, laboratory tests, children’s care, and maternal care.
Additional coverage varies by plan.
Under the Affordable Care Act, health insurance companies are not allowed to refuse coverage or discriminate based on a pre-existing conditions for plans that offer qualifying health insurance. However, short term health plans typically do not cover pre-existing conditions.
Health insurance companies charge monthly premiums. The cost of these premiums depends on the kind of plan you purchase.
Most health insurance plans also have guidelines about deductibles, out-of-pocket expenses, and copays. These vary depending on the specific plan you choose.
As you compare health plans, be sure to include out-of-pocket expenses as part of the full cost of each plan.
Luckily, it’s becoming easier and easier to find affordable health insurance. To see the health plans on the government’s marketplace, use HealthCare.gov. These plans can be a better deal than plans not on your state’s marketplace.
If you want to quickly compare plans from multiple health insurers, there are commercial sites that allow you to do that online.
Be sure to understand how these companies display search results before using them so that you can find a health plan that fits your situation well.
You can also work with a licensed insurance agent who can assist you in finding a plan that meets your coverage needs while fitting your budget.
Most health insurance companies have application and approval processes. These can vary based on the kind of health plan you purchase. Applications and purchase decisions need to be completed during open enrollment, November 1 – December 15.
You may also be able to enroll outside of open enrollment if you qualify for a special enrollment period or if your state has extended their open enrollment dates. Check with each company or government organization for their specific procedures.
If your employer offers health insurance with its benefits package, you should talk to your employer about how to enroll.
In most cases, the health insurance provided by your employer should be sufficient. Make sure you understand what the terms of your health insurance plan are as you renew your coverage.
Without health insurance, you will bear the full cost of your medical expenses. You also won't have access to the discounted rates that insurance companies negotiate with health care providers. While buying health insurance can stretch your budget, it's a risk not to have it.
When you subscribe to a health plan, you subscribe to a network of providers, a cost-sharing strategy between you and the insurer, and access to the insurer's negotiated rates for health care. Cost-sharing strategies vary plan to plan. However, once you've met the deductible through copays and coinsurance, the insurance company will take more responsibility for your health care costs. The out-of-pocket limit is the annual maximum for covered services.
Open enrollment occurs annually starting on November 1 and ending on December 15. It is the time to enroll in coverage for the following year.
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