Avoid These Pitfalls When Buying Health Insurance
Buying health insurance is not easy . You pay a lot of money just for the fact, to stay healthy, and if you are seriously ill or injured, you may still be on the hook for thousands. Smart shopping can lower your costs and provide more options for good grooming – if you know what to avoid.
Do what you did last year
Always go shopping. You may already have a great plan – or, let’s face it, the least bad of your options – but you won’t know until you see what else is there.
Many states allow automatic renewals for a plan purchased through health insurance exchanges , but this is not always a good idea. If you received an insurance subsidy (for example, 84% of people who signed up through exchanges), your subsidy and therefore your premium may change for the new year, making it less profitable.
This is because the grants are calculated based on the price of the second lowest cost Silver plan in your area. This could be a different plan, with a different carrier and a different premium price than last year. Even if your plan doesn’t raise rates, the overall ecosystem of insurance plans can change and this will affect how much you pay for your insurance . (There is a full analysis of those numbers here .) If your income or other key information changes, that could also affect your bets. Update your information on the exchange and then review the plans to see what is available to you.
If you get insurance from an employer who pays for a fraction of the cost of your premiums, this is probably your best bet, but not necessarily. Again, go shopping anyway. It’s possible that the exchange plan subsidy will create a better deal than what you get from a stingy employer.
Finally, find out if your plan is correct. Some older plans do not have to comply with all the provisions of the Affordable Care Act. For example, you still have to pay for preventive care while everyone else gets it for free. You can call your insurance company and ask if she has a grandfather: they will know what the word means and they have to tell you.
Thinking about the futility of a high deductible plan
If you do not purchase insurance, you will have to pay a tax penalty. Nothing special, you can say I paid this amount last year and it was not that much. Well, the amount is still increasing every year . In 2016, this will be 2.5% of your income, or the average price of the Bronze plan, or $ 695 per adult, or $ 2065, whichever is greater. Since the penalty costs about the same as a low-cost plan, you can also buy insurance and get associated benefits, even if it’s a high-deductible plan.
If you think a high deductible is the same as paying out of pocket, think again. When it comes to auto insurance, you’ll be right: a deductible is the amount of money you have to pay out of your pocket before your insurance is triggered. Health insurance uses the same word, but it means a little differently. You can pick up a lot of hypothetical fees that won’t impact your franchise in any way.
For example, anything on the government’s list of basic health care benefits is free to you, excluding your deductible. This is a huge number of things that include almost every type of preventative care you can think of. This includes screening for cholesterol , depression, and testing for sexually transmitted infections if you are at high risk. It includes all recommended vaccines for adults and children. For women, this includes various types of birth control , including the IUD. It includes breastfeeding support and supplies. It includes all routine examinations that are carried out when examining a child.
Basically, if you are healthy and only visit your doctor for checkups and preventive treatments, almost everything is covered for free, even on those high deductible plans. The only catch is that you have to use your plan’s network and you must meet certain requirements to get some of these benefits (for example, you must be over 50 to get a free colorectal cancer screening and you must be an infant. examination of infant development.)
Even when something takes away your deductible, you better have the provider send the invoice to your insurance company anyway before sending it to you. This is because insurance companies can usually force the provider to withdraw part of the bill. These savings can be significant. I once received a bill that said my knee surgery cost me about $ 42,000, but they forced my insurance company and I together to owe about $ 2,000 for the operation. If I didn’t have insurance, I would have received an invoice for the original amount and would never have guessed that I could negotiate this far.
Do not use health savings accounts
To be clear, high franchises suck. However, they represent one side of the trade-off: high deductions are accompanied by lower insurance premiums (monthly payments) and vice versa. In some cases, a high deductible plan may make more sense than a lower deductible plan.
For such a plan to be a reasonable option, you must have sufficient funds in your contingency fund to cover the deductible. There is a special type of account designed for just this purpose: the Health Savings Account (HSA). Since your premiums are lower with a high deductible plan, you can (hopefully) afford to put a few hundred dollars a month into HSA. Then, when you get your medical bills, you can pay them off with that sweet, tax-free cash.
Unlike the similar-sounding FSA , the money you invest in HSA is yours forever. You can use it next year, you can take it off tax-free when you retire , and you can take it with you when you change jobs. (You can even opt out of it for non-medical expenses, but you will pay a tax penalty.)
The downside is that sometimes costs can drop when your HSA is running low. For example, if you open an HSA today and break your leg tomorrow, you won’t have enough money in your account to pay all your expenses. If you had a high premium plan, you would be in your best shape. Thus, HSA makes high deductible plans bearable, but in order to find out if a particular high deductible plan is right for you, you will have to calculate and consider how much risk you are willing to take.
Don’t check who is online
Some plans allow you to save money over a very small network. You may have to compromise to get an affordable data plan, but you need to make sure your current providers are online.
Also check which specialists are available. A study published in JAMA Dermatology found that many of the dermatologists listed in narrow net directories were unavailable: either died or retired, were unavailable with a phone number in the directory, or were booked for several months. Another study by JAMA Internal Medicine showed similar results for other specialties. So if you think you might need specialist help next year, don’t just rely on the list in the plan’s handbook: actually call a few and make sure they can see you as a patient.
Even if your favorite ISPs are online, there is another potential problem. The network can include not only doctors, but also medical institutions. If your doctor is performing surgery at two different hospitals in the city, it is possible that one location is covered by insurance and the other is not.
It is also possible to be treated by a network doctor in a network hospital, but other people, such as an anesthesiologist, who are not in the network will be involved. Before proceeding with the procedure, it is recommended to ask if all participants will be connected to the network. While you cannot fix this problem by buying insurance, it is good to know about this downside of narrow networks.
While shopping, you can look at maximum cash. The law requires no more than $ 6,850 per person or $ 13,700 per household, but this only applies if you remain in your network. Outside the network, ceilings can be appallingly high — $ 50,000 per household is possible. And in many tariff plans there are no restrictions on the use of outside the network at all .
Go alone
You are not alone when you buy insurance. On exchanges, you can get free local help through healthcare.gov or your state equivalent.
You can also shop comparisons through a web broker like HoneyInsured or HealthSherpa . Most brokers only need a few pieces of information to get you started comparing purchases. We love that HoneyInsured asks what risk you are willing to take (to choose between high and low deductible plans) and their predictions of how much you are likely to spend if you have high medical expenses. They also recommend one plan over others based on what you think your expenses might be, and put premiums and deductions on a schedule like the one above. However, HoneyInsured only works in a few states. You can find a complete list of authorized web brokers here .
Be that as it may, you buy insurance, make sure you consider all the options and consider the trade-offs. The variety of plans and the huge amounts of money you are dealing with can make it difficult to think right, but avoiding these pitfalls can help you make some smart decisions.
Illustration by Sam Wooley.
Vitals is a Lifehacker health and fitness blog. Follow us on Twitter here .