Updated September 2, 2020
For most of the country, health plan open enrollment runs November 1 – December 15. A few select states offer extended coverage dates like California, Minnesota and Washington, D.C. to give residents more time to select health insurance coverage. Bottom line – you only have a few more weeks to make a decision on what medical plan you want to buy for 2020 coverage.
Statistically, consumers have more choice during this year’s open enrollment with 20 new health insurance companies entering or reentering states and a 4% premium price drop on average on HealthCare.gov plans. But are Affordable Care Act (ACA) plans your best option? For many in America, yes. But for individuals who don’t qualify for a subsidy or need a broad provider network, ACA plans could be limiting. This post will review the benefits of ACA plans, qualified health plans purchased off-exchange and the best short-term health insurance advantages to help you compare plans side-by-side.
Here are the top five consumer tips to help healthcare consumers sort through their options and pick a health insurance plan:
1. Compare health insurance plan types
Do you qualify for a financial subsidy through the federal marketplace or your state health insurance exchange? Individuals and families can qualify if their total household income reported on federal taxes is between 100%-400% of the federal poverty level. If you are eligible for a subsidy that will lower your monthly health insurance costs, an ACA plan from HealthCare.gov or your state marketplace exchange might be your best option. ACA plans are also recommended if you have a pre-existing condition and need ongoing medical treatment or prescription drugs.
If you would not benefit from a federal plan, a qualified health plan is a major medical health insurance plan option that covers all of the mandatory benefits under the ACA (also known as Obamacare). You can purchase these plans directly from a health insurance company, through an independent insurance agent or online using a web broker like HealthCare.com or eHealthInsurance. These plans typically have a more robust provider network than the plans available on HealthCare.gov (although networks do vary by plan and state of residence).
In addition, if you do not qualify for a tax subsidy because your total household income is higher than the legal threshold, there are other plans to consider outside of HealthCare.gov.
2. Look outside the exchanges
If you are healthy and your total household income is over the 400% poverty level maximum, you can speak to an independent insurance agent or check websites that give multiple plan options in one search so you can compare benefit differences side-by-side. If cost is your No. 1 concern, short-term health insurance has budget-friendly rates and can be purchased for up to 364 days in many states (state-specific rules apply). While not required to comply with certain federal requirements it can provide protection from the unexpected.
Alternatives to ACA plans like short-term health insurance or fixed indemnity insurance could also provide temporary relief if don’t plan to use your medical insurance very often or anticipate getting a permanent major medical plan in the near future. Short-term medical plans are structured like ACA plans with deductibles, coinsurance and maximum out-of-pocket maximums, but don’t cover some benefits that ACA plans do like maternity or long-term mental health. Since short-term health plans don’t cover as many benefits as Obamacare plans, they are more budget-friendly if a long-term commitment to a federal ACA plan isn’t in the cards.
Fixed indemnity health plans typically do not have a deductible but instead pay a flat “fixed” amount for specific health services like doctor office visits and outpatient services. So no matter how much your medical treatment might cost, you only get the fixed dollar amount outlined in the plan details. These plans can work for individuals who could not afford to pay towards a deductible but still need some insurance to help lower the cost of their medical treatment.
3. Compare networks
Whether you are looking at health plans on the federal exchange or using a web entity to shop multiple plan types, determine what kind of provider network you can live with. Some networks limit consumers to only seek care at preferred clinics. Others limit you to a specific metropolitan area. If limits are a concern, many short-term medical plans don’t have networks, allowing policyholders to see any provider they wish. This can solve for surprise billing when you don’t know if a provider or facility is in- or out-of-network. But if there is no network, some providers might object to not being able to “check a box” for an exact PPO when taking your health insurance information. So if there are no pre-negotiated prices between the insurance company and the provider, how would medical providers get paid?
When there is no network on a short-term medical plan, a third-party administrator reprices a medical claim using the Medicare reimbursement scale as its reference. This is what no network payments are sometimes called, “reference-based pricing.” The insurance company typically reimburses medical providers based on a percentage above Medicare allowable amounts.
Once bills are received, they are repriced according to a predetermined percentage of Medicare allowed amounts, based on the Medicare fee schedule. Payment is then made to the provider based on this amount and the reduction shown as a discount by the provider. If a provider wishes to review and discuss the allowed amount or initially objects to the reimbursement amount, the provider is connected with a repricing vendor. Some repricing vendors can sometimes be authorized to negotiate a settlement on the patient’s behalf so they are not responsible for the remainder of the bill. (Note: This reimbursement system does not apply to all short-term medical plans and should be reviewed before purchasing a policy.)
4. Compare benefits
Do you use preventive care every year? An ACA plan covers preventive services at 100%. Do you wind up in Urgent Care several times a year? You might want a health plan with a doctor copay. If you don’t plan to use maternity services or don’t need coverage for a pre-existing condition, short-term health plans can offer a cost-effective alternative to higher-cost, high deductible ACA plans with many similar benefits.
You might also be interested in “extra” benefits like free telemedicine visits with doctors online or a discount prescription drug card. Be sure to review all of the plan’s details and verify what the insurance company covers if certain benefits are important to you. And remember that if you utilize a lot of care during the course of the year, a more expensive health insurance plan with richer benefits might actually save you money in the long run.
5. Compare all out-of-pocket expenses
Almost all health insurance plans have a deductible that you are required to meet before the health insurance company will pay any portion of your medical bills. Then there are doctor copays and the coinsurance percentage up to the total out-of-pocket maximum. Add up each plan’s out-of-pocket expenses to determine if a lower-cost plan with higher out-of-pocket expenses is better for your budget or if it would be smarter to purchase a higher-dollar insurance plan to get more medical expenses covered overall.
Here are the benefits to compare when considering your total out-of-pocket expenses could be:
Annual deductible – Since major medical health insurance plans typically run between January 1 and December 31, look at how much you would have to pay out-of-pocket should a medical issue arise. Also, look to see if there are additional deductibles on the plan, such as an emergency room deductible and if you take prescription drugs, a pharmacy deductible.
Coinsurance – Even if you hit your medical deductible, your health insurance plan probably has coinsurance. Coinsurance gives the health insurance company some assistance paying your medical invoices. The “co” in “insurance” means you share a portion of the medical expenses with your insurance company once your deductible has been met. The insurance carrier usually pays the majority of the coinsurance amount, but you could be subject to paying up to 30% of your medical bills once coinsurance kicks in.
Copayments – Copayments can be a winning benefit if you anticipate seeing the doctor frequently throughout the year or know you will have multiple urgent care visits. Many times you can have a flat $25 or $50 copay for a doctor’s office visit which is not subject to your deductible. But it is still an expense, so add to your total tab of out-of-pocket expenses.
Annual Out-of-Pocket Maximum – Your maximum amount is the total you are required to pay before your health insurance company becomes 100% responsible for your medical bills. Note, if you are looking at a short-term health plan, verify that the out-of-pocket maximum is for a combination of deductible and coinsurance or if it is just for coinsurance outside of the deductible. This caveat varies by plan and can greatly increase your out-of-pocket exposure if you are not aware of it in advance.
It’s imperative for consumers who purchase their own health insurance to understand what they are buying so there are no surprises during the plan year. Compare plans, research the differences and shop slowly to ensure you are comparing apples to apples on the plans up for considering.