If you’ve never shopped for health insurance on your own – or not since before the Affordable Care Act (ACA) went into effect – because you’ve always been covered under your parents’ plan, a spouse’s plan or through your employer, it’s hard to know where to start. How do you get good coverage at an affordable price? What pitfalls do you need to look out for? It’s a complicated subject, but we’ll get you started. This broad overview provides the steps you should take to shop for health insurance if you’re in the market for an individual or family plan and if you’re under age 65. (Learn about health care coverage for seniors in Medicare 101: Do You Need All 4 Parts?)
4 Steps to Purchasing Health Insurance
These steps can help guide you to the best coverage for you (and your family, if you are looking for them, too) at a price you can afford.
1. See which insurance plans your existing providers accept.
Do you already have a primary care physician or specialists whom you like and want to keep seeing? If so, start your search for health insurance by calling those offices and asking them which plans they prefer, which other plans they accept and if they have any intention of changing what insurance they accept in the near future. Calling your providers directly is not only easier than contacting insurance companies to ask if your providers are in network; it also means getting the most current information and the scoop on any upcoming changes. You don’t want to choose a plan from a particular insurance company because your doctor appears to be in the network, only to learn that the insurer’s list of in-network providers is outdated and incorrect – or your doctor is leaving the network next year. (For related reading, see 7 Mistakes to Avoid When Buying Health Insurance and Finding the Right Health Plan.)
It’s possible that not all of your current providers accept the same insurance. If that is the case, you’ll have to make some tough decisions about which providers you want to keep seeing at in-network rates, which you might be willing to replace with different providers in your new insurance network and which ones you can afford to pay for at out-of-network rates. If you find yourself in this situation, ask your current providers about their cash and out-of-network rates to see what costs you might face if you have to choose an insurer that only has some of your providers in its network. (If cost is your primary concern, see Find the Cheapest Health Insurance Providers.) You’ll also want to make sure any prescription drugs you take on a regular basis are covered by the plans you’re considering, especially if the medications are pricey or don’t have generic substitutes.
2. Check out your options on the exchange.
If you’re not getting health insurance through an employer, there are two markets from which you can purchase it: the government market and the private market. You should consider both to see where you’ll get the best coverage for your budget. (Read Lowering Your Costs for Marketplace Health Insurance Coverage and How to Choose Between Bronze, Silver, Gold and Platinum Health Insurance Plans.)
To see what your options are on the exchange, go to HealthCare.gov and enter your zip code. From there, you can click to be taken to the official website of your state’s health insurance exchange, if your state has one (check here to find out), or to the federally facilitated marketplace at HealthCare.gov, if your state doesn’t have its own exchange. You’ll need the information listed in this checklist to apply for an exchange-based plan. One advantage of choosing a plan through the exchange: If your household income is low enough, you may qualify to receive a subsidy to help pay your insurance premiums.
Normally, you can only enroll in an exchange plan during open enrollment, which this year runs from November 1, 2015, through January 31, 2016. (See Tips on the Health Insurance Marketplace/Exchange.)
However, you can use the exchange outside of the open enrollment period if you have a qualifying life event, such as: You get married or have a child; you lose your existing coverage because of a layoff, divorce or other qualifying reason; or you receive benefits from Medicaid or the Children’s Health Insurance Program. (For details, see Can You Use a Healthcare Exchange After Open Enrollment?)
If you need to buy insurance in, say, April, and you don’t meet one of the special criteria, you’ll have to go to the private health insurance market and purchase a short-term plan. This plan won’t count as the required insurance you need to avoid tax penalties, but it will protect you against high healthcare costs until the next open enrollment period, since private insurance uses the same open enrollment period as marketplace insurance.
3. Compare your choices in the private market.
Unlike in the past, insurers offering Affordable Care Act-compliant plans can’t charge you higher premiums or refuse to cover you if you have a preexisting condition so don’t assume that an off-marketplace plan will provide less coverage or cost more. (See How to Buy a Health Plan With a Chronic Condition and Essential Health Benefits Under the Affordable Care Act.) To see what your options are, you can go directly to health insurance company websites or use comparison shopping sites. You’ll typically need to provide information such as your gender, date of birth, smoker status, household income, household size and zip code. If you have a spouse or children, you’ll likely have to provide their information as well. The sites will then show you a list of plan choices and some of the most important details about each plan, such as the monthly premium cost, primary care co-pay, deductible, out-of-pocket maximum and covered prescription drugs. These sites may show you both marketplace and off-marketplace plans; keep in mind that you must buy a marketplace plan through the marketplace to be eligible for a subsidy.
4. Consider using an insurance broker.
If you didn’t find a clearly good option shopping on your own in the public and private health insurance markets, if you’re so overwhelmed you don’t even want to try or if you just don’t have a lot of time, consider getting expert help. Using a health insurance broker won’t cost you a penny, and the broker will do all the hard work of finding the best plan for your situation. Unlike a captive insurance agent, a broker is independent, meaning he or she can offer you plans from many different companies. An insurance broker gets paid by commission from the insurance company whose plan you buy (find out more here), and the plan will not cost you any more if you buy it through a broker than if you buy it on your own.
Don’t confuse a licensed agent or broker with an exchange navigator; the latter cannot recommend a plan based on your needs, has not gone through a criminal background check and may have less expertise. That being said, a navigator can still be informative about your options on the ACA exchange, and you might feel that one is more impartial since he or she doesn’t receive any commission based on which plan you choose. (For related reading, see How to Avoid Common Health Insurance Scams & Fraud.)
The Bottom Line
You need to have health insurance coverage to avoid tax penalties, which for 2015 are 2% of your annual household income above the tax return filing threshold, with a maximum of the national average cost of bronze plan premiums, or $325 per adult and $162.50 per child under 18 – whichever is higher. (See Obamacare Penalty Enforcement: How It Works for more details.) More important, you want to have coverage so you can afford to visit a doctor when the need arises.
Having insurance and seeing a doctor regularly will help you prevent illness and catch and treat health concerns early, when they’re easier to deal with physically, emotionally and financially. Don’t let a lack of health insurance lead you to a health crisis or medical bankruptcy. And make sure to check your coverage options annually at open enrollment time to see if a less expensive or better value plan is available. (For further reading, see Where to Find Affordable Health Insurance and Tips for Finding Affordable Health Insurance.)