Whether you’re a young adult branching out from a family health plan or a working adult new the insurance marketplace, buying major medical insurance is a very important decision. But a combination of complex regulations, government bureaucracy and the large number of options can make the process of buying major medical insurance confusing and difficult. The simple answer of how to buy health insurance is: Shop for a plan, pick one and pay for it.
Unfortunately, it’s not always that black and white, especially since you have plenty of options for healthcare coverage under the Affordable Care Act. Not sure where to start? Here are some things you need to know about buying coverage.
During the last presidential election, there was a lot of talk about ending the Affordable Care Act (ACA), commonly known as Obamacare. After a lot of back and forth in Congress, conservative lawmakers weren’t able to pass any legislation eliminating the ACA for good. That means that for this year and the foreseeable future, Obamacare remains the law of the land for health insurance.
However, some important changes have been made to how major medical plans work that will take effect in 2019. One big difference is that the tax penalty for not holding health insurance (known as the individual shared responsibility payment) will be zeroed out starting January 1, 2019. The mandate to have minimum essential coverage itself still exists, but since there’s no longer a penalty attached to it, it’s going to be even more ineffective at persuading people to buy health insurance than it was before.
The Trump administration has also made changes to short term health insurance plans. While these don’t count as major medical plans and aren’t a good substitute if you need comprehensive coverage, temporary plans serve a purpose in the health insurance industry. Under current regulations, these plans can now last for “less than a year” nationwide, and you can renew them for up to 36 months. Individual states may set tighter limits on short term plans, though.
Before you shop for health insurance on the private market, make sure you exhaust your options for other coverage. Your job may offer a health plan, or you or your children might qualify for your state’s Medicaid program and/or CHIP. We don’t say this to drive you away – we sell health insurance, after all – but to make sure you have a good understanding of what’s out there. Your work-based coverage might be too expensive, or you just might not like the options that you do have. In that case, a private plan could be the solution you’re looking for.
Where to Buy
If you’re not sure how to buy health insurance, then you may also be wondering where to start looking for a plan. You’ve got four categories of options for shopping: a public marketplace, agents or brokers, an insurance company directly or a private marketplace (like ours). We’ll highlight the features of each below:
- Public marketplace: Also referred to as a “health insurance exchange,” a public marketplace is one created by the Affordable Care Act. Most states use the federal one at HealthCare.gov, but 11 states and the District of Columbia have created their own state-based exchanges. Government marketplace plans are the only ones that qualify for cost savings, but you don’t actually need to buy them from the marketplace to get the savings. You can use an independent broker, agency or third-party site like this one to buy an on-exchange plan with savings (if you qualify).
- Agents or brokers: You probably know that insurance agents and brokers exist. You might even know one personally. Agents work directly with companies to sell their health insurance plans. Brokers work with more than one carrier, usually. Because agents and brokers represent specific companies, you’re less likely to get unbiased advice from them about carriers they don’t represent. But you can work with these people for free since they get paid from the carriers.
- Insurance company directly: If you know you want to buy from a company directly, you can do all of the legwork yourself to buy a health plan directly from it. Many have online portals of their own now for consumers to use to shop. Just know that you’re not going to get any information about plans from competitors (naturally) if you go straight to a carrier site to get insurance. You risk missing a better plan if you don’t compare your options from multiple carriers.
- Private marketplace: Private health insurance marketplaces let you compare different plans from different carriers. You’re reading this article on a private marketplace. The benefit of this approach is that you can see multiple options at once, and there are agents available to walk you through your options. We’re not as independent as the federal exchange would be – since customer service on government marketplaces is not staffed with agents – but we do have extensive knowledge of the industry, and we can help you find the right plan.
Insurers sell plans on and off the marketplace. That’s why it’s important to shop your options. Carriers might have completely different plans on and off the exchange sites, and some could be cheaper or provide better coverage if you shop outside of the exchange. Some carriers choose not to participate on the exchanges at all.
You can’t just sign up for major medical insurance anytime. Each year, the open enrollment period gives Americans the chance to enroll in health insurance that complies with the ACA. For coverage starting January 1, 2019, the open enrollment period runs from November 1 through December 15. Outside of this timeframe, you’ll only be able to sign up for major medical plans if you qualify for a special enrollment period, which is based on major life events like marriage, the birth of a child or loss of your job.
Common Insurance Terms
As you start shopping, keep some common insurance terms in mind so you know what you’re seeing. We know these terms can be tough to keep straight. Here’s a refresher:
- Premium: The amount of money you’ll have to pay each month for your health plan, regardless of whether you saw a doctor that month or not.
- Deductible: A set amount that you have to pay before an insurance company starts paying its share of your medical costs. Some services, like wellness screenings and other preventive care, don’t count toward the deductible (meaning you won’t need to meet the deductible first before the company covers it).
- Network: Healthcare providers whose services are covered by insurance. “In-network” means a provider in the network while “out of network” usually means that your insurance won’t cover services from this person/provider (or will cover it at a reduced rate).
- Provider: Any healthcare person or institution that provides your care; this would include primary care doctors, surgeons, psychologists, physical therapists, clinics and anyone or anywhere else that provides care.
- Copay(ment): Copays are a flat fee charged for services covered by your health plan. You may have a $20 copay for primary care visits, for instance, or a $200 copay for emergency room visits that don’t lead to hospitalization.
- Coinsurance: Similar to a copay, coinsurance is a percentage that you and the insurer split for your care. Once you meet the deductible, you might have 30 percent coinsurance, which means that the insurer will cover 70 percent of the bill (after the deductible) and you’ll be responsible for the rest.
This list isn’t exhaustive, of course, but these are common terms that come up when you’re buying health insurance.
Buying Health Insurance
Now that we’ve set you up for buying health insurance, you might still be wondering how you actually go about getting a policy. Well, that’s up to you. You’ve got several options for buying major medical plans. We recommend working with health insurance professionals who can answer any questions that you have along the way. Shopping on a private marketplace (like ours) gives you the chance to see different carriers and plans, ask questions of agents over the phone or online, and buy a plan with confidence. Before you check out your options for coverage, though, make sure you’ve got some basic info available, including:
- Your name and the names of anyone buying a plan
- Health information, such as medical problems or prescriptions you take, so you can see the coverage that a plan offers for these services
- Your income and monthly budget, so you don’t get swayed into a plan you can’t afford
Having your information handy will help you find the right plan – not to mention apply when you’re ready. Don’t wait too long to buy health insurance. Remember that you can only buy major medical coverage during open enrollment, which ends on December 15 in most states.