Under the Affordable Care Act, most Americans must have minimum essential, qualified health coverage. But shopping for insurance can be difficult, especially if your situation has changed and you need a new plan.
Major life changes are stressful—whether you’re preparing for the birth of a child, switching to a new job, getting married, or getting divorced, the last thing on your mind is your health insurance. But since each one of these situations could have an impact on your health coverage, you may find yourself in the market for a new or different health insurance plan.
How to shop for health insurance depends firstly on how you’re going to get your coverage.
Shopping for Individual Health Insurance
If you aren’t eligible or don’t like the health insurance options offered by an employer or through Medicare or Medicaid, you can buy health insurance on a public or private marketplace. The marketplace you use will depend on where you live. There are five different types of marketplaces:
Federally-facilitated Marketplace. Most states use the federal health insurance marketplace, which is run by the U.S. Department of Health and Human Services (HHS). As of 2016, these states use the federally-facilitated marketplace:
State-based Marketplace. These marketplaces are entirely run by the state. If you live in one of these states, you can buy health insurance through your state’s marketplace.
District of Columbia
State-partnership Marketplace. In 2016, seven states run a state-partnership marketplace. If you live in one of these states, you can enroll in coverage via the federal marketplace, but the state may provide in-person consumer assistance functions.
Federally-supported State-based Marketplace. There are four states with a federally-supported state-based marketplace. The state is responsible for all marketplace functions, but relies on the federally-funded marketplace IT platform.
Private Marketplace. Private marketplaces, like HealthMarkets, can be run in any state. They offer on-exchange plans (plans available in each state’s marketplace), as well as plans that are off-exchange (plans that are not on the marketplace but are ACA compliant). Private marketplaces can also offer the advice and assistance of licensed health insurance agents at no cost to those looking to purchase a plan.
There are hundreds of health insurance plans available to you, and almost as many variables you’ll want to compare when you’re choosing the plan that’s best for your situation. All health plans are broken up into different tiers (often called metal levels): bronze, silver, gold, platinum, and catastrophic. Each metal level offers the same level of coverage but differ in premiums and out-of-pocket expenses.
If you’re concerned that health insurance could be too expensive, keep in mind the government may help you pay for your healthcare costs. Subsidies are available depending on your income, how large your family is, and the Federal Poverty Level.
There are two different subsidies for which you may be eligible—a premium tax credit or a cost-sharing reduction.
Premium Tax Credit
A premium tax credit may be an option if your income falls between 100 percent and 400 percent of the Federal Poverty Level. You can apply this subsidy to any Marketplace plan. It’s based on a “sliding scale,” meaning the less income you make, the larger the credit.
There are two ways to apply your premium tax credit. Some or all of it can be paid to your insurance provider in advance to lower your monthly premiums, or you can receive the credit when you file your tax return. If you’re married, you must file jointly.
Cost-sharing reductions are another option that can reduce out-of-pocket expenses—things like copays, coinsurance, deductibles and maximum out-of-pocket spending limits—for in-network healthcare services. If your income is between 100 percent and 250 percent of the Federal Poverty Level, you may qualify. Note that this subsidy is available only for silver plans. The good news is there are many silver plans from which to choose.
Federal Poverty Guidelines
The chart* below shows you the Federal Poverty Level guidelines for 2016 and the maximum household income that qualifies for each type of subsidy (based on the number of people in your family):
Federal Poverty Level
Maximum Income to Qualify for Cost-Sharing Subsidies
(250% of FPL)
Maximum Income to Qualify for Premium Tax Credit
(400% of FPL)
*Source: US Department of Health and Human Services—https://aspe.hhs.gov/poverty-guidelines. Note that this chart is applicable only for the 48 contiguous states and the District of Columbia. Alaska and Hawaii have separate guidelines. The figures included in this chart are estimates. Your local HealthMarkets agent can help you determine you eligibility for these subsidies.
You must show proof of US citizenship to qualify for a subsidy. If you are eligible for healthcare coverage through Medicare, Medicaid, or the Children’s Health Insurance Program (CHIP), you won’t be eligible.
Also, if your employer is offering adequate, affordable coverage and you choose not to enroll, you may not be eligible for a subsidy if you purchase a plan from a marketplace. How do you know if your employer-based health coverage meets those requirements?
It must offer benefits equal to those in a bronze plan.
Employee contributions must cost less than 9.5 percent of household income, excluding the cost of adding family members to the plan.
If coverage offered through your employer fails to meet either requirement, you may qualify for subsidies.
We’ll discuss more details of employer-based coverage later.
Ask for Guidance
You can do a cost-benefit analysis of the dozens of plans that may be available in your area, but it can take hours of your time, and you may miss some of the fine print.
That’s why it’s important to have some guidance. Your local HealthMarkets agent is available anytime and can answer any questions you have about finding the right coverage for you in person or over the phone. HealthMarkets can even help you online! Your agent can also help you determine if you qualify for a premium tax credit or a cost-sharing reduction.
Every year, your premiums can go up and your coverage can change, even if you stick with the same health insurance plan. Review your plan every year with your local HealthMarkets agent so you don’t miss out on the benefits and savings you deserve.
Shopping for Medicare
In 2014, 13 percent of the population was covered by Medicare. Medicare can be confusing, especially because there are so many unusual phrases and acronyms. Medicare coverage is available for people ages 65 and older, as well as some people who are disabled, or have a disease like End-Stage Renal Disease (ESRD) or Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig’s disease). Most people who are on Medicare—81 percent—are eligible because they are 65 or older.
There are many choices for Medicare coverage, but first you should decide if you want Original Medicare or a Medicare Advantage plan. Original Medicare has two components: Medicare Part A and Medicare Part B. Medicare Part A is your hospital insurance; Medicare Part B is medical insurance.
Because Medicare Part A and Medicare Part B don’t cover everything, you may choose to buy a Medicare Supplement plan, also called Medigap. If you take prescription medication, you might want to consider a Medicare Part D plan that adds prescription drug coverage to Original Medicare.
A Medicare Advantage plan, also called Medicare Part C, is an alternative to Original Medicare that allows you to purchase health insurance in a bundle from a private insurance company, rather than as separate components from the government. Medicare Advantage plans include both Medicare Part A and Medicare Part B, and many plans also cover prescription drugs. A HealthMarkets agent can discuss your Medicare options with you and help you determine a good fit.
Shopping for Health Insurance Through Your Employer
In 2014, 49 percent of the population had employer-sponsored coverage either through their own job or as a dependent in the same household. If you choose to get your health insurance through your employer, your options are limited to the plans your company offers. A 2014 survey by the National Small Business Association found that 71 percent of small businesses offer only one plan to their employees.
If your company offers multiple plans, look through the benefits of each plan carefully. Here are some of the questions you may want to ask yourself before choosing a plan:
Am I on any prescription medication? If so, will this plan cover them?
Will I have any major health expenses this year?
For example, if you’re having knee surgery or you plan to have a child, you’ll want to choose a plan that has lower copays or coinsurance, since you’ll have likely have several doctors’ visits. You may also want to choose a plan with a lower deductible.
Do I need dependent coverage for my spouse and/or children? What are the costs associated with this?
Is my doctor in this plan’s network?
Once you have a good idea of what your needs will be, you can take a closer look at each plan. You may want to make a spreadsheet so you can easily compare these factors:
If you don’t like any of your employer’s options, you can purchase health insurance on a public or private marketplace. The Kaiser Family Foundation reports that only 80 percent of eligible workers take up coverage when it is offered to them through their employer.
Keep in mind if you do decide to enroll in your employer’s plan, you may have to wait until open enrollment begins.
Pre-Tax Dollars vs. After-Tax Dollars
One advantage of acquiring health insurance through your employer is that you pay your premiums with “pre-tax” dollars.
In other words, the money going toward your health insurance is deducted from your paycheck before taxes are withheld. This reduces your taxable income—you’re paying taxes on a smaller amount of money—providing you savings.
If you buy individual insurance through a marketplace, you’re paying for your premiums with “after-tax” dollars, just like you would for any other good or service. You may not receive the tax savings you would from an employer-based plan if you aren’t eligible for the subsidies we discussed earlier.
Here’s an example of how this works. Let’s say your paycheck is $1,000 and your health insurance premium is $200.
Using pre-tax dollars: If you have employer-based coverage, the $200 for your premium is deducted before taxes are withheld. You would be paying taxes on $800 instead of the full amount of your paycheck.
Using after-tax dollars: With individual coverage you purchased through a marketplace, you would be paying taxes on the full $1,000 paycheck. Then you would pay the $200 premium for your health insurance (again, if you don’t qualify for a premium tax credit).
So choosing an employer-based plan is a no-brainer, right? Not necessarily—it depends on your circumstances. It’s possible that purchasing your own coverage could be more affordable.
Over 70 million Americans are enrolled in Medicaid and/or the Children’s Health Insurance Program (CHIP), a number that has increased by 24 percent since the Affordable Care Act expanded Medicaid coverage in several states. Medicaid provides health coverage to eligible Americans, including low-income adults, pregnant women, people with disabilities, children, and the elderly.
What Does Medicaid Cover?
Medicaid is jointly funded by the state and the federal government, so each state establishes and administers its own Medicaid program.
Because each Medicaid plan is state run, eligibility requirements vary depending on where you live. The Affordable Care Act expanded program eligibility for lower-income Americans, but not all states have chosen to participate in the expansion. To find out if you are eligible for health insurance through Medicaid, contact your state’s Medicaid program. Here are the state specific Medicaid eligibility requirements as of October 1, 2014. The chart* below shows monthly income based on a family of four:
Your agent can search to find the plans that fit your situation and your budget. Agents know what’s available on—and off—the exchange, and the best part? We do it all at no cost to you. Call HealthMarkets today at (855) 839-8126.
About the Author: Nina Prince
Nina is a writing ninja (7+ as a consumer advocate)! She is an American foreigner. Avid reader. Unskilled gamer. Falls down a lot. Travel enthusiast. Always honing her craft with a smile.
---------- Sources: “Questions and Answers on the Premium Tax Credit.” IRS. 2016. Andrews, Michelle. “In Addition To Premium Credits, Health Law Offers ..." Kaiser Health News. 2013. “Options If You Have Job-Based Health Insurance.” HealthCare.gov. 2015. “Health Insurance Coverage of the Total Population.” Kaiser Family Foundation. 2013. “Distribution of Medicare Beneficiaries by Eligibility Category.” Kaiser Family Foundation. 2012. “2014 Small Business Health Care Survey.” National Small Business Association. 2014. “Employer Health Benefits — 2014 Annual Survey.” Page 56. Kaiser Family Foundation. 2014. McClanahan, Carolyn. “Employer Based Coverage or Obamacare Plan? Which is Better?” Forbes. 2013.
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