How to Shop for Health Insurance
Shopping for health insurance can be difficult, especially if your situation has changed and you need a new plan. How to shop for health insurance depends on where, when, and why you get your coverage.
Shopping for Individual Health Insurance
You can buy health insurance on a public or private marketplace. The marketplace you use will depend on where you live. There are four different types of marketplaces:
1. 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 2021, these states use the federally-facilitated marketplace:
- New Hampshire
- North Carolina
- North Dakota
- South Carolina
- South Dakota
- West Virginia
2. State-based Marketplace. There are 15 marketplaces are entirely run by the state. If you live in one of these states, you can buy health insurance plans through your state’s marketplace.
- District of Columbia
- New Jersey
- New York
- Rhode Island
3. Federally-supported State-based Marketplace. There are 6 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.
- New Mexico
4. 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).
Depending on where you live, there could be 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 ACA 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 that the government may help you pay for your healthcare costs. Subsidies may be 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% and 400% of the Federal Poverty Level (FPL). You can apply this subsidy to any Affordable Care Act 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% and 250% of the FPL, 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 FPL guidelines for 2021 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/system/files/aspe-files/107166/2021-percentage-poverty-tool.xlsx. 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. HealthMarkets can help you determine your eligibility for these subsidies.
You must show proof of US citizenship or legal residency 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 offers adequate, affordable health insurance 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 9.83% of household income, excluding the cost of adding family members to the plan.
If health insurance through your employer fails to meet either requirement, you may qualify for subsidies.
Ask for Advice
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 get some advice. HealthMarkets can help answer any questions you have about finding the right coverage for your needs. We can also help you determine if you may 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 HealthMarkets so you don’t miss out on the benefits and savings you deserve.
Shopping for Medicare
You may be eligible for Medicare if you’re a U.S. citizen or permanent legal resident who has lived in the U.S. for more than five years and one or more of the following applies to you:
- You are 65 or older.
- You have been on Social Security Disability Insurance (SSDI) for two years.
- You have end-stage renal disease (ESRD) or Lou Gehrig’s disease.
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.
Shopping for Health Insurance Through Your Employer
If you choose to get your health insurance through your employer, your options are limited to the plans your company offers.
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 may be able to purchase health insurance on a public or private marketplace.
Pre-Tax Dollars vs. After-Tax Dollars
One advantage of acquiring health insurance through your employer is that some individuals can pay their 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 may work. 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).
HealthMarkets can help you sort out how to shop for insurance and find the right health plan for your needs.
Can I Shop Around for Health Insurance
HealthMarkets can help you compare health insurance plans, all at no cost to you. Answer a few simple questions about your insurance needs, and we can streamline your insurance shopping experience. We’ll compare all the plans available to us in your area side-by-side, so you can see what works best for you and your loved ones.
Contact a licensed health insurance agent, review your options, and choose coverage with confidence.