By Rick Lindquist and Paul Zane Pilzer
Open enrollment began November 15, and if you’re like many policy buyers, you couldn’t feel less prepared to dig through all the options. Before you make a knee-jerk decision based on cost, we suggest you ask three key questions.
So you’re faced with the task of signing up for individual health insurance for the first time. You know open enrollment began November 15 and ends February 15. Beyond that, you’re pretty clueless. Not only do you dread the paperwork and the form filing, you’re painfully aware you’re about to make a purchase (required by law) that has serious implications for your well-being and your wallet. And yet, when you think about digging for some answers, you realize: I don’t even know what the questions are!
Relax. While it’s normal to be nervous about something that your employer (or perhaps your parents) handled for you in the past, there are really just a few key issues you need to know.
A lot of people will blindly select a plan based on sticker price. Yet if you do that, you’re likely to be dissatisfied with your choice—and you may not have the coverage you’d like when you need it the most!
There are three vital questions you’ll want to ask before you make a decision:
“Can I keep my same doctor?” Each health insurance plan has a network of providers, including hospitals, laboratories, doctors’ offices, imaging centers, and pharmacies. Every health insurance provider has contracts with these medical providers agreeing to provide services to covered plan members at a designated cost.
If you have a preferred doctor, it is vital to review the provider directory for each plan before purchasing a policy to ensure that your doctor is in your new plan’s network. If your preferred doctor is not in your plan’s network, the insurance company may not cover the medical bill, or may require you to pay a higher share of the cost. If you would like assistance, a health insurance agent or broker is a great resource to help guide you through the process of selecting a health insurance policy.
“What does the policy cover?” Due to the Affordable Care Act (ACA), all individual health insurance policies are required to cover ten essential health benefits:
1. Emergency services
2. Hospitalization
3. Laboratory tests
4. Maternity and newborn care
5. Mental health and substance abuse treatment
6. Outpatient care
7. Pediatric services (including dental and vision care)
8. Prescription drugs
9. Preventative services and management of chronic diseases
10. Rehabilitation services
These are the minimum services each health plan should cover. Plans might also include additional services like chiropractic, dental, and vision coverage. You should always do research to determine what services a particular plan covers, especially if you need coverage beyond the 10 essential health benefits. You should also ascertain what portion of the covered costs you’ll be responsible for. For example, under one plan a visit to a particular specialist might be 100 percent covered; under another you might have a copayment of $50 for each visit. You don’t want to be surprised by deductibles, copayments, and services that aren’t covered after you’ve already purchased a policy!
“Which metallic level is really right for me?” As of 2014, individual health insurance plans are categorized in four standardized levels of coverage, called “metallic tiers of coverage.” These categories help you better compare plans. In terms of monthly premium cost, from lowest to highest, they are bronze, silver, gold, and platinum. When you’re evaluating coverage, of course, you’ll want to look not only at premiums but also at out-of-pocket costs—the amount you’ll pay when you receive medical care. Here’s a quick breakdown of the actuarial value of each tier:
- Bronze plan (60 percent): The bronze plan has an actuarial value of 60 percent, meaning that individuals covered by a bronze plan will be required to pay 40 percent of their expected medical expenses via deductibles, copayments, and coinsurance.
- Silver plan (70 percent): The silver plan has an actuarial value of 70 percent, meaning that individuals covered by a silver plan will be required to pay 30 percent of their expected medical expenses via deductibles, copayments, and coinsurance.
- Gold plan (80 percent): The gold plan has an actuarial value of 80 percent, meaning that individuals covered by a gold plan will be required to pay 20 percent of their expected medical expenses via deductibles, copayments, and coinsurance.
- Platinum plan (90 percent): The platinum plan has an actuarial value of 90 percent, meaning that individuals covered by a platinum plan will be required to pay 10 percent of their expected medical expenses via deductibles, copayments, and coinsurance.
It is important to select the right metallic tier for your health and financial needs. In general, if you anticipate using a lot of medical services, it is more ideal to select a platinum or gold plan. While the premiums are higher, you will pay less out-of-pocket when it comes time to receive medical care. If you do not anticipate having a lot of healthcare needs, a silver or bronze plan is more ideal to save money. Although there will be higher out-of-pocket costs when you do need medical services, you will pay a significantly lower premium.
By putting some thought into what your ideal individual health insurance policy should look like, you’ll make the process of shopping on the Marketplace easier and less confusing. Moreover, you’ll ensure that you have the coverage you need at a price that fits your budget.
And be aware that you don’t have to navigate this process on your own. If you are unsure of what plan to select and would like help navigating the shopping process, you can always choose to work with an insurance broker.
Out-of-Pocket What? A Refresher Course for Insurance Shoppers
If you’re like many health insurance shoppers, terms like “deductible” and “out-of-pocket maximum” make your eyes glaze over. Sure, you’ve heard the terms before. And you’re all too aware that out-of-pocket costs are the money that comes out of your pocket (duh!) when you receive healthcare. But frankly, now that you’re shopping on the Health Insurance Marketplace for an individual policy, you could use a refresher course.
Here are four specific health insurance terms you’ll likely run across as you review out-of-pocket costs. The better you understand them, the more prepared you’ll be to choose a policy that fits your needs.
Deductible: The amount paid for covered care before the insurer begins to pay. For example, a family or individual might have to pay $500 out-of-pocket for a covered service like a hospital procedure before the insurance company pays. After the policyholder has paid $500, the insurance company pays the remainder of the cost for the procedure. This would be a $500 deductible.
Copayment: A set dollar amount paid to the healthcare provider for a covered service. For example, there may be a $30 copayment for each visit to your general practitioner.
Coinsurance: The percentage of allowed charges for covered services you are required to pay. For example, if an insurer is responsible for 80 percent of the charges for a service, you would be responsible for the remaining 20 percent.
Out-of-Pocket Maximum: An out-of-pocket maximum is the maximum amount of money you will pay for covered services during a benefit period (for example, over the course of a year). Let’s start with what your out-of-pocket maximum never includes: your premium, balance-billed charges, or services your health insurance plan doesn’t cover. As for what you’re out-of-pocket maximum does include, that will vary from plan to plan but copayments, deductibles, and coinsurance might be on the list.
One thing’s for sure: Once you have paid the full amount toward your out-of-pocket maximum, your insurance will pay 100 percent of the allowed amount for your covered healthcare expenses.
The new health law says that in 2014, the out-of-pocket limit for plans sold to individuals and small businesses cannot be more than $6,350 for an individual or $12,700 for a family (not including your monthly premium). Some plans may have lower out-of-pocket limits than that.
About the Authors:
Paul Zane Pilzer is the New York Times best-selling author of 11 books, a former professor at NYU, and has served as an economist in two White House administrations. He is also the founder of six companies including the two largest U.S. suppliers of personalized employee health benefits, Extend Health (1999) and Zane Benefits (2006).
Rick Lindquist is president of Zane Benefits, Inc., the U.S. leader in individual health insurance reimbursement for small businesses. Zane Benefits’ software has been featured on the front page of the Wall Street Journal, USA Today, and the New York Times. He is a regular contributor to leading health benefits publications, including ClarifyingHealth.com.
About Zane Benefits, Inc.:
Zane Benefits is the leader in individual health insurance reimbursement for small businesses. Since 2006, Zane Benefits has been on a mission to bring the benefits of individual health insurance to business owners and their employees. Zane Benefits’ software helps businesses reimburse employees for individual health insurance plans for annual savings of 20 to 60 percent compared with traditional employer-provided health insurance. Today, over 20,000 customers use Zane Benefits’ software, services, and support to reimburse individual health insurance plans purchased independent of employment. Zane Benefits’ software has been featured on the front page of the Wall Street Journal, USA Today, and the New York Times. Learn more at www.zanebenefits.com.
About the Book:
The #1 Amazon best-selling The End of Employer-Provided Health Insurance is a comprehensive guide to utilizing new individual health plans to save 20 to 60 percent on health insurance. Over the next 10 years, 100 million Americans will move from employer-provided to individually purchased health insurance. Written by a world-renowned economist and New York Times best-selling author, this insightful guide explains how individual health insurance offers more to employees than employer-provided plans. Learn more and join the debate at www.healthinsurancerevolution.org/book.
The End of Employer-Provided Health Insurance: Why It’s Good for You, Your Family, and Your Company (Wiley, 2014, ISBN: 978-1-119-01211-5, $25.00, www.zanebenefits.com, www.healthinsurancerevolution.org/book) is available at bookstores nationwide, from major online booksellers, and direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797. For more information, please visit the book’s page on www.wiley.com.
Founded in 1807, John Wiley & Sons, Inc., has been a valued source of information and understanding for 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley’s core business includes scientific, technical, and medical journals; encyclopedias, books, and online products and services; professional and consumer books and subscription services; and educational materials for undergraduate and graduate students and lifelong learners. Wiley’s global headquarters are located in Hoboken, New Jersey, with operations in the U.S., Europe, Asia, Canada, and Australia. The Company’s Web site can be accessed at www.wiley.com. The Company is listed on the New York Stock Exchange under the symbols JWa and JWb.
