For most Americans, the question isn't if they need health insurance. It’s really about finding the right type of affordable coverage to stay healthy and avoid a crippling amount of medical debt.
Instead, the question is: How do I get health insurance? The process of getting new health insurance can feel very overwhelming to people who worry they won't be able to afford coverage. Perhaps they don't understand what they're looking at when they go to apply for it. Luckily, health insurance is available to more Americans than ever under the Patient Protection and Affordable Care Act, or ACA, which created a marketplace of plans with a range of costs and benefits.
Step 1: Determine what kind of health insurance coverage you need.
When shopping for health insurance, many people look for the lowest-cost option. Instead, try making a list of you or your family's needs. There are many different health care plans out there; some that offer coverage for limited needs, some that are for temporary needs, and some that are comprehensive.
Families with young children can find themselves on a first-name basis with the staff at their pediatrician's office, so they should consider a plan that offers comprehensive benefits like an ACA-qualified health insurance plan, for example. But a young, single person who is healthy may not need to have the full comprehensive benefits of a qualified plan. If they missed their enrollment window or if they want options outside of the ACA plans, a non-qualified plan type like a short-term health plan or an indemnity-style or fixed benefit plan could be an option.
What's an ACA-qualified health insurance plan? See note 1 It's a plan that follows established limits on deductibles, copays and out-of-pocket maximum amounts. It also provides coverage for 10 essential services, including things like ambulatory and emergency services, hospitalization, maternity and newborn care, mental health treatment, prescription drugs and pediatric services. An ACA-qualified plan can help you be prepared for the future, because it can be hard to predict what kind of care you might need.
Having adequate health insurance is foundational to your health and wellness planning. Figure out what other type of ongoing care you or your family members may need in additional to medical and wellness services. If you get coverage through an employer, you may also be able to enroll in disability insurance as well as dental and vision insurance. Other plan types and benefits may be available as well. Whether you get coverage through your work or if you plan to get it through the marketplace, consider your needs, the costs and your utilization when deciding which coverages are needed. Dental insurance may be a no brainer for a family of five with kids needing braces, but the decision may vary for a young single person with good dental history.
Step 2: Figure out what health insurance coverage you can afford.
First, figure out whether you're eligible for premium tax credits under the ACA. These subsidies can offset your monthly premiums and may be available to you depending on your family size and your projected household income.
Most states have adopted the federal expansion of Medicaid under the Affordable Care Act (ACA), providing affordable health care coverage for low-income individuals and families. Generally, households with incomes up to 138% of the Federal Poverty Level (FPL) are eligible for Medicaid. For those whose incomes exceed the Medicaid threshold, financial assistance through the ACA marketplace can help lower the cost of health insurance. Subsidy eligibility depends on factors such as household income, family size, and location.
There may be other cost-saving options available as well, based on plan type. Understanding what you can afford outside of whatever the ACA is going to provide for you is powerful knowledge. Be sure to budget for out-of-pocket costs and understand cost-sharing factors of different plan types.
It’s also important to understand if you qualify for the premium tax credit See note 1, or PTC. The PTC is a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace. To get this credit, you must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit (PTC).
Step 3: Review the prescription benefits that health insurance options offer.
If someone in your family is on maintenance or ongoing prescription medications, see what they'll cost. Health plans have a list of prescription drugs they cover. When purchasing a new health insurance plan, be sure to choose a plan that includes any brand-name drugs you use, as they're covered at a higher level.
Step 4: Decide which provider you'll see.
If keeping your current health care provider is important to you, find a plan with your provider in its network. Out-of-network providers may be covered at a lower rate, if at all, than those in-network. On the other hand, if you find a plan that saves you a lot of money but makes your doctor or specialist out-of-network, consider the savings versus having to switch providers.
Two popular health plan types are Health Maintenance Organization (HMO) and Preferred Provider Organization (PPO). Usually, HMOs have a controlled network of doctors and specialists. With an HMO, you'll likely see a doctor within a designated network and may need prior authorization from your insurance provider to see a specialist, if needed. PPOs, on the other hand, give you control over which doctors and specialists you can see. But keep in mind that while you can see whoever you want, usually you’ll have to pay a little more for that control.
Step 5: Plan for out-of-pocket costs, potentially with a supplemental health plan.
The cheapest monthly premium may not always be the right answer if it carries a deductible you can't afford. It's important to pick a plan that has a level of financial responsibility you can budget for so you can use your plan when needed without the fear of relying on credit cards or other debt.
Many people who feel like they can’t afford to pay their deductible will often skip getting the care they need, which only makes their health and financial problems worse in the long run. Eventually, your health will worsen to the point that you can’t work, and your problems will grow from there.
In general, if you find yourself struggling to budget for larger, unexpected expenses, it may be beneficial to have a supplemental health plan in addition to your health insurance. These types of plans can be for specific illnesses or accidents. There are also plans like fixed indemnity plans that can help to offset your out-of-pocket costs, such as your health insurance deductible.
How does an indemnity plan work? With traditional health insurance, you pay the deductible at the point of care, and then the rest comes out of insurance. Indemnity policies are just the opposite. Let's say you break your foot and go to the emergency room. If you have an indemnity plan that covers emergency room visits, you may receive benefits under that plan separate from your health insurance that can then be used toward whatever you want to, like your deductible or other out-of-pocket costs. However, most indemnity plans are limited to a specific benefit amount and stop providing benefits once that limit is met.
But indemnity plans should only be used as a supplement to traditional insurance, not as your sole solution. If you have a catastrophic health event, the amount in your indemnity plan likely won't even begin to cover it.
Consider employer-provided health insurance.
Employers get a tax break on the health care costs they provide for their employees, so it's usually the most affordable option. About 50% of the country gets their health insurance through their employer, and if you were to do a cost comparison, you'd likely find it's cheaper than going with a plan that you pay for entirely on your own.
With that said, choosing the best health care for you and your family should not come down to price alone. Remember step one: Make a list of you or your family's needs. Whether you go with your employer's plan or an ACA plan, be sure it has the coverage you need.
Get started looking for new health insurance.
Now that you've made a list of the health insurance coverage you and your family need, it's time to go shopping. There are two ways to go about it: either through the federal marketplace healthcare.gov See note 1 or through a private provider, such as USAA. You can see which plans are available in your area by visiting usaa.com/healthsolutions. If there's not a plan offering, visit healthcare.gov. See note 1
The open enrollment period is the time of year that anybody can purchase health insurance through healthcare.gov without changing jobs or changing marital status, which would be considered qualifying events for plan enrollment at any time. See note 1 Usually, open enrollment is a two-month period toward the end of each year. During open enrollment, people can shop for, compare and change plans.
In the past, people used short-term health insurance as a bridge if they needed insurance but didn't have a qualifying event. In most cases, those short-term plans don't offer all the same essential services or qualifications that an ACA plan offers, so you're taking on a financial risk.
A health savings account may be right for you.
Health savings accounts can be great way to reduce your taxable income and help you save for medical expenses. You're eligible for an HSA if you're enrolled in a high-deductible health insurance plan. These eligibility limits change annually, check the IRS resource on HSA plans for the most current information. See note 1 When you're shopping for plans, look for the ones tagged as "HSA-eligible."
Here's how an HSA works: You pay into to your HSA, taking a deduction on your payments. You're able to decide how your savings earns interest, through interest-bearing accounts or investments, and when you take that money out for qualified medical expenses, it comes out tax-free.
Another HSA benefit: When you put your money into an HSA, it can carry over from one year to the next. If you don't visit the doctor often or if you've been blessed with good health and have a good health record, you can pool your money year over year. That way, you can use it to plan for the future.
In your retirement years, you can use that money to pay for things that supplement your Medicare, and you can use it to offset normal everyday health care expenses.
Ready to shop for new health insurance?
Members with questions can contact a USAA specialist about their health insurance coverage. Our team can help point you in the right direction if we have policies available, or to the appropriate state-regulated or federal exchange.