Health insurance plans before age 65
Short-term health insuranceMost states allow short-term health plans, which offer limited coverage for low premiums. These plans can last a year in most states, with the option to extend coverage to three years. Short-term plans don’t provide as many benefits as standard health insurance and have hefty out-of-pocket costs.
MedicaidMedicaid is a federal/state health insurance program for lower-income Americans. These plans offer comprehensive benefits at low costs that are based on your household income.
Coverage through workThe most common way that people pre-retirement age gets health insurance is through an employer. Employer-sponsored health insurance usually offers comprehensive coverage at more affordable prices than individual health plans.
Individual health insuranceIndividual health insurance either through the health insurance marketplace or directly from a health insurer is a way to get health insurance if you can’t get one from an employer. Individual health insurance offers comprehensive benefits, but it’s often more expensive than an employer-sponsored group health plan unless you qualify for tax credits.
Student health insuranceStudents often get health insurance through a parent’s health plan, but students may also get a plan through their employer, college, or an individual health plan. Another option for people under 30 is catastrophic health insurance, which offers coverage for low premiums, but with a high deductible.
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Common types of health insurance plans
Health maintenance organization (HMO)These plans have limited networks and you must receive care within that network. Otherwise, the health insurance company won’t pay for the care. HMOs have lower premiums than PPOs, but that comes with more restrictions, including limited provider networks and needing primary care physician referrals to see other health care providers, such as specialists. Learn more about HMO plans
Preferred provider organization (PPO)PPO plans are typically more expensive than other types of health plans, but that higher premium comes with more flexibility. You often don’t have to choose a primary care provider in a PPO plan, you can select health care providers from a larger network typically, and opt for either in-network or out-of-network care (with the latter charging more). Also, you can visit a specialist without a referral from a primary care provider. Learn more about PPO plans
Exclusive provider organization (EPO)This is a managed care plan that allows you to go to doctors and hospitals within the plan’s network. An EPO has a limited network of doctors and hospitals and only pays for coverage from in-network doctors unless it’s an emergency. However, you don’t need to choose a primary care physician or need a referral to see a specialist. Learn more about EPO plans
Point of Service (POS)These plans serve as a hybrid of PPOs and HMOs. “Point of service” means that you get to pick whether to use HMO or PPO services every time you see a provider. POS plans often have rules similar to HMOs. For example, you need to choose an in-network physician as your primary care physician. However, you can visit an out-of-network physician for a higher fee in a POS plan, which is similar to a PPO. Learn more about POS plans
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Frequently Asked Questions About Health Insurance
How does health insurance work?
The concept behind health insurance is simple: You pay money to an insurance company for a policy that aims to protect you against health care costs. The goal is to pay much less overall in a given year for health care insurance than you would out-of-pocket if you didn’t have insurance.
Health insurance plans differ and may provide a distinctive combination of services as well as access to particular providers. However, most plans help pay doctor visits, prescription medications, preventive care, and hospital stays.
Members pay a monthly or regular premium and the insurer pays for a portion of your medical care costs, according to the plan’s terms.
Who should buy health insurance?
Health insurance is a smart decision for everyone — both for your health and finances.
Without health insurance, you won’t be covered for medical care, including preventive services like annual physicians, chronic illness help, and emergency care.
Being uninsured can also leave you on the hook for large medical bills.
Which type of health insurance should you buy?
The type of health insurance to get depends partly on your eligibility.
Most people pre-retirement age get health insurance through an employer. An employer-sponsored health plan is usually the best avenue to get comprehensive coverage at the lowest price because employers pay more than half of the health care costs.
However, you can also get an individual health plan on the health insurance marketplace or directly from an insurance provider. People with a health insurance marketplace plan may be eligible for premium tax credits that help reduce the cost of premiums.
People who are 65 and over are eligible for Medicare. Medicare beneficiaries choose between Original Medicare or Medicare Advantage.
How can you find affordable health insurance?
If you can’t get a health plan from an employer, a good place to look for a plan is the health insurance marketplace. Marketplace plans offer premiums tax credits based on income that help reduce the cost of health plan premiums.
If you’re eligible, another option is Medicaid, which offers comprehensive, low-cost plans to lower-income Americans. The federal/state health insurance program bases premiums on your household income. So, if you have a low income, you could pay little to nothing on premiums for a Medicaid plan.
What are different types of health insurance?
There are multiple ways to get health insurance, including:
- Employer-sponsored health insurance
- Health insurance marketplace
- Individual health insurance purchased directly from a private insurance company
- A former employer’s COBRA plan
- Short-term health insurance
When can you buy health insurance?
You can enroll in health insurance during open enrollment. Employers set their own open enrollment periods throughout the year.
The Affordable Care Act marketplace open enrollment typically occurs between Nov. 1 to Dec. 15 every year. Some states with their own exchanges have longer open enrollment periods.
Meanwhile, Medicare has two open enrollment periods. The Medicare open enrollment period is Oct. 15 to Dec. 7 when you can make changes to your plans. Also, Medicare Advantage open enrollment is from Jan. 1 to March 31. During that time, you’re only able to make changes to a Medicare Advantage plan or switch from Medicare Advantage to Original Medicare.
If you miss out on open enrollment, you may qualify for a special enrollment period and enroll in a health insurance plan at any time if you have a qualifying life event, such as getting married, having or adopting a child, or losing other coverage.
How much does a health insurance plan cost?
The cost of health insurance varies by the type of plan. The overall average annual premiums in 2020 for employer-sponsored plans averaged $7,470 for single coverage and $21,342 for family coverage. Employers usually pick up well more than half of those costs. The average employee contributions are $1,243 for single health coverage and $5,588 for family coverage, according to Kaiser Family Foundation.
Meanwhile, Individual health insurance purchased through the marketplace or directly from an insurance company usually costs more than employer-sponsored health coverage. Recent research shows that the average health insurance costs for an unsubsidized yearly premium for an Obamacare/ACA plan on the Healthcare.gov marketplace are $5,472 for single coverage and $13,824 for family coverage.
What are supplemental health insurance plans?
Supplemental health insurance plans offer additional benefits that go beyond your health insurance. For instance, a supplemental plan may help you with out-of-pocket costs.
Dental insurance and vision coverage, which is often not covered by a standard health insurance plan, are two other examples. Also, critical illness insurance and hospital indemnity insurance are other types of supplemental insurance plans.
Is there any checklist to choose a right health insurance plan?
To guide you in your decision on which health insurance plan to choose, answer the following questions in this checklist:
- What are your current and future health needs? What kind of care, treatment and medications will you require over the next year?
- What’s your budget? How much can you afford to pay in premiums, deductible, coinsurance and other out-of-pocket related expenses in a 12-month period?
- Do you prefer to pay higher premiums and a lower deductible or lower premiums and a higher deductible?
- Have you compared different plans, carefully considering covered services and medications, participating providers, quality of the network, premiums, deductibles, coinsurance and out-of-pocket costs?
- Does the plan you prefer cover all your needed and preventive care, including your medications, specialists and any procedures you regularly receive?
- What are the potential ramifications and tax savings of using a health savings account (HSA) or flexible savings account (FSA) if that’s available with your preferred health insurance plan?
What is the health insurance marketplace?
The health insurance marketplace, available at Healthcare.gov and also known as Obamacare or “the exchange,” is a service operated by the federal government that helps people shop for and enroll in health insurance.
The ACA created the exchange in 2010. It’s designed to provide an easier means of shopping for and securing health care coverage for individuals and families. Some states run their own marketplace health insurance exchanges.
The ACA divides plans by metal level. The level depends on the cost of premiums, how much cost the insurer covers, and how much the member pays:
- Bronze: Health plan pays 60% on average for health care services. You pay 40%.
- Silver: Health plan pays 70% on average. You pay 30%.
- Gold: Health plan pays 80% on average. You pay 20%.
- Platinum: Health plan pays 90% on average. You pay 10%.
This means that you pay lower premiums but more out-of-pocket costs if you choose a Bronze plan compared to the others. On the other hand, Platinum has the highest premiums but the lowest out-of-pocket costs.
What is the open enrollment period?
The ACA plan open enrollment period typically occurs between Nov. 1 to Dec. 15 every year. Some states with their own exchanges have longer open enrollment periods. The Biden administration also expanded open enrollment until Aug. 15 this year in light of the COVID-19 pandemic.
“Anyone who missed the normal open enrollment period can purchase a marketplace plan during a special enrollment period,” says Martucci.
Employers set their own open enrollment periods.
Can I get health insurance if I missed open enrollment?
Typically, you can’t get or switch a health insurance plan unless it’s during the open enrollment period provided by the ACA marketplace or your employer.
If you miss out on open enrollment, you may qualify for a special enrollment period and enroll in a health insurance plan at any time if you or someone in your immediate family:
- Gets married
- Has a baby
- Loses coverage through death, divorce or unemployment
- Moves outside your health plan’s coverage area
- Becomes a U.S. citizen
- Is released from jail
- Has a change in income that affects eligibility for premium subsidies
Whether you get health insurance during open enrollment or special enrollment period, coverage can be vital to both your health and finances.
How does an HSA work with health insurance?
An HSA (health savings account) is a tax-advantaged account connected to a high-deductible health plan (HDHP). An HSA lets you save money for future medical expenses. HSAs are portable and can be used for retirement savings if not applied to a medical expense.
“It’s important for individuals to understand that an HDHP may not be the best option if they’re expecting large medical bills in a particular year. That’s because, although premiums are lower, it could be difficult to afford the deductible for a costly procedure, even with money in an HSA,” cautions Staton.
What are the benefits of HSA insurance?
HSAs have become more popular in recent years as a way for people to be more autonomous about their health and financial decisions, says Anne Brunson, vice president of service operations for Maestro Health in Charlotte, North Carolina.
“HSAs present a way for people to save money and prepare for unknown medical expenses in the future, while also saving for retirement — which doesn’t necessarily have to be tied to your health plan,” she says.
You or your employer can make contributions to your HSA. If your employer contributes to the HSA, this money isn’t included in your income.
Income earned on amounts contributed to an HSA is also not taxed. Distributions from an HSA are tax-free if used to pay for or reimburse qualified medical expenses incurred after an HSA is established.
How do I get health insurance on the marketplace?
You can enroll in a health insurance plan on the ACA marketplace in a few different ways:
- Apply online at Healthcare.gov.
- Work with a marketplace-registered agent/broker.
- Use a certified enrollment partner’s website.
- Contact the marketplace call center to enroll by phone (800-318-2596) or fill out and mail in a paper application.
“It’s important to note that this process must be completed before the end of the open enrollment period unless you have a qualifying life event,” Staton says.
Questions to ask before you choose a health plan
Before selecting a plan, make sure to figure out exactly what you want from a plan and what’s available to you.
What type of health insurance policy should i get?
How do you decide what coverage you need?
- Out-of-pocket expenses
- Provider network
- Services/medications covered
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