If you're starting to research the best type of health insurance, whether it be for you, your family, your employer or your business; this guide will help you navigate the maze of options that are on offer. With this, we want to help you understand the best policy for your circumstances and provide clarity in what can otherwise be an insurance marketplace filled with complex terminology and a mass of different health insurance policy types.
Finding the best health insurance for your individual needs takes time. In any guide to health insurance coverage, one of the key factors they all stress is that you must do your research. Whilst it’s true that this takes time; this investment of your time will repay you if you ever need to make a claim on your health insurance policy.
By the time you have read each section in this ultimate guide to health insurance coverage, you will have all the information you need to make an informed choice. Now, let’s get started! Health Insurance plans will typically fall into two distinct categories Individual and Group Coverage; group coverage is also referred to as employer-sponsored health insurance.
In a nutshell, individual plans are arranged between a health insurance company and the policyholder; whereas a group plan is offered by a worker’s union, an employer or a government agency. Here, we explain the different types of health insurance coverage and list the limitations and advantages of each.
As an individual health insurance consumer, you are free to buy health insurance from whomever you want, and your employer, if you have one, is not involved in the transaction. When you compare the cost of individual plans to group plans, they are usually more expensive. The obvious reason for this is because there is no secondary contributor to the cost of the policy. Another factor to consider when comparing individual health insurance Vs. group insurance is that there will generally be more limitations to the health coverage that is offered.
Although there are many states that have formed their own state insurance pools, and which enable their residents to easily buy coverage online, most states will offer ‘Obamacare-approved’ health insurance plans via the healthcare.gov portal.
Anyone can buy individual health insurance for themselves and for their family via a licensed healthcare insurance agent or via the health insurance marketplace. From October 1st, 2013, individuals are free to choose their own plan, and the medical professionals they see. Small businesses can also contribute to a monthly healthcare allowance to help their staff meet their health insurance costs.
Prior to the introduction of the new healthcare law, people who were buying individual healthcare insurance would have had to buy extra ‘riders’ that covered specific conditions, such as pregnancy. However, with the introduction of the PPACA (The Patient Protection and Affordable Care Act, all health insurance plans now need to provide a minimum number of ‘core and essential benefits.’ In the post-Obamacare era, all healthcare plans now offer these ‘essential benefits.’
Maternity, Pregnancy, Care for Newborns – both before and after their birth
Outpatient Care – AKA Ambulatory Patient Services
Hospitalization – Overnight Stays and Surgery
Chronic Disease Management
Preventative and Wellness Services
Substance Use Disorder Services
Mental Health Services – Including Behavioural Health Treatment Such as Therapy and Counselling
Paediatric Services – Including Vision and Oral Care – Adult Dental and Vision Are Not Included
Rehabilitative and Habilitative Devices and Services
In addition to the above essential healthcare benefits, Obamacare has widened the depth of healthcare insurance coverage for all Americans. Health insurance providers are no longer able to discriminate against families or individuals based on their past medical history. Prior to the passage of the PPACA, for any individual who, for instance, has diabetes, would not be able to buy health insurance outside of state-sponsored higher-tier risk-rated pools. Thankfully, now everyone has access to the same health insurance plans, irrespective of their health and any pre-existing medical conditions.
The best type of health insurance will depend on your individual needs and demands at the time you wish to buy a health insurance policy. If you have been offered an individual health insurance plan by your employer, or you are a small business considering giving this option to your staff; this section will explain the pros and cons of individual health coverage Vs. group healthcare plans.
With individual health insurance, a person will keep their coverage in place if they change their employer. This is a significant advantage of getting individual health insurance Vs. an employer-sponsored option.
Because you are the main decision-maker for your insurance choices, you can select the exact level of coverage to meet with your needs. This can be tailored around the needs of your entire family, and you get to choose co-insurance, co-pay, deductibles and more.
Unlike a group insurance plan or employer-sponsored health insurance scheme; individuals who are covered under an individual health insurance policy can choose their preferred network of medical professionals and clinics.
If you work away from home and you need medical attention while you are not local to your usual place of residence, this offers a distinct advantage that can save you a lot of money. With the freedom to choose your own network, there are fewer limitations about whom you can see, and more importantly, where you see them. If you have a group insurance policy with only a limited network of medical professionals; should you need urgent medical care outside of that network, you could potentially be left having to cover all of the costs of these expenses yourself.
It Takes Time
When compared to an employer-sponsored health insurance plan, finding the right company, and the best policy for your individual healthcare insurance can take time. You may need to consult with an insurance agent to help you narrow down your options, or you might decide to do your own research. Either way, it is more time-intensive than a group health insurance plan where everything is taken care of for you by your employer.
With an individual healthcare insurance plan, your premiums cannot be paid on a pre-tax basis. With an employer-sponsored health policy, your premiums are taken out of your salary before your tax is applied. With individual healthcare, you have to pay your health insurance costs from your post-tax earnings.
If you are given the option to join a group health insurance plan, then this will most likely provide you with a much more comprehensive level of coverage when compared with an individual health insurance policy. The main reason for this is because group plans will usually pool policies within their organization, which reduces the overall costs to the health insurance companies. With a group insurance health coverage plan, services such as adult vision and dental care services, well-baby services, and preventative care are usually covered.
However, one thing you will need to keep in mind when reviewing group plan insurance is the way in which it’s set-up; as this can make a big difference. A group health insurance plan will either be fully insured or self-funded. In the following sections, we explain everything you need to know about self-funded Vs. fully insured group health insurance plans.
An Explanation of Self-Funded Health Insurance Plans
If you are being offered a self-funded health insurance plan, then you can expect your employer to assume all of the risk and for them to pay all of your medical costs. Rather than paying a large premium to a health insurance company, a self-funded healthcare policy will establish a maximum upper level of annual risk; an amount that is then kept in a type of reserve until it is required. As an example, if a company establishes that its maximum risk is $2 million per year, the company can keep these funds and even invest it if required. Once the year is complete, anything that was not spent from this amount can be returned back to the company coffers.
Self-funded plans are exempt from state laws, and there is no breadth of coverage guarantee offered. The core difference and disadvantage to you as the insured individual is that your employer has a considerable amount of leeway when it comes to deciding what type of coverage you get. It also gives them the power to rescind the health insurance benefit if, for instance, a benefit of the plan ends up amounting to more money than they expected.
If the worst happens, and your employer refuses a benefit due to the costs involved, your appeal is with the employer and not the health insurance company. If legal action is pursued, then the Federal Courts are your only avenue of appeal.
So, if you have an offer of a self-funded group healthcare insurance plan, you MUST inspect the details of the policy in detail. Unlike an individual healthcare policy, this type of insurance is not obliged to cover the ‘essential health benefits’ we spoke of earlier.
An Explanation of Fully Insured Health Insurance Plans
With a fully insured health coverage plan, an employer will partner with a health insurance company. They will pay out a regular premium in order to manage all of its employee health care claims. The amount of premium they pay will usually be based on the upper level of annual risk. This is also a low-admin partnership for the employer as all of the legal and administrative duties that are connected to claims management are handed in full by the insurer.
As a practical example using the same figures as we did in the self-funded explanation, the potential risk amount of $2 million will be paid directly to the insurer, and they keep that money in its entirety, regardless of how much is actually used.
State laws govern all fully insured health insurance plans. Unlike a self-funded plan that will essentially work in the company’s best interest, with a fully insured healthcare policy, you get a breadth of coverage guarantee, which also offers added peace of mind.
Buying health insurance is easy but finding the best type of healthcare coverage for your needs requires research. In this section, we discuss the advantages of taking group health insurance Vs. an individual healthcare policy.
By their definition, a group healthcare plan will have a large number of insured individuals in which the risk is shared across. This essentially lowers the cost of insurance for everybody in that plan. Because of the lower costs, more people are compelled to join.
Selection and Choice
Regardless of whether the plan is sponsored by a union or an employer, there will typically be a choice offered as to which brand of insurance you prefer to have. This means that as an individual, you get a range of healthcare insurance companies to choose from. This choice ultimately encourages insurance companies to create more competitive products that offer better or more varied coverage options for their clients.
Company Appeal on the Job Market
Irrespective of the size or sector of the company; being an employer of choice and being seen as an attractive place to work is always important. It’s how they attract and retain the best people to their organizations. By offering a comprehensive level of healthcare insurance for employees, and promoting health, wellbeing, and wellness; this creates a positive image of the company, and it shows their employees that they genuinely care about their wellbeing.
Management of Risk
With a group health insurance option, everybody can benefit from paying lower premiums due to the fact that any risk is spread out over the larger group, and everyone pays the same monthly or annual premium. For instance, an employee with a chronically ill partner will pay the same premium as their co-workers with healthy spouses.
On the surface, a group healthcare insurance policy appears to be a non-restrictive financial option. However, it is not always the best type of healthcare insurance for everyone. Although the initial cost of health insurance is usually the most concerning factor, make sure you evaluate the policy in detail without simply making a judgment on price alone.
The majority of people who have group insurance can have their healthcare premiums deducted from their salary before taxes. For individual healthcare policyholders, they have no choice but to pay their insurance premiums using their after-tax salary. For anyone who is self-employed, health insurance is only partially deductible.
Although most group healthcare insurance plans will offer a choice of health insurance companies to choose from; when compared to the huge range of options on the open market, there is a majorly restricted range of healthcare providers on offer. In some cases, individual companies will promote a self-funded health insurance plan as it is of best interest to them. In smaller sized organizations, there is sometimes only a single healthcare insurance company on offer.
With auto insurance, you have a free choice and complete autonomy, over which insurance company is best for you. However, with group healthcare insurance, that freedom of choice is often not yours to make.
With a group healthcare policy, you will need to adhere to the framework of your plan, and you will only be able to see plan-approved medical professionals if you want to ensure your expenses are covered.
If you have a rare or difficult medical condition, this can raise issues that might become problematic. While there are certain group healthcare insurance options that do cover your out-of-network expenses, these are only ever typically covered at a lower rate. This can often result in you paying more. So, if you travel a lot for work and you are ill while being away from home; this could mean that you have to pay the full and total price for your healthcare. With an individual healthcare insurance option, you get a greater degree of flexibility.
The cost of healthcare in the US is constantly changing. Following the publication of findings from a health insurance survey that was carried out in late 2019, the annual cost of a family health insurance policy through an employer-sponsored plan has now surpassed an annual cost of $20k. While it’s true that employers will pay the bulk of this cost, in the example given above, the individual contributions are still around $6,000 per year. This figure doesn’t account for any deductibles, co-payments, or other cost-sharing elements.
For many employers, they have to reduce the levels of coverage they provide in order to meet with these rising costs.
What’s more alarming is that despite there being over 15 million more people in employment in 2017 than in 1999, there were significantly fewer people being covered by employee-sponsored health insurance plans in 2017.
This information suggests that more people are preferring to buy individual healthcare insurance policies rather than taking insurance that is directly linked to their employer.
If you want to know whether individual health insurance is cheaper than an employer-subsidized health insurance plan; there are a number of factors you need to consider. This includes your income, whether your company has a group insurance plan in place, and where you live.
Even with the rising costs of healthcare insurance in America, the cost of employer health insurance is often cheaper than buying an individual healthcare plan. However, as we have already detailed in this post, there are many other pros and cons of individual healthcare insurance Vs. group insurance that you should consider.
The introduction of the Affordable Care Act aims to make health insurance coverage more accessible and or affordable. However, getting the best type of health insurance is still a little confusing at times. In this section, we outline the key things you need to know as a young adult looking for health insurance in a quick question and answer format.
As a young adult, you can remain on your parent’s insurance plan until your 26th birthday. Whether you live at home with them or not, even if you married; you can stay on your parent’s health coverage until your turn 26. If you are given the option to get health insurance through work, you must choose one or the other; you cannot have both running at the same time.
If you are getting health coverage via your place of work, then you will need to know about the open enrollment period dates. In the majority of states, the next open enrollment period for the Affordable Care Act for health coverage for 2020 will run from November 1st to December 15th. If you live in DC, New York, Colorado, Minnesota, Massachusetts or California, then you will benefit from an extended enrollment period which will run until either the middle or end of January 2020.
Minnesota: November 1 to December 23
California: October 15 to January 15
Colorado: November 1 to January
Massachusetts: November 1 to January 23
Columbia: November 1 to January 31
New York: November 1 to January 31
If you go through what is classified as a ‘qualifying life event,’ such as a divorce, having a child, getting married or changing your employment status’ then you can make changes to your coverage/plan at any time one of these events occurs.
Yes. If you don’t take out health insurance, then you will need to pay a tax penalty. There are lots of ways to get a new health insurance policy arranged; the most typical places that young people get health coverage from is on their parent plan, the VA, COBRA, Medicaid or a policy you purchase individually.
The penalty for not having any health insurance is changing. In 2018, the penalty fee was $695 or 2% of your household income, whichever was the greater amount. So, although you may have been tempted to try and save a little money, the risks do not really warrant any reward; especially if you have a genuine need for any kind of urgent medical attention. Regardless of how fit and healthy, you think you are; an unexpected illness or accident can occur at any time.
Due to changes made by the Trump administration, the federal tax penalty for non-enrollment is set to be eradicated for 2019. However, anyone not registered in 2018 will still need to pay their penalties on their 2019 tax forms. However, because these are federal-level changes only, it is still necessary to look at your local state requirements for health insurance. Many states have their own penalties that will still be applicable if you do not have insurance that is compliant with your own state laws.
Given the costs of medical bills in the event of an incident, healthcare insurance could prevent you from acquiring significant debts in your young adult life, and for this reason, it serves to protect your future wealth and ensure you are able to recover quickly from any illness or accident.
If your employer doesn’t offer a healthcare plan, you have a range of options at your disposal. These include:
Independent Health Insurance Broker
Usually, the state healthcare exchange provides you with different levels of coverage. Normally, there is a lower, middle, and upper tier of healthcare insurance. Depending on your financial circumstances, you might find that the lower tier is still expensive. There are a number of ‘hardship exemptions’ that will pre-qualify you for something called a catastrophic plan, that is a much lower cost than any standard tier of healthcare insurance. As of 2019, anyone under the age of 30 can apply for this whether they have an exemption or not.
The catastrophic plan is offered via the federal health insurance marketplace, and it covers three primary care visits each year, along with a range of specific preventative services for free.
If you need to buy health insurance for your family, you want to make sure you select the right policy, at the right price, with a company that will be easy to deal with should the need arise to contact them.
A family health insurance policy will typically provide insurance for you, your partner, and your children. As with all types of insurance, you can choose from a range of family health insurance plans that provide coverage in the event of an illness or injury.
Family healthcare gives peace of mind that should anything happen; you can focus on helping your family get better, rather than having to worry about work or bills.
Most family healthcare policies will have bot an individual and a family deductible that apply. Whenever an individual within the family makes a payment toward their individual deductible, this is also accredited to the overall family deductible. If the total family deductible is met; the health benefits will apply to all members, regardless of whether they have met with their own deductible requirements.
Essentially, family deductibles were introduced to ensure that larger families wouldn’t have to worry about paying large individual deductibles for every member of the family.
There are three major factors you’ll want to look at when trying to choose the best type of health insurance for your needs.
Out of Pocket Expenses – how much will you need to pay for any routine healthcare visits or needs.
Your Monthly Premiums
If you are injured or sick, what is the biggest potential amount you could be asked to pay before your healthcare insurance kicks in?
It is also a good idea to make sure you have a thorough understanding of co-insurance, co-pay, and deductibles to help you make your final decision about buying healthcare insurance online.
Searching online to buy healthcare insurance isn’t going to be the highlight of your year. However, getting the best type of health insurance is essential. So, how do you find the best health insurance policy for you?
In this section, we review different types of health insurance products; PPOs, HMOs, HDHPs, EPOs, POS, and more! We cut through the jargon and explain what you need to know in order to find the best health insurance policy for your unique set of needs.
Even if you get health insurance through your employer, it’s important to understand the different options you have; as most companies will give you a choice of healthcare insurance plans to choose from.
Every health insurance plan is categorized by how they work, and each plan will work a little bit different from the other. Read on for an overview of PPOs, HMOs, HDHPs, EPOs, and POS.
Health Maintenance Organization Plans or HMOs as they are otherwise known, give you a list of medical professionals that work with your health insurance company, and they will generally require you to choose a physician or primary care provider. The provider is then in charge of the coordination of all your healthcare needs. The driving factor behind offering a limited pool of providers is to help them manage the costs and ensure they can offer lower premiums.
With an HMO plan, you will need to see your primary care provider for a referral before you are able to see a specialist.
HMO plans are a popular choice, and they will usually include co-pays and deductibles for any non-preventative care visits. The main drawback to an HMO is that you are not allowed to see an out-of-network provider unless it is arranged in advance by your primary care provider with approval from the insurance company or it is an emergency.
An Exclusive Provider Organization Plan or EPOs as it also called give you an entire network of medical providers to select from. Similar to an HMO, unless it’s an emergency, you will need to stick to the providers within their network. There is usually no coverage offered for ‘out-of-network’ providers for a non-emergency situation. With an EPO, you will also need to factor in the deductible, co-insurance, and co-payments.
A High Deductible Health Plan or HDHP is typically a different type of health insurance plan that has a high deductible. With this type of plan, policyholders will need to pay the deductible before most of the coverage kicks in. The main advantage of an HDHP is that they are often a much lower cost than other types of healthcare insurance plans.
A preferred provider organization plan, also known as a PPO, is another type of plan that has a list of providers that are considered to be in-network providers. These medical providers will have agreed and negotiated rates with your health insurance company in order to better manage their costs. One of the major differences with a PPO is that you can see an out-of-network provider, but you will have to pay out more money to do so.
Different to an HMO, the majority of PPOs will not ask you to visit your primary care provider in order to get a referral to a specialist. This means you are free to see a specialist directly. You will be expected to pay out for co-insurance or co-pays for any non-preventative care, and there will also be a yearly deductible with a PPO plan.
Also known as Point of Service Plans, a POS offers a unique degree of flexibility that most of healthcare insurance plans do not. Usually, you will have a provider of primary care services that you will visit for referrals, and any other type of preventative care needs as well. The most appealing factor for a POS is that you can use out-of-network providers as long as you are willing to pay a slightly higher cost for their services.
While most visits to medical specialists and the primary care provider are not usually subject to a deductible; any visits outside of those will ask you first to pay the deductible. For out-of-network visits, you will most likely need to make a payment directly to the provider, and you will also need to fill in paperwork in order to receive a reimbursement.
A short-term healthcare insurance policy will not cover you for all medical situations. Usually, they will not cover your pre-existing medical conditions, maternity care, preventative care, or help with prescription costs either. The core purpose of short-term healthcare coverage is to provide you with coverage for any accidents or illnesses. You will not normally be able to renew these plans, but it’s worth confirming your own state laws and the exact terminology offered by your healthcare insurance company.
Here is a list of the most significant health insurance policy details you need to review before buying health insurance online.
Your health insurance deductible is the amount of money you will need to pay yourself prior to certain parts of your coverage becoming available. Although the majority of co-pays and preventative healthcare visits are usually exempt, you will need to make sure that you can afford to pay your deductible in case of hospitalization or a major medical event. If you are looking for health insurance with a low deductible, these lower costs will usually be offset by a higher cost elsewhere.
Your monthly health insurance premiums are the regular payments you make to keep your health insurance accessible at all times. Although a health insurance policy with a cheap monthly premium might seem appealing, it will usually mean there are higher costs to pay elsewhere in the policy framework.
Both co-pays and co-insurance are two ways a health insurance company will layout the costs of their services to ensure you only get what you need.
A Co-pay is normally a flat rate that is paid for a specific service, such as lab work or a visit to a Doctor.
Co-insurance is the percentage you will need to pay out for health costs that are covered under certain types of insurance. For example, you might need to pay 10% of the total bill for any in-patient hospital services.
It is important to look at the co-insurance figures before you buy a healthcare policy because lower monthly premiums combined with a higher co-insurance and co-pay rate could end up being quite expensive if you need to visit healthcare providers regularly.
The maximum limit for any out-of-pocket costs is essentially the biggest amount of money you will have to pay outside of your monthly premiums for your healthcare coverage in any given year.
To give you a practical example, let’s say your out of pocket maximum is $5,000, your deductible is $2,000 and you have 20% co-insurance across all the services. In this case, you will need to pay out $1,000 of the first $1,000 of your medical expenses to cover your deductible. Next, you will need to pay 20% of the next $15,000 of your medical expenses.
Following these payments, you will have hit the maximum out-of-pocket amount, and your health insurance policy will then cover any other medical expenses that are allowed on the policy. If you were to then incur a further $5,000 of medical expenses in that year, you would not need to pay anything else for this.
Choosing the best type of health insurance plan takes time, and you need to run through many different scenarios on the financial aspects too. For most people, the goal is to spend the lowest amount on their new health insurance policy; however, there are a range of other essential elements you need to review carefully to ensure that what you think is a low-cost health insurance policy doesn’t end up costing more than you thought when you need to use it.
Buying the best healthcare insurance needs to be a balancing act between your monthly premiums, the in-and out-of-network options, the services you could potentially need, and the various co-insurance and co-pay amounts.
The best health insurance policy for you as a young person might be very different from the best healthcare coverage needed for a family. The same applies for when you need health insurance in retirement, and should you become disabled, or you develop an illness during your lifetime; your needs and demands from a healthcare insurance provider could change.
The key is to take your time, review all the details we have outlined in this guide to health insurance and choose a healthcare policy that is best for your current circumstances.