Get to Know the Different Types of Health Insurance Plans with These 4 Tips
Are you new to health insurance or looking to switch plans? Trying to weigh the many options for coverage and specifics of each plan can feel overwhelming. What is available to you will depend on many factors, including your age and where you live.
Finding the right option is not impossible. It simply requires knowing what to look for in the many types of health insurance plans. Follow these five steps and you will be on your way to getting coverage that meets the healthcare needs of you and your family.
1. Consider the Different Types of Health Insurance Plans
The first step to narrowing down health insurance options is to consider what programs are available to you. More than half of all Americans have access to insurance through their employer. If you are over the age of 65 or low-income, you may qualify for a government program like Medicare or Medicaid.
If you are under the age of 26, you have the option of staying on your parents' health coverage. And everyone has the option of buying health insurance through the federal marketplace.
Medicare
If you are over the age of 65 or have certain disabilities such as end-stage renal disease, you may qualify for Medicare. This is a federally-run comprehensive health program.
Medicare is broken into different coverage components. Part A is hospital insurance. Part B is the basic health insurance plan.
If you enroll in Medicare Part A, you must enroll in Part B. But you can enroll in Part B without enrolling in Part A.
Medicare Part D is the prescription drug coverage program. You must be enrolled in either Part A or Part B to access Part D.
Medicaid
Medicaid is another federally-funded, state-administered program that provides health coverage for more than 73 million Americans. To receive funding, states must cover certain groups, including low-income families and women who are pregnant. And they can offer additional coverage eligibility beyond these groups.
In 2010, the Affordable Care Act (ACA) expanded eligibility criteria, such as the federal poverty level (FPL) income level recipients had to be under. While most states have chosen to participate in this expansion, about a dozen have not. Be sure to see what the qualifying criteria are for your state.
Medicaid includes the Children’s Health Insurance Program (CHIP), which covers children of families that make too much money to qualify for regular Medicaid but not enough to afford private health insurance. But, if you think you fall into this category, this program may offer some assistance in getting health insurance for your children.
Private Health Insurance
Private health plans are available through your employer or by purchasing them on the federal marketplace. These have a wide range of coverage benefits and costs to consider.
Since the passage of the ACA, people under the age of 26 can stay on their parents’ health plans. There also is an ACA provision that prohibits health insurance companies from denying coverage based on preexisting conditions.
Also, people under 30 can buy catastrophic health plans on the marketplace. And some colleges and universities offer medical insurance plans to students.
2. Assess Your Health Needs
The next thing to think about is your coverage needs. Simply because you qualify for a particular program or plan does not mean it is a good fit for the health needs of your family.
Government Benefits
Medicaid plan benefits will vary by state. Although, there is often choice among at least a few providers within the program.
With Medicare, you can see almost any provider. There is also Medicare Advantage. This is a private health insurance plan administered by a company that has contracted with Medicare.
About 30 percent of all Medicare recipients are on these plans, which cover most benefits found in original Medicare. An added benefit to Medicare Advantage plans is that they often cover things like vision, hearing, dental, and other specialty services, that original Medicare may not.
Like other health insurance, Medicare Advantage coverage will vary by plan. The Medicare website offers in-depth ratings of Advantage plans. Be sure to dig into the details of each one, to ensure they meet your healthcare needs.
Another thing to consider is that, while original Medicare allows you to visit almost any provider, Medicare Advantage plans function like other private insurance plans. They have a network of providers you are allowed to see.
Private Plan Coverage
If you have access to health insurance through your employer, they have negotiated a plan with a health insurance company. You may be able to choose between a few tiers of coverage. Take the time to examine these and assess the pros and cons. In general, lower monthly premiums mean higher out-of-pocket costs through deductibles and co-pays.
Employer-based or private health plans purchased on the federal marketplace will most likely fall into one of two categories: health maintenance organizations (HMO) or preferred provider organizations (PPO). Both offer a network of physicians and healthcare providers that offer services to members at an agreed-upon rate.
Catastrophic plans, available to younger people, will only cover major medical emergencies.
3. Think About Cost
Purchasing health insurance requires a bit of planning. Do not simply look at monthly premiums. Consider what you would be paying for everything from routine doctor visits to major medical emergencies. In short, do not plan on what you think you will pay for any given set of circumstances, but what you could pay.
Cost for Government Plans
With some rare exceptions, the state pays most costs of Medicaid plans. States have the option to require premiums for certain groups in the plan, such as families in higher income brackets that were included with the expansion.
If you or your spouse paid Medicare taxes for at least 10 years, then you will not have to pay premiums for hospital insurance (Part A). All beneficiaries must pay premiums for the basic health insurance component of Medicare (Part B). And there are co-pays associated with the Part D prescription drug component as well.
Medicare Advantage plans tend to have cheaper out-of-pocket costs. In 2017, the average out-of-pocket costs for Advantage plans was about $5,000, but some plans had annual caps below $3,000.
Also, with original Medicare, you will generally have to pay a certain percentage of services but with no out-of-pocket max. With Advantage, like most other private health plans, there is an out-of-pocket cap.
This may not be necessary for most services. But if you end up with a big bill for things like surgeries or emergency room visits, an out-of-pocket cap can be a lifesaver.
Cost of Private Plans
One big advantage of getting healthcare through your job is cost. Your employer negotiates premiums with a health insurance company. And they likely will contribute to the cost of monthly premiums for each employee.
HMOs generally have lower monthly premiums, copays, and coinsurance, than many other plans. A disadvantage is that, while costs may be lower for in-network services, these plans rarely cover out-of-network services (unless it is an emergency).
Also, with an HMO, you must choose a primary care physician (PCP). That doctor makes all referrals for other providers.
PPOs do not require the use of a PCP. These plans offer more choices but have higher out-of-pocket costs than HMOs. Monthly premiums, as well as copays, will almost certainly be more.
Also, with a PPO, there is an annual deductible that you must meet. They have in-network providers (which cost less) and out-of-network ones (that will cost more).
Catastrophic plans offer low monthly premiums but, again, offer very little coverage.
4. Examine the Details
The COVID-19 pandemic resulted in 5.4 million Americans losing health insurance due to unemployment. But it does not take a pandemic to realize that the healthcare marketplace will always be in flux. In addition to changes to your own healthcare needs, there are many things that can affect what health insurance you have or need.
Benefits offered by the plan you have this year may change next year. It is why you should look at the details of each plan every year you re-enroll.
Do not assume that the “silver” marketplace plan you choose for next year is exactly the same as the coverage you are receiving now. And you may find that the price of the “gold” plan is now worth the extra money relative to the new benefits it offers. Always do your homework so that you will know you are getting the right plan for the money you are paying.
Make use of online resources. Much like the government Medicare Advantage plan ranking site, there is any number of resources online to help you compare plans. Be equipped with as much information as possible, so that you can make the right choice.
Do Not Wait
It is important for everyone, regardless of health or income, to have access to healthcare. And that means you need to have insurance.
While there are open enrollment times for a lot of government and private healthcare plans, major life events can affect these. For instance, if you lose your job, you become eligible for Medicaid (assuming you meet the other criteria), regardless of the time of year. Private plans also accommodate for such abrupt life changes.
Use the information above to assess what types of health insurance plans may be right for you and your family. Don't wait until you need it to have to get it. There is no reason not to get the ball rolling today. You and your family's health are worth it.
