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Buying Health Insurance: A Step-by-Step Guide

Buying Health Insurance | Very Good Coverage

Buying health insurance is a priority for all. But choosing the right policy for you and your family can be overwhelming if you don’t know how to go about it.

Buying health insurance can feel ambiguous and confusing for first-time health insurance buyers or for those who do not know how health insurance works. This article offers a comprehensive guide on how to buy health insurance. It delves into the importance of having health insurance while highlighting the huge financial implications of being uninsured. It also offers a clear step-by-step guide on how to buy health insurance so that you make.

The first step is to analyze your biggest health requirements. You can then choose your health plan marketplace before comparing types of health insurance plans. You should then look at health plan networks, compare out-of-pocket costs before finally reviewing the coverage and narrowing it down to the benefits offered.

To offer the right guide and the most accurate information, we analyzed financial data from the Center for American Progress on how health insurance has improved in the past decade. We also analyzed data on health care costs from CDC and the health insurance costs from the federal government’s insurance marketplace eHealth.

Why Do You Need Health Insurance?

If there’s one thing that you want to own but hope to never use, it is health insurance. It is no longer an option but a necessity. But even with this, many people are asking; why do I need health insurance?

Well, there are several compelling reasons why having health insurance is of great importance. They include:

Rising Costs of Medical Expenses

Unquestionably, the costs of medical expenses, especially prescription drugs in the US have been rising. If anything, the costs of medical expenses in the US are far much higher than in many other parts of the world. To make it even worse, these costs are rising each year and could be unattainable if you do not have health insurance.

Below are some figures to show the rising costs of medical expenses in the US in the last 10 years.

From the above data, it’s very clear that the costs of medical expenses will continue to rise at least in the near future. The cost is projected to rise by 5.3% in 2021 and is likely to increase by $640 from 2020. As such, the projected average cost of individual health insurance in 2021 will be just over $12,722

Without health insurance, you might have to deal with extremely costly medical services as shown above. Worst still, most of these medical services could be unaffordable when you’re ill. But if you have health insurance, you’ll only have to pay a fraction of what you’d otherwise have paid.

Financial Protection during Medical Emergencies

It might be true that you’ve never been sick or don't have a history of illnesses or chronic diseases. But have you ever imagined what could happen when you find yourself in a medical emergency?

Well, nobody is immune to medical emergencies and you can find yourself in a situation where you need urgent surgery or even prolonged specialized care. Believe it or not, you’re most likely to become bankrupt if you find yourself in such a precarious situation and do not have health insurance.

The table below offers some perspective.

From the above analysis, it’s quite clear that it’s generally more expensive to access health if you’re uninsured than if you’re insured. It doesn’t matter the type of illness you’re suffering from, being uninsured leaves you with the prospect of facing huge medical debts and perhaps medical bankruptcy.

On the other hand, having health insurance will significantly lower the costs of healthcare. Even though the costs of medical expenses are on the rise, having health insurance can lower the burden and make it a lot easier to access healthcare.

In essence, health insurance is of great importance in the sense that it offers you financial protection during medical emergencies. Generally speaking, most health insurance plans have annual out-of-pocket limits. After meeting that limit, your insurance provider will cover the full cost of your care as long as you pay your monthly premiums.

So even in the worst possible scenario, there’s a maximum limit that you have to pay in a calendar year. With that in mind, having health insurance offers financial protection and ensures that you do not become medically bankrupt or go into medical debt.

You, therefore, have to always keep in mind that medical emergencies can occur to anyone and can cost thousands of dollars or even more. So even if you take good care of yourself, you may be involved in an accident or get diagnosed with serious illnesses and your health insurance could be the only savior.

Preventive Care

It’s a lot easier to take preventive care and services such as medical checkups and screenings for granted if you do not have health insurance. This means that you could miss out on the opportunity of noticing, finding, or diagnosing a minor issue that could later translate to become a full-blown medical problem.

Without health insurance, it’s also very easy to miss routine treatments because you believe you’re saving money. You can imagine how unwise it would be to skip cancer screenings in the name of saving money only to have cancer because it wasn’t spotted earlier.

As such, preventive care, which is an essential part of all health insurance plans, is the best solution if you want to avoid serious health issues and the accompanying costly medical expenses. Remember, you’ll be more willing to make good use of your health insurance plan by going for routine preventive care.

The Affordable Care Act

Before 2019, the Affordable Care Act (ACA) made it mandatory for every American to have health insurance. However, the individual mandate tax penalty for not being insured was removed and you won’t have to pay a tax penalty for not having health insurance coverage unless you live in DC, CA, NJ, MA, and RI.

But even with the removal of the tax penalty, the ACA has streamlined the way people can access health insurance coverage and it’s now a lot easier to get coverage. More importantly, health insurance can help you secure your health and finances.

Here’s how the ACA has affected the individual health insurance marketplace.

Peace of Mind 

Your peace of mind is vital to your overall well-being. Having health insurance gives you peace of mind by providing financial protection if you have a serious accident or illness.

Why Do Many Americans Go without Health Insurance

But even with the numerous benefits of having health insurance, many Americans remain uninsured. According to a report by the US Census Bureau, around 9% of the country’s population, which is nearly 28 million Americans, do not have health insurance.

Here are some of the main reasons why many Americans are uninsured.

The High Rates of Unemployment

Many Americans are unemployed. They tend to struggle to put enough food on the table for their families, so health insurance isn’t a priority. In fact, many unemployed people often ask; why should I think about getting health insurance yet I do not have a job?

Truth be told, many employers in the US offer health insurance to their employees. It’s, therefore, not surprising that many Americans choose to wait until they get a job to get health insurance.

But thanks to Obamacare, you can access health insurance even if you’re unemployed. In other words, you do not have to wait until you get employed to get health insurance. Well, you can be eligible for different types of health insurance coverage including:

  • Medicaid – You can qualify for Medicaid if you’re unemployed or underemployed
  • COBRA – Although COBRA might be an expensive option for you given that you’ll have to pay the full premium for your group plan, it can be an option if you recently lost your job and are still looking for alternative coverage in the marketplace.

The High Costs of Health Insurance Premiums

According to a report by the US Census Bureau, almost 50% of Americans who are not insured choose to go without health insurance because they cannot afford what they believe to be the high costs of health insurance premiums.

If anything, many Americans lead a hand-to-mouth lifestyle and direct their paychecks to more immediately pressing expenses including food, rent, and other immediate bills such as water and electricity bills. As such, they often defer medical care and health insurance because they believe they cannot afford the monthly premiums.

Honestly speaking, the costs of premiums charged by many health insurance companies seem to be unfair for an American who is struggling to put food on the table. That’s why low-to-mid-income families choose to deal with other pressing issues and defer health insurance.

Migrant Status

Another main reason why many Americans are uninsured is what can be simply termed as migrant status. For one to get health insurance in the United States, he/she must be a legal US citizen, be a permanent resident, an international student, or a legally present migrant.

You’ll have to go without health insurance if you do not fall in the above-mentioned categories. The only exception is if you live in California where you can qualify for Medi-Cal until you attain the age of 26.

Here’s a brief look at the percentages.

As you can see a huge percentage of those who go without insurance do so because they are unemployed. Others may not be eligible for coverage based on their migrant status while others choose to go without health insurance because they do not see the need. Well, this can be a precarious situation particularly if they fall sick.

The best thing to do is to learn more about health insurance, learn its importance, do some research, and find a plan that can meet your personal needs. No matter your situation, there’s always the right health insurance plan for you.

Types of Health Insurance

When looking to buy health insurance coverage, it’s vital to know the different types of health insurance that are available to you. They include:

Individual Health Insurance

Probably the most common type of health insurance, an individual plan basically refers to buying your health insurance plan independently either in the marketplace or from an insurer. In other words, you are responsible for paying the premiums and everything else as there’s no group or employer involved.

Coverage Offered

In the past, individual health insurance plans excluded some types of coverage such as coverage during pregnancy and you had to buy them separately. But thanks to Obamacare, all health insurance companies are mandated to provide essential benefits including:

  • Emergency services
  • Hospitalization
  • Ambulatory services
  • Pregnancy, maternity, and newborn care
  • Prescription drugs
  • Mental health and substance use disorder services such as counseling, psychotherapy, and any other behavioral health treatment
  • Laboratory services
  • Rehabilitative and habilitative services
  • Pediatric services
  • Preventive and wellness services

Before Obamacare, health insurance companies could deny individuals coverage based on their pre-existing conditions but that’s no longer the case. Today, the law dictates that everyone is given the same and equal access to health insurance regardless of their pre-existing medical conditions.

Here’s a percentage of individual health insurance plans not covering some benefits before Obamacare.

obamacare-benefits-before-aca

Group Health Insurance

Group health insurance plans are generally offered by employers, government agencies, and workers’ unions. Group health insurance tends to be more affordable than individual plans since the premiums are pooled together.

Small group plans (those that cover fewer than 50 full-time employees) are required to offer the same essential health benefits as individual health insurance plans. On the contrary, this rule doesn’t apply to large group plans though they generally offer comprehensive coverage.

Types of Group Plans

The two types of group health insurance plans include:

Self-funded Group Plan

Under this type of group plan, the employer or the group provider pays for all covered medical costs and assume all the risks involved.

Fully Insured Group Plan

Under this type of group plan, the employer or group provider partners with the health insurance company and only pays the insurer the premium to manage its members’ health insurance claims.

Unlike self-funded group plans, which have premiums kept in a reserve, fully insured group plans are designed in such a way that the insurance company assumes the administrative and legal responsibilities of managing the health claims of the employees.

Some advantages of group insurance plans include:

  • Your family may be included in the employer’s group insurance if they are under 26.
  • It’s cheaper than individual health insurance plans
  • Group plans tend to be more comprehensive than individual plans
  • You may pay the same premiums and fees while the risk is distributed among a large group
  • Group plans improve the overall quality of the job market

How to Buy Health Insurance – a Step-by-Step Guide

Here is a step-by-step guide on how to buy health insurance in the United States.

Assess Your Healthcare Needs

The first and probably most important step in buying health insurance is evaluating your healthcare needs. What are your topmost requirements? Do you want a personal policy or are you thinking about including your family members? Do you have small children in the family or are you planning to include an aging loved one?

You should consider your health conditions such as pre-existing illnesses and whether or not you plan to get pregnant in the calendar year. Such factors may help you choose the right health insurance plan for you and your family.

For example, you have to know the number of family members that you want to include in the plan as well as the age of the family members. Such factors can help you consider the best plan and calculate the amount of premium that you’ll be paying. In essence, it’s important to know your healthcare needs and those of your family members and choose a health insurance plan based on those needs.

Choose a Health Insurance Plan

Many people with health insurance in the United States get it through their employer’s group plans. If you are one of such people, then you might not need to buy health insurance from the government health insurance marketplace.

But if you are not in a group insurance plan or just looking for an alternative health insurance plan, you can consider buying an individual health insurance plan from the government marketplace.

You have the option of using the federal government’s marketplace or your state’s marketplace. You can go to HealthCare.gov and enter your ZIP code. You’ll be redirected to your state’s marketplace if there’s one otherwise you’ll use the federal marketplace.

You also have the option of buying health insurance directly from a health insurance company. You have to keep in mind that you won’t be eligible for premium tax credits if you choose this option.

Compare Different Types of Health Insurance Plans

You also have to remember that there are different types of health insurance plans that you find in the marketplace. You’ll definitely encounter a lot of acronyms including PPOs, HMOs, EMOs, or POS plans. These are essential in determining how you get your coverage and care.

Here are different kinds of health insurance plans. You should put your needs and those of your family under scrutiny when comparing these different types of health insurance plans.

You should consider the amount and type of treatment that you’ve received in the past. It may be impossible to predict the cost of medical expenses in the future but at least you should be guided by past trends so that you can make an informed decision.

Here’s a table that compares various health insurance plans.

If you decide to choose either POS or HMO plans, you have to keep in mind that you’ll always have to get referrals from your primary caregiver. It has restrictions that might limit you from seeing other specialists or doctors outside your network. However, these plans are among the cheapest and can be ideal for you if you’re on a budget.

Again, POS and HMO plans can be better if you have no problems seeing a primary doctor who will manage your care. You get to do less work as the doctor will coordinate every service that you get. While POS allows you to go outside your network, you have to get a referral from your doctor to minimize the out-of-pocket costs.

But if you want to choose your own specialists and even go outside the network, a PPO or EPO might be your ideal option. A PPO will be an ideal option if you live in rural areas where getting a doctor or a specialist is difficult and you may be forced to go outside your network.

On the other hand, you can choose to go with EPO if you live in a large city where you can easily find medical providers within your network. Better still, EPOs are a bit cheaper as they help you minimize the out-of-pocket costs that are often associated with going outside your network.

As far as HDHPs are concerned, you can be in any of the above-mentioned plans but you’ll have to follow rules relating to HSA. They typically have lower premiums but with higher out-of-pocket costs. This type of plan will qualify you for HSA, which is a tax-advantaged account that can help you save towards your medical expenses.

Compare Different Health Plan Networks

Your costs are lower when you choose an in-network doctor since they provide services based on an already agreed-upon rate. On the other hand, your costs might be much higher if you go outside the network as doctors may charge you without considering any agreed-upon rate.

So if you have a preferred doctor that you would want to see, it would be ideal to ensure that he/she is within the network that you choose. But if you do not have a preferred doctor, it may be wise to choose a large network that gives you more choices. A larger network can be particularly essential if you live in a rural area as it makes it a lot easier to find a doctor who will be in your network.

Compare the Out-of-Pocket Costs

It’s important to note that your out-of-pocket costs are as important as your premiums and even the network that you choose. When choosing any health insurance plan, you should make sure that it clearly outlines the out-of-pocket costs that you’re expected to pay.

With that in mind, it may be essential if you become conversant with some of the most important health insurance terms including premium, deductibles, covered costs, copayments, coinsurance, out-of-pocket maximum, and formulary.

In short, you have to know the above-mentioned parts of your health insurance plan and how they may affect the type of care that you receive. You also have to keep in mind that your out-of-pocket expenses will be higher if your monthly premiums are lower and vice versa.

The idea here is that you should narrow down your choice based on your out-of-pocket costs as well as your premium. Remember, you can go for a plan with lower out-of-pocket costs if:

  • You’re in good health and rarely sees the doctor
  • If you can afford a plan with higher monthly premiums
  • Young and in good shape

On the other hand, you can go for a plan with higher out-of-pocket costs if:

  • You have a health issue and anticipate seeing the doctor regularly
  • You’re expecting to have a baby
  • You take expensive prescription drugs regularly
  • You’re diagnosed with a chronic condition such as diabetes or cancer
  • You anticipate going for surgery during the calendar year
  • You’re old and prone to age-related diseases

Shop around and Compare Benefits

By now, you should have narrowed down your options to a few health insurance plans. You should check the benefits that your chosen option offers and determine if the plans cover a wide range of services that you require in your health insurance plan. You have to remember that some plans offer better coverage in terms of the services and essential benefits that are offered.

The most important thing is to ensure that you’re getting the best benefits for your needs. This is why you shouldn’t skip this important step as you could miss on a health insurance plan that is better suited for your needs and those of your family.

Some of the most important things to consider when comparing benefits include:

  • What are some additional things that are covered under this plan?
  • What could happen if I get sick when I’m abroad?
  • What are some of the maternity services that are covered in the plan?
  • Which types of drugs do the plan offer for my condition?
  • What’s the signup process?

Factors to Consider When Shopping for Health Insurance

Here are a few important factors to consider when shopping for the right health insurance for you.

Premium

It’s very understandable that many people often zero in on insurance premiums and tend to forget about other health insurance costs. Well, premiums are the most obvious expense when it comes to health insurance, so it should always be on top of your priority. And while it’s essential to find a health insurance plan that fits within your budget, going for the cheapest plan may not be the best idea.

Low premiums generally come with higher out-of-pocket costs and this would mean that your health insurance costs are higher in the long run. With that in mind, premiums should be one criterion to use when choosing the right plan.

Out-of-Pocket Expenses

Almost all health insurance plans come with out-of-pocket costs. For example, the deductible is the amount that you have to pay upfront before the insurance company begins paying for the costs of care. There may also be copayment and coinsurance once you’ve paid your deductible.

Prescription Drug Coverage

It’s essential to know the specific prescription drugs that are covered in your health insurance plan. Many insurers use formularies to categorize prescription drugs into various tiers. For example, brand-name drugs might cost more while generic drugs may have a lower copay.

To this end, buying health insurance shouldn’t be a difficult process. You need to get a plan that works best for your needs and those of your family. This platform is a great place to start. You can call us on 877-790-2569 and speak with a licensed insurance agent.

About THE AUTHOR

Greg McKnight

Read more about Greg McKnight

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