This guide is for individuals looking to buy an individual health insurance policy for themselves or for their families. We’ll show you where to buy health insurance, how the process works, and how to choose the right health insurance for your unique situation.
Table of Contents:
The Two Basic Ways To Purchase Health Insurance
The Open Enrollment Period
Navigating the ACA (Obamacare) Marketplace
Types of Health Insurance Plans Available
How To Choose The Right Plan For You
Health Plan Examples
A lot has changed in the last few years. First and foremost, there’s no longer exclusions for pre-existing conditions. Rates can only be determined based on your age, your location and whether or not you use tobacco. Also, starting in 2014, having health coverage became the law. Those not enrolled in a plan received a penalty equal to 1% of their income and it will be raised to 2% in 2015.
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Two Ways To Buy Health Insurance
There’s two basic ways to purchase an individual health insurance policy: You can purchase private insurance like you’ve always been able to, or you can purchase coverage via the new Obamacare (ACA) Marketplace.
The ACA Marketplace is the resource set up by the government that allows people to compare and enroll in individual health insurance plans. Private companies have also created similar looking platforms to shop for plans, but the ACA Marketplace (also known as the public exchange) is the most popular. The primary difference between public and private exchanges are that public exchange plans must meet certain standards as laid out in the Affordable Care Act.
For the vast majority of people, we recommend purchasing health insurance via the ACA Marketplace, as it offers some key advantages over private insurance:
- If you are earning below 400% of the poverty level, which is currently a salary of $46,680 for an individual or $95,400 for a family of four, you are eligible for subsidies.
- It offers certain benefits that you won’t necessarily find on the private market, such as an annual out-of-pocket maximum. We’ll discuss this in more detail later in this article.
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Find out how much of a subsidy you qualify for:
There are a few scenarios, however, in which you may want to shop on the private market.
- If you want short term coverage (under 12 months) or bare bones, minimal coverage. These types of plans are generally not available through Obamacare. Note, however, that short term coverage and some bare bones plans do not count as minimal essential coverage and thus you may still face the penalty for not having health insurance. If you’re interested in one of these plans nonetheless, check out the options on a site such as eHealth.com.
- If your income is high enough where you don’t qualify for subsidies and want to purchase a high quality plan. Because of it’s wide array of policies and competitive prices, we still recommend checking out the ACA Marketplace. However, if you want the full range of options, consider speaking with a broker who can show you both private and public marketplace plans.
You can purchase ACA plans online, on paper or through a broker. We recommend using the online platform as it is faster and provides useful tools for comparing policies. We’ll show you how to do this later in the article. On the other hand, if you want to submit a paper application or use a broker keep these things in mind:
- Healthcare.gov has a list of organizations that can help you with the application process. Check the Local Help feature to find a certified application counselor near you.
- Depending on the state you live in, a federally certified broker may be able to assist you free of charge. Many state health resources websites offer a database of brokers. To find yours, Google search “[your state name] ACA certified brokers”
When Can You Apply – Open Enrollment & Special Enrollment
Because pre-existing conditions are no longer discriminated, insurance companies have to set guidelines for when you can apply for coverage. Otherwise people could just wait until they’re sick to buy insurance.
The 3-month period in which you can apply for health coverage through the ACA Marketplace is known as open enrollment. This year, open enrollment begins November 15, 2014 and runs until February 15, 2015.
However, there are some special circumstances in which you can apply for coverage even if open enrollment has ended. If you just lost health insurance or experienced family changes such as marriage or childbirth, you qualify for special enrollment. For a 60 day period following the event (i.e. loss of insurance, marriage, etc.) you can apply for ACA coverage. Some private exchange plans can also be purchased throughout the year.
Navigating the ACA Marketplace
The first step to purchasing an ACA individual health insurance policy is to access the Obamacare website and click “Get Insurance.” From there you’ll be prompted to select a state.
Some states have their own ACA health care websites while others use the federal service. Scroll to choose your state and you’ll either be linked to your state’s website or you’ll be prompted to continue on healthcare.gov. If your state runs it’s own exchange website, you mustuse that web service to apply for coverage. While state-run websites may look a little different and have slightly different offerings, the basic application process, plan levels, subsidies and benefits are the same.
Once you’re in the right place, you’ll have to make an account and verify your identity with a Social Security Number or document numbers for legal immigrants. You’ll also want the following information ready for the next step:
- Employer & income information for everybody in the household who needs coverage (i.e. pay-stubs or W-2 forms)
- Policy number of your current health insurance plan
- Information about any employer coverage plan you’re eligible for – be it from your own employer, a spouses’, a parent’s, etc.
With that information, you’ll be ready to fill out your health care application. At this step, you may be given the option whether or not you want to apply for financial assistance. By choosing “no” you can skip a number of questions. However, if you earn below $46,000 (or $96,000 for a family for a four) it’s worth filling out the extra information as you may qualify for some benefits. Once the application is complete, you’ll move onto choosing a plan.
Types of Health Insurance Plans: The Basics
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While browsing through plans on healthcare.gov or your state’s marketplace, one of the first things you’ll probably notice are the different levels of plans – Bronze, Silver, Gold and Platinum. What these names refer to is basically how much of your health costs you will have to pay out of pocket and how much your health insurance will cover.
All health plans have a variety of costs.
- The premium is the monthly fee you pay for coverage.
- The deductible is an amount you must pay in medical bills before insurance kicks in.
- A co-pay is a fixed amount you must pay for doctor’s visits
- Co-insurance is the rate your provider pays vs. what you pay for a given medical bill.
The marketplace adds up all these costs (except for the premium) to determine what level a plan belongs in. On a Bronze level plan, for example, you’ll pay about 40 percent of your medical expenses (in addition to premiums), while your insurance provider pays 60 percent. On a Platinum plan you only pay about 10 percent and your provider pays 90 percent. Silver and Gold are in between.
|Rate of Coverage for ACA Plans|
|Percentage paid by Insurance||60%||70%||80%||90%|
However, the less you have to pay out-of-pocket, the higher the premium. For example, if a Bronze plan costs around $3,000 a year in premiums, a Platinum plan will probably cost around $4,500 or more.
Aside from the cost of premiums and the percentage of cost-sharing, the levels have no essential differences. In other words, a platinum plan does not necessarily mean higher quality care than a bronze plan, and vice versa.
Out of Pocket Maximum & Other Benefits
No matter which level you choose, Obamacare plans have the benefit of an out-of-pocket maximum – a limit on the amount of money you could potentially need to spend on health care in a given year. The out-of-pocket maximum varies from plan to plan, but can be no higher than $6,350 in 2014. In other words, once you spend $6,350 in deductibles, co-pays and coinsurance (but not premiums), your insurance company will cover 100 percent of costs for the rest of the year.
Obamacare plans also guarantee coverage of the 10 essential health benefits (EHBs). This includes services like hospitalization, maternity and newborn care, prescription drugs and many others. Also, preventive care, which includes screening for illnesses, is always free with an ACA plan. While many private market health plans also cover EHBs and preventive care, it’s not required by law as it is for ACA plans.
Choosing Your Health Insurance Plan
So how do you know which plan is right for you? The basic equation here is juggling how much you want to pay upfront (the premium) vs. how much you’re prepared to spend later (the deductible). To decide that, the first question is:
How Much Medical Treatment Do You Anticipate?
If the answer is little (i.e. fewer than 3 primary care doctor visits, no major procedures), then you probably don’t need a high rate of coverage. Consider a bronze plan with a high deductible and low monthly premiums. You will have higher out-of-pocket expenses for things like an emergency room visit or specialist appointment. But you’ll pay a lower premium (or monthly fee) for coverage. Plus, with an out-of-pocket maximum of $6,350, you’ll be protected from colossal medical bills in the event of major injury or illness.
If you anticipate needing regular medical treatment due to a chronic condition, childbirth or anything else, then consider a plan with a higher rate of coverage. The higher monthly premium might be worth it in the long run considering the amount you save on doctors visits and treatment.
What Type of Network Do You Want?
Another factor to consider is the type of network your policy gives you access to – HMO, PPO, etc. In a nutshell, a PPO will often let you see wider range of doctors than an HMO. However, an HMO will often have lower deductibles and thus a higher rate of coverage. EPO and POS plans fall in between. For more on the subject, check out our guide on choosing a network.
Do You Qualify For Subsidies?
The ACA Marketplace offers subsidies for individuals and families who earn less than 400 percent of the poverty level (which is $46,680 for an individual or $95,400 for a family of four in 2014). You can potentially receive a subsidy on both the cost of your premiums and your out-of-pocket expenses (known as cost-sharing reduction). However, whereas the subsidy for premiums can be applied to any level plan (bronze silver gold or platinum) the cost-sharing benefit can only be applied to silver plans.
It’s important to note that if you or somebody in your household is eligible for group coverage on an employer plan, you may be excluded from subsidies. The reason being that if a group plan is available to you or your family, you’re expected to take advantage of it. Exceptions here are if your employer’s plan is too expensive (more than 9.5% your household income) or if it doesn’t meet the health care law’s minimum standards. In those scenarios you’ll still qualify for subsidies on the ACA Marketplace.
Most Popular Option
So far, silver plans have been the most popular choice among consumers with bronze level plans coming in second. While silver plans are certainly attractive for those who qualify for cost-sharing reduction, there’s a strong case to be made for bronze plans.
As detailed by Financial Advisor Jason Hull, the annual out-of-pocket limit prevents bronze plans from actually costing that much, even in the event of high medical bills. Thus, due to their lower monthly premiums, bronze plans can be the financially wisest choice.
Want our free help choosing a plan? Call (800) 609-8613
Sample Health Insurance Costs
To give you an idea of the average cost of ACA Marketplace plans, we’ve listed several life scenarios. But first, a few important notes:
- All these rates are based on non-smoking applicants. If you do smoke, your premiums could be up to 50 percent higher.
- Rates vary depending on your location. While most individuals will find costs similar to the averages below, it can actually be quite a bit higher or lower. If you live in an area with fewer-than-average hospitals or specialists, for example, rates may be higher. Check out this NPR analysis of where you can expect heightened costs for coverage.
Single, in your 20s and earning $25,000
At this salary, you will qualify for subsidies. Expect to pay around $1,750 in annual premiums for a silver plan and around $1,300 for a bronze plan after benefits.
If you choose a silver plan, you’ll also qualify for subsidized deductibles, co-pays and co-insurance. You’ll only need to pay for about 27 percent of medical bills (versus the standard 30 percent for silver plans). This subsidy will not apply to plans of any other level (bronze, gold, platinum).
People under 30 years old can also enroll in a catastrophic plan. Such plans usually require you to pay the full price of doctor’s or hospital bills. But you’re given an out-of-pocket maximum, which will ensure coverage in case of a major injury or illness. Also, catastrophic plans on the ACA cover 3 primary care visits a year at no cost as well as free preventive care.
Single, in your 30s and earning above $46,000
You won’t qualify for any subsidies. Expect to pay around $3,100 in annual premiums for a silver plan and around $2,600 for a bronze plan.
Married with two children, covering your family
If your household income is above $95,400, you won’t qualify for subsidies. Expect to pay around $9,700 in annual premiums for a silver plan and around $8,000 for a bronze plan.
If your household income is below $95,400, it’s likely you’ll qualify for subsidies. For a household income of $75,000, expect to pay around $7,100 in annual premiums for a silver plan and around $5,450 for a bronze plan after benefits.
Married, in your 60s, covering you and your spouse
If your combined income is above $62,000, you won’t qualify for subsidies. Expect to pay around $14,600 in annual premiums for a silver level plan and around $12,000 for a bronze level plan.
If your combined income is below $62,000, you may qualify for subsidies. For a combined household income of $55,000, expect to pay around $5,200 in annual premiums for a silver level plan and as little as $2,700 for a bronze level plan after benefits.
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Finishing your Enrollment
If you want to take a few days to decide on a policy, you can log off and re-access the website at any time. Your application will continue where you left off. Note, however, that open enrollment ends February 15, 2015, so be sure to get enrolled before the deadline.
Once you’ve selected a plan, you’ll pay the first month’s premium directly to the insurance company – NOT the marketplace. From here on out, you’ll want to contact your new health provider for any questions regarding the plan, payment or coverage. However, you can still log in to your marketplace account to view a summary of your coverage.
Looking for the best health benefits package for your employees? Gusto will look at hundreds of health plans and offer you the best choices for your budget and your employees. Click here to visit Gusto and schedule a free demo.