Avoid These Traps When Shopping for Health Insurance

Avoid These Traps When Shopping for Health Insurance
December 24 01:00 2015

Health insurance is tricky to shop for. You pay a ton of money just to try to stay healthy, and if you get seriously sick or injured, you could still be on the hook for thousands more. Smart shopping can keep your expenses low, and give you more options for good care—if you know what to avoid.

Doing Whatever You Did Last Year

Always shop around. You may have a great plan already—or, let’s face it, the least bad of your options—but you won’t know that until you see what else is out there.

Many states let you auto-renew a plan bought through the health insurance exchanges, but this isn’t always a good idea. If you got a subsidy for insurance (like 84% of people who enrolled through the exchanges), your subsidy and thus your premium might change for the new year—making it less of a good deal.

That’s because the subsidies are calculated according to the price of the second-lowest cost Silver plan in your area. That might be a different plan, with a different carrier and a different premium cost, than it was last year. Even if your plan doesn’t raise its rates, the total ecosystem of insurance plans may have changed, and that affects how much you pay for your insurance. (There’s a full analysis of those numbers here.) If your income or other key information has changed, that can also affect your rates. Update your information on the exchange, and then browse the plans to see what’s available to you.

If you get your insurance from an employer that pays part of the cost of your premiums, that’s probably your best bet, but not necessarily. Again, shop around anyway. It’s possible that the subsidy on an exchange plan will create a better deal than what you’re getting from a stingy employer.

And finally, find out if your plan is grandfathered. Some old plans don’t have to follow all of the provisions of the Affordable Care Act. You might still have to pay for preventive care, for example, while the rest of us are getting it for free. You can call your insurance company and ask if it’s grandfathered: they’ll know what that word means, and they’re required to tell you.

Thinking a High Deductible Plan Is Useless

If you don’t buy insurance, you’ll have to pay a tax penalty. No biggie, you might say, I paid that last year and it wasn’t so much. Well, the amount is still increasing every year. In 2016, it’ll be 2.5% of your income or the average price of a Bronze plan or $695 per adult or $2,065 total—whichever is more. Since the penalty costs about as much as a cheap plan, you might as well buy insurance and get the benefits that come with it, even if it’s a high deductible plan.

If you think a high deductible is the same as paying out of pocket, think again. With car insurance, you’d be right: the deductible is the amount of money you have to pay out of pocket before your insurance kicks in. Health insurance uses that same word, but it means something a little different. You can rack up plenty of hypothetical charges that don’t dent your deductible at all.

For example, anything on the government’s list of essential health benefits is free to you, without touching your deductible. This is a massive amount of stuff, and includes almost every type of preventive care you can think of. It includes cholesterol screening, depression screening, and testing for sexually transmitted infections if you’re in a high risk demographic. It includes all the recommended vaccines for adults and children. For women it includes birth control of many kinds, including IUDs. It includes breastfeeding support and supplies. It includes all the routine assessments that happen at well-child visits.,,,

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