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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.
Basically, if you’re healthy and only visit the doctor for screenings and preventive care, almost everything is covered at no charge, even on those high deductible plans. The only catch is that you have to use your insurance plan’s network, and for some of these benefits you have to meet certain requirements (for example, you have to be over 50 to get free colorectal cancer screening, and you have to be a baby to get the developmental screening for babies.)
Even when something does take a bite out of your deductible, you’re better off having the provider send the bill to your insurance anyway, before sending it to you. That’s because insurance companies can usually get a provider to knock off part of the bill. These savings can be substantial. I got a bill once that said my knee surgery cost about $42,000, but that they made most of that disappear so my insurance company and I would, together, owe roughly $2,000 for the surgery. If I had no insurance, I would have gotten a bill for the original amount and never would have guessed that I could negotiate it down that far.
Not Taking Advantage of Health Savings Accounts
To be clear: high deductibles suck. They represent one side of a tradeoff, though: high deductibles come with lower premiums (monthly payments) and vice-versa. In some cases, a high deductible plan might actually make more sense than one with a lower deductible.
For a this kind of plan to be a smart option, you should have enough in your emergency fund to cover the deductible. There’s a special type of account meant for exactly this purpose: the Health Savings Account (HSA). Since your premiums are lower with a high deductible plan, you can (hopefully) afford to put a few hundred dollars a month into the HSA. Then when you get hit with medical bills, you can pay them with that sweet, sweet tax-free money.
Unlike the similar-sounding FSA, the money you put into an HSA is yours forever. You can use it next year, you can withdraw it tax-free when you retire, and you can take it with you when you change jobs. (You can even withdraw from it for non-medical expenses, but you’ll pay a tax penalty when you do.)
The downside is that sometimes expenses might hit when your HSA is running low. For example, if you open an HSA today but break your leg tomorrow, you won’t have enough money in the account to pay all of your costs. If you had a high premium plan, you would be in better shape. So HSAs make high-deductible plans bearable, but to find out if a particular high-deductible plan is right for you, you’ll have to do the math yourself, and consider how much risk you’re comfortable with.
Not Checking Who Is in-Network
Some plans save money by having a very small network. This may be a tradeoff you have to make to get an affordable plan, but you’ll want to make sure your current providers are in-network.
Check what specialists are available, too. A study published in JAMA Dermatology found that many of the dermatologists listed in narrow networks’ directories were unavailable: either dead, retired, not reachable by the phone number in the directory, or booked solid for months. Another study in JAMA Internal Medicine found similar results for other specialties. So if you think you might need a specialist’s care in the coming year, don’t just rely on a listing in the plan’s directory: Actually call a few and make sure they are able to accept you as a patient.
Even if your favorite providers are in-network, there is another potential problem. It’s not just doctors that can be in or out of network, but facilities too. If your doctor does surgeries at two different hospitals in town, it’s possible that one location is covered and the other is not.
It’s also possible to be treated by an in-network doctor at an in-network hospital, but still have other people involved—say, an anesthesiologist—who are out-of-network. Before you have a procedure done, it’s a good idea to ask if everybody involved will be in-network. Although you can’t solve this problem while shopping for insurance, it’s good to be aware of this downside of narrow networks.
What you can look at when shopping is the out-of-pocket maximum. The law mandates a maximum of $6,850 for an individual or $13,700 for a family, but that only applies when you stay in your network. Outside the network, caps can be horrifically high—$50,000 for a family isn’t out of the question. And many plans have no out-of-network cap at all.
Going It Alone
You’re not alone when you’re shopping for insurance. On the exchanges, you can get free, local help, either through healthcare.gov or your state’s equivalent.
You can also comparison shop through a web broker like HoneyInsured or HealthSherpa. Most brokers only require a few bits of information for you to get started comparison shopping. We like that HoneyInsured asks how much risk you’re willing to take on (to decide between high and low deductible plans) and their predictions of how much you’re likely to spend if you have a large medical expense. They also recommend one plan over the others based on what you’ve said your expenses are likely to be, and plot out premiums and deductibles on a graph like the one above. HoneyInsured only operates in a few states, though. You can find a full list of authorized web brokers here.
However you shop for insurance, make sure you’re considering all your options, and calculating the tradeoffs. The variety of plans and the huge amounts of money you’re dealing with can make it hard to think straight, but avoiding these traps could help you make some smart decisions.
Illustration by Sam Wooley.
Vitals is a blog from Lifehacker all about health and fitness. Follow us on Twitter here.
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