Health insurance is probably one of the largest items on your budget, after housing costs. But it’s essential—paying for your healthcare costs directly could be even more expensive. Choosing the cheapest health insurance available could save you thousands of dollars a year, but be careful that you still choose a plan that covers all your needs.
Let’s look at a few of the options you can choose from.
Employer Provided Plans
If you work full time for a company that employs over 50 people, it should provide you with at least one health insurance option. The quality of those choices varies wildly, as does the portion of the premium you’ll have to pay.
Enrolling in your employer’s health insurance plan is usually the best option, especially as you aren’t eligible for marketplace credits if you have a qualifying option through work.
The first important question to answer about your job’s insurance plan is who it covers. Will it only cover you, or your spouse and children also? Next, will it cover your whole premium or only part?
If you have a number of options, consider the pros and cons of each. A high-deductible plan may have a lower premium, but if you are sick, you’ll pay for much of the costs out of pocket. A lower-deductible plan will cost more upfront, but you won’t have to worry about large medical bills before insurance kicks in.
You may have the choice of an HMO or a PPO. An HMO requires you to choose a primary care provider and visit them first for a referral before you can see any other providers. A PPO, on the other hand, allows you to visit any doctor in the network. Often, HMOs have higher deductibles but lower costs at the point of service.
Lastly, consider what network covers the hospitals in your area and the doctors you use. If you work far from your home, the insurance your employer offers may not have providers convenient to you. Or, if there is a doctor or facility you already use, you may want to choose a network that covers them, even if it means paying more.
Marketplace Health Insurance
What if the health insurance your employer offers you doesn’t work? What if you don’t have insurance through your work? Then it’s time to turn to the health insurance marketplace.
You can find marketplace plans on HealthCare.gov. Normally customers can only enroll in a marketplace plan during open enrollment, which comes in November and the first half of December. However, if you’ve just lost your insurance, had a baby, gotten married, or moved, you may be eligible for a special enrollment period.
If your income meets certain limits, you may be eligible for tax credits which reduce the cost of marketplace insurance. The cutoff is four times the poverty level, so it’s worth it to apply even if you don’t think of yourself as low-income. But these credits are only available to people who don’t have qualifying health insurance from their employers.
Once you’ve entered the marketplace, you will choose plans similar to those employers might provide: Health Maintenance Organization (HMOs) or Preferred Provider Organizations (PPOs), with high or low deductibles, from various providers. Marketplace insurance is ranked as platinum, gold, silver, or bronze. Platinum plans have the highest premiums and lowest deductibles, while bronze plans have a low premium but a high deductible. Choose a premium you can afford, but keep in mind you will need to pay the whole deductible before the insurance kicks in.
Health Savings Accounts
Paying for your own healthcare costs until you meet your deductible can drain your savings. Enter health savings accounts (HSAs), which allow you to save money for any healthcare expense with pre-tax contributions.
Anyone who has a high-deductible insurance policy can have an HSA. If your HSA is through your employer, you can contribute to it with pre-tax dollars. If you contribute on your own, you can deduct those contributions on your taxes. You can contribute $3,550 to your HSA yearly, or $7,100 for families.
Spending from HSAs is also tax-free. But you can only use your HSA to pay for medical expenses, such as doctor visits, prescription drugs, or even dental care.
Choosing Health Insurance
There are many factors that go into choosing the best health insurance for your family. How much you can afford monthly, how much healthcare you tend to use, and how you prefer to choose a doctor all factor in. A financial advisor can help you sort through the options available to you and pick the option that works best for you and your family. Contact us to be matched with an advisor who knows their way around the challenges of the health insurance market.
