Healthcare coverage is critical to your finances as well as your health. Even if you are healthy now, an accident or sudden health issue could put both your well-being and your finances in jeopardy. In addition, if you do not maintain your medical coverage, you may be required to pay a penalty on your tax returns.
Healthcare open enrollment is here and over the next few weeks, you will likely have to make some very important decisions regarding your medical insurance coverage for 2016. Whether it’s your healthcare insurance options from your employer or union, your Medicare choices, or your Affordable Care Act options known as “Obamacare”, the decisions you make now will have a significant impact on how much your healthcare costs will be in the next year.
Around this time each year, open enrollment allows you to make choices about your medical insurance coverage without having a “qualifying event” such as losing your existing coverage, getting married or divorced, starting or leaving a job, etc. But for many of us, these decisions can be confusing. So how do you know if you’re choosing the right plan?
How to Compare Plans
When you compare plans to find the best one for your situation, there are a number of things you’ll need to look at:
- Monthly Premium: how much you pay for the coverage itself
- Deductible: how much you pay for your care out of pocket before the coverage begins, there may be separate deductibles for medical treatment and prescription drugs, there are high deductible health plans (HDHP) which allow you to take advantage of a pre-tax health savings account (HSA)
- Co-Pay: a set amount you pay each time you see a provider (a doctor, hospital, or lab for example) or purchase a prescription
- Co-Insurance: like a co-pay, but typically a percentage of the total cost as opposed to a fixed amount
- Maximum Out-of-Pocket Expense: the amount you would need to pay for the year before your coverage pays for all remaining expenses
- Formulary: list of medications which are covered by the plan
And of course, you’ll need to see if your providers are available so that you can see the doctors with whom you already have a relationship. Depending on the type of plan, you may only be covered for in-network providers (those who agree to a discounted rate with your insurer), or you may be able to see out-of-network providers for an additional cost. Also pay attention to whether you will need referrals from your primary care doctor in order to see specialists.
Employer Sponsored Coverage
If your employer or union offers coverage, your human resources department or union should inform you of your choices and the timeframe you will have to make your selection. These plans are usually group plans that are less costly than outside options and they are often subsidized by the employer. Premiums may be deducted directly from your paycheck, or you may need to make separate payments.
If you are an American 65 or older, disabled or a veteran, you likely qualify for Medicare coverage. Basic Medicare coverage must be selected during the first few months you qualify, but supplemental insurance coverage is chosen each year from October 15 through December 7. Supplemental insurance provides additional coverage compared to basic Medicare (either through a MediGap policy or a Medicare Advantage plan) and can also include prescription drug coverage.
You should have already received a complete guide to Medicare from the government which details your options and choices. You can also look for tailored options on the Medicare Plan Finder, including estimates of costs under each plan. If you need more assistance, you can contact Medicare at (800) 633-4227 (or (877) 486-2048 for the hearing impaired).
Finally, if you are satisfied with your existing Medicare coverage after reviewing any changes to your plan, you do not need to do anything to keep that coverage.
Health Insurance Marketplace Coverage (Obamacare)
If you do not receive coverage through an employer or Medicare, you can obtain medical insurance coverage through the Health Insurance Marketplace. Open enrollment runs from November 1 through January 31. There are a wide variety of plans, divided into Bronze, Silver, Gold and Platinum with varying coverage levels and premiums. What you will ultimately pay depends on your income and whether you can obtain tax credits to make these plans more affordable. To find out your available options, check out the Health Insurance Marketplace online. If you need more assistance, you can contact them at (800) 318-2596.
Health Care Sharing Ministry
While many have not heard about them, there is another option known as a health care sharing ministry (HCSM). These organizations enable the sharing of health care costs between members who have common religious beliefs. While this does not qualify as minimal essential coverage, members of these ministries are not required to have insurance under the Affordable Care Act, meaning they are not subject to the penalty (although they do need to file an exemption form). Before you sign up, be sure to understand the limitations, exclusions, and requirements of that organization. For more about health care sharing ministries in general, check out this article from US News & World Reports.
Healthcare coverage is so important and is now required for every American. Getting the right coverage will protect your health as well as your finances. Remember, medical costs are the number one reason for personal bankruptcy and having the right insurance can help to guard against it.
Crunch time is right now for healthcare open enrollment. So carefully consider your options and make the right decision for you and your family. You will benefit if you do, and may regret it if you don’t!
Have you made your 2016 coverage choices already?
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