Health insurance is getting more complicated to navigate than ever. Below is a quick guide on what you need to know to apply for health insurance through the Affordable Care Act (Obamacare!):
The healthcare exchanges:
The healthcare exchanges are where you can actually purchase insurance coverage. The plan options vary by state, but many states have opted to use the federal government’s site, healthcare.gov, to run these “marketplaces.”
Start at healthcare.gov to find out where to purchase healthcare coverage for your state.
Quick deadline guide:
- You have until January 31, 2016 to apply for coverage.
- Apply by December 15th to get coverage by January 1st.
- Apply by January 15th to get coverage by February 1st.
- Apply by January 31st to get coverage by March 1st.
Penalties for not having health coverage (the greater of the two calculations):
- 2.5% of income, with a maximum amount equal to a bronze health plan OR
- $695 per person in your household, up to $2,085
In other words, not having coverage will cost you anyway!
Terms you need to know:
- Premium – your monthly payment for insurance coverage. Premiums can be as low as $200 and I’ve seen as high as $700 per month.
- Premium tax credit – the federal government is subsidizing the cost of the premiums for those making under a certain income in the form of a premium tax credit. Depending on your state, income, and number of dependents, you can qualify for lower monthly insurance premiums. Get an estimate of what you might qualify for here: https://www.healthcare.gov/lower-costs/. Keep in mind that if you end up making more money than you estimated, you might owe back some of that tax credit.
- Deductible – the amount you will pay out of pocket before your insurance starts to cover most of the cost. The deductible can be a little as $0 (but expect to pay a huge premium!). The maximum deductible you’ll see is $6,850 for an individual, $13,700 for a family. These also happen to be the maximum out of pocket maximums (see below).
- Out of pocket maximum – the total amount you’ll pay before insurance covers your costs 100%. After you hit your deductible, you may be responsible for coinsurance or copays (see below). After you hit your out of pocket maximum, you wouldn’t be responsible for any medical expenses that are covered by your insurance.
- Coinsurance – a percentage of the total medical cost you’re responsible for paying, usually between 20-50%. The insurance company will pay the rest. For instance, if your medical bill is $1,000, a 20% coinsurance means you pay $200 of this bill.
- Copay – a small amount, usually between $15-$75, that you pay every time you go to the doctor. These are more common with plans that have low or no deductibles. A copay might also kick in instead of coinsurance once you’ve hit your deductible and your insurance starts paying for most of the cost.
- In network vs. out of network – which brings us to in network vs. out of network. Most insurance on the health care exchanges only cover medical expenses in their network. This means that if your doctor is not in the insurance company’s network, they won’t help you with any of the medical costs. It’s all 100% out of pocket and full price.
- Metal level – these are the different plan tiers that are available, starting with bronze, then silver, gold, and platinum. As you can imagine, the higher the tier, the more expensive the coverage and the lower the deductible.
- Open enrollment period – usually starts in November of the current year and ends in January of the following year. This is the timeframe where you can apply for health insurance. If you don’t apply by this time and don’t qualify for a special enrollment, you’re out of luck.
- Special enrollment – if you have a big life change, like losing a job, losing health insurance at your job, getting married, having a baby, etc. you can qualify to apply or re-apply for health insurance at any point in the year.