Getting the best value for your insurance dollars requires a bit of research and decision making as we approach the 2015 health insurance open enrollment period. Keeping the following deadlines and figures in mind will help.
Deadlines
You can enroll in a new individual health plan only during the open enrollment period.
The open enrollment period for 2015 coverage in the individual health insurance market begins on November 15, 2014 and ends February 15, 2015. Coverage under your 2015 plan will begin on January 1 or later, if you enroll after that date.
You can enroll in a new individual health plan only during the open enrollment period. You may qualify for a “special enrollment period” if you experience a life event—such as job loss, marriage or divorce—that causes you to lose health insurance coverage.
Otherwise, if you lack coverage and do not enroll in a health plan before the end of the open enrollment period, you’ll be uninsured for the year, unless you qualify for an employer or governmental plan, such as Medicaid.
Coverage under your current health plan will end on December 31. If you like your current plan, you can simply renew it as long as your insurer continues to offer it.
If you have a grandfathered plan, it might have a renewal date other than January 1. A grandfathered plan must have existed on March 23, 2010 and cannot have been changed in ways that substantially cut benefits or increase costs. Insurers must notify consumers with these policies that they have a grandfathered plan. Grandfathered plans might lack some of the consumer protections required by the Affordable Care Act. However, they often cost less, so some people opt to keep them.
Dollars and Sense
Premiums: Premiums for individual health policies will increase an average of 7.5 percent in 2015, according to a survey of rate filings in 27 states and the District of Columbia by PricewaterhouseCoopers LLP. Your rates may vary greatly depending on your location and the type of plan you choose.
Deductibles: The premiums you pay will depend in large part on the deductible you select. The deductible is the amount you must pay for services your health insurance policy covers before it begins to pay your claims. For example, if your policy has a $1,000 deductible, it won’t pay anything until you’ve paid $1,000 out of pocket for covered health services. Deductibles might not apply to all services.
A health insurance deductible differs from other types of deductibles. In auto, renters and homeowners insurance, you don’t get services until you pay your deductible. However, many health insurance plans provide some benefits before you meet the deductible.
For example, all plans offered in the insurance marketplaces created by the Affordable Care Act must cover certain screenings, immunizations and other preventive services without requiring you to meet your deductible first. Many health insurance plans also cover other benefits, such as doctor visits and prescription drugs, even if you haven’t met your deductible.
Having health insurance can lower your costs even when you have to pay out of pocket to meet your deductible. Insurance companies negotiate their rates with providers; you’ll pay that discounted rate even if you haven’t met your deductible yet. People without insurance pay, on average, twice as much for care.
Out-of-pocket costs: Many people overlook the effect of out-of-pocket costs when calculating their total health insurance costs. Out-of-pocket costs, or cost-sharing, consist of all your medical care expenses not reimbursed by insurance, so you must pay them yourself. They include deductibles, coinsurance, and copayments for covered services, plus all costs for medical services that your plan doesn’t cover. Most health insurance plans put an annual cap on your out-of-pocket expenses. After you reach the out-of-pocket maximum, your plan will pay 100 percent of your covered medical expenses.
For 2015, the IRS set the out-of-pocket cost limit at $6,600 for individual coverage and $13,200 for family coverage. The maximum applies to in-network services and excludes any amounts you spend on premiums. If you have a health savings account-qualified high-deductible health plan (HDHP), please note that the maximum limits for HDHPs are a bit lower, at $6,450 for individual coverage and $12,900 for family coverage.
Out-of-pocket costs in Marketplace plans: The health insurance marketplaces offer four tiers of coverage: bronze, silver, gold and platinum. All plans might cover essentially the same benefits; what separates them is their “actuarial value.” This is the percentage of average costs for covered benefits that the plan will cover. Bronze plans have an actuarial value of 60 percent; silver plans have an actuarial value of 70 percent, gold plans a value of 80 percent, and platinum plans 90 percent. For a silver plan, then, you will pay approximately 30 percent of the cost of all your covered benefits. Please note that actuarial value is based on averages, so your actual cost-sharing could be higher or lower.
HealthPocket recently released a study of out-of-pocket costs in marketplace plans for 2015. Compared to 2014, deductibles will decrease for all plans except platinum plans. Bronze plan deductibles average $5,058; silver plans average $2,659; gold plans $1,127 and platinum plans $497.
Buying insurance involves tradeoffs. If you choose a plan with a lower deductible, you’ll have lower out-of-pocket costs. But you’ll pay more in premium. For many people, the choice depends on their tolerance for risk. If you prefer to avoid surprises, or if you lack a savings safety net to help you pay for unexpected medical expenses, then you might want a plan with a high actuarial value/low deductible.
If you buy a bronze plan for 2015, you will have a maximum out-of-pocket cost averaging $6,387 per year. A silver plan would lower your out-of-pocket maximum to an average of $5,589. A gold plan will have an average out-of-pocket maximum of $4,434, while a platinum plan would have an out-of-pocket maximum of only $1,624.
Good article