When I transitioned to full-time freelancer a few years ago, I felt a jumble of excitement and nervousness. Taking the leap from working a desk job with benefits to solopreneurship was no doubt thrilling, but it also came with a bunch of added responsibilities and costs. One such expense that needed to be addressed pronto was paying for my own health insurance.
While not exactly on my "awesome stuff to do list," I knew that being hasty about picking a plan would lead to making a regrettable, poor choice. I made sure to spend plenty of time to shopping around to see what options were out there.
Here’s how I went about deciding which health care plan to purchase:
While Open Enrollment wasn’t until November, because I lost my health coverage after leaving my job in August I qualified for Special Enrollment and was able to shop for a plan early. I had 60 days to sign up for health insurance, otherwise I would have to wait until November. And while I had two whole months to enroll, I just didn’t feel comfortable going without health insurance for too long.
Health insurance tiers
As I live in Los Angeles, I poked around for rates on Covered California, the local state exchange offering four "metal" tiers: Bronze, Silver, Gold, and Platinum. Bronze plans have the lowest monthly premium but higher deductibles and out-of-pocket maximums, while Platinum plans have the highest monthly premium but lower deductibles.
PolicyGenius now has a better tool for comparing rates no matter where you live (it shows all available plans both on and off the ACA exchanges in your area, lets you set your personal priorities to find the best plan, shows you how much subsidy you qualify for under the ACA, and even tells you if your doctor is in-network for the plan you’re considering). But this was back before the PolicyGenius health insurance shopping tool launched. Unfortunately, I did not qualify for a subsidy (sadface).
Past medical history
When I first hopped onto the Covered California site, I was asked what type of medical service I expected to use for the next year, which ranged from low use (1-2 doctor visits a year, no to brief prescription medications), to very high use (i.e., a hospital stay, more than six doctor visits with lab tests, very high cost, ongoing medical prescriptions).
I thought about when I went to the doctor and why. I’d say I fell toward the center of the spectrum. I’m not someone who swears off seeing a doctor unless I’m on my deathbed, but I’m not a full-blown hypochondriac, either (okay, maybe sometimes).
I mainly went the doctor for routine checkups, and the occasional infection. (Trust me, I’ve had my fair share of bizarro finger burns which have led to gnarly, full-blown skin infections.) I didn’t have any chronic medical conditions, just high cholesterol and blood sugar, which required me to go in for lab work a few times a year. I ended up clicking "medium use," which was about 3-5 visits a year.
Through my former employers I had been enrolled in both HMO plans, which offer coverage only within a specific network, and PPO plans, which also offer some coverage outside of their network (albeit at a higher cost than within the network). Even when I was on the PPO plan, for the most part I would visit the PPO plan’s health centers—low-cost clinics that were great for routine checkups, wellness program, and urgent care. This isn’t available on all PPO plans, but mine included this benefit. I’d only tap into the wider PPO network when I needed to see a specialist, such as the time I suffered a minor head injury and went to see a neurologist. (It turned out to be one of those hypochondriac moments.)
I had also been enrolled in Kaiser Permanente, which is an HMO that operates in a handful of states. While there are limitations with an HMO, such as having to get your prescription drugs at one of their pharmacies, and needing a referral before you can see a specialist, I also was a fan of how you could get everything done through their network. As I didn’t have a doctor outside of Kaiser that I had a longtime relationship with, I would have to spend some time finding a primary care physician.
Being part of the Kaiser network was important to me. In fact, I didn’t even both looking at other plans. I knew how the system worked, and that some of my medical records were housed there. And because I was familiar with Kaiser, I felt more at ease when shopping around.
I narrowed it down first by the three major types of plans: HMO, a PPO, and a faith-based health ministry. Poking around the Covered California site was fairly easy, but again, this would have been much easier with PolicyGenius’ tool that shows you side-by-side comparisons of all your options.
When shopping for health insurance and figuring how which tier to purchase, it’s a game of balancing the minimum amount of coverage you need and the maximum out-of-pocket expenses you’re comfortable with—and can reasonably afford.
All of the plans seemed super expensive, especially since I was used to paying very little for health care through my old jobs. I reminded myself that the monthly payment for Bronze plans was the lowest, while the payments for the Platinum ones were the highest. While a monthly premium was the one thing I knew I had to pay for, I actually looked at my premium last. I wanted to choose to plan based on other costs to figure out if the premium would be worth it. I focused on the following costs:
The yearly deductible, or how much you need to pay before insurance starts paying for some of your health expenses. (Usually routine checkups and generic drugs are covered without hitting a deductible.) A Bronze plan’s deductible was $4,800 for an HMO versus $6,300 for a PPO that I was interested in. If you’re going for a Platinum plan, the yearly deductible can be zero, but the monthly premiums are oftentimes twice as much than a Bronze plan.
The annual out-of-pocket was something I paid closer attention to. I was thinking about the worst-case scenario: If I racked up a bunch of medical expenses, what could I comfortably afford to pay for out of pocket each year? For instance, a Bronze tier plan could have a maximum up to $6,300 with a $500 separate drug deductible, while a Platinum tier plan could have an annual out-of-pocket maximum of $4,000 with no drug deductible. Even if you stick with the same plan and insurance, the amount gets reset each year.
Cost of drugs
The cost of drugs depends on whether they’re generic or a brand. When it comes to brand drugs there’s preferred brand, non-preferred brand, and specialty drugs. Besides checking the cost of the generic drugs, which I usually get, I kind of glossed over this section. I haven’t had to take pricey prescription medications (knock on wood) so this section didn’t pertain to me. Of course, if you have a chronic medical condition that requires specific, expensive drugs, you’ll want to spend more time scrutinizing this.
I didn’t expect to go to the doctor too frequently, but I also wanted to see how much it would cost to go see an OBGYN or optometrist, as those were considered specialty visits. I also took a look at the co-pays to trips to the ER and urgent care, x-rays, and lab work.
Depending on your plan, you may have to pay a percentage of the costs for primary care visits, drugs, and so forth in addition to your co-pay—even after you meet your deductible. I really didn’t want to pay out of pocket for things I most likely would need, like trips to the doctor and some prescription drugs.
There are a ton of costs you can compare and you can spend tons of time agonizing over the details. To make my decision I looked most carefully at the things that I would most likely need to pay for based on my past medical history and anything I could anticipate going to the doctor for in the new year.
If you have a particular condition or want more info on something that isn’t easily located online, you can get more info by reaching out directly to the insurance company.
Another option I looked into was faith-based health ministries. It fell onto my radar because a lot of my freelancer pals were raving about it. While it’s not technically health insurance, it is a pool of funds that you contribute to and then tap to pay for your medical bills. And there is something like a deductible which is called a "personal responsibility," and maximum eligibility amounts for certain types of expenses. Depending on the ministry, you either pay your bills and get reimbursed, or have the ministry handle the billing on your behalf.
There were a lot of attractive things about these health ministries: The premiums are set based on the number of people on the plan, and you can opt into a tier that covers $125,000 or $1 million per incident. The rate is the same no matter where you live and how old you are, and you can’t be rejected if you have a pre-existing health condition (although pre-existing conditions may not be covered for the first year or so). This is a popular option for full-time RVers, as it’s not limited to state-specific coverage. You can submit a bill from any provider in all 50 states, and sometimes overseas.
However, there are some caveats: you need to live a health-conscious life, including no alcohol or smoking. And when I took a deeper look at the things not covered, such as mental health, eye exams, birth control, and accidents and injuries associated with "risky behaviors," such as cancer that could be related to smoking, or car accidents possibly due to reckless driving, I realized that it was not a good fit for me. Although I was no party girl or Evel Knievel, I didn’t want to have to deal with being denied coverage based on some questionable activity.
Besides an annual checkup and a few lab tests a year, I didn’t anticipate going to the doctor too frequently. However, I did want to have visits to the doctor and generic drugs covered with a co-pay, and not have to hit the deductible before my health coverage would kick in. I ultimately decided on a Silver level HMO plan, which had a monthly premium of $290.00.
I haven’t had many complaints with my plan and have stuck with the same one for the past few years. However, I’m not immune to the general anxiety and fear of millions of fellow Americans who get insurance through the Affordable Care Act. And depending what goes down with Trumpcare, I’ll definitely be spending more time exploring different options, including switching over to a PPO plan.