Update: Many states have extended their deadline for health insurance to start on January 1st. To find out if you have a little more time, look here.
Think of your favorite action movie. There’s probably a sequence where the clock is ticking … time’s running out...the hero only has seconds to stop the bomb or the rocket launch or the asteroid.
Your situation isn’t quite as dire, but still – we have a mission for you, should you choose to accept it: buy health insurance.
And time is running out for you, just like it does for your favorite hero.
December 15, 2016 marks the deadline for health insurance shoppers to buy if they want their health insurance coverage ringing in the New Year on January 1, 2017. The final deadline for open enrollment is January 31, 2017 if you don’t particularly care if your coverage kicks in right away.
The clock is ticking, but it’s not too late yet. Choosing a health insurance plan doesn’t need to be hard: follow these three easy steps and you’ll be buying health insurance with time to spare before the December 15 deadline.
How do I know how much money to spend?
You know all of the great battles. Ali vs. Frazier. Celtics vs. Lakers. Luke vs. Vader. Now it’s time for the next great showdown: premium vs. deductible.
If there’s one main tradeoff when it comes to health insurance, it’s between your premium (the amount you pay each month for the plan) and the deductible (how much you pay for services and procedures before your insurer will cover expenses). Another way to think about the two concepts: the premium is what you pay to have insurance and the deductible is what you pay to use the insurance. In general, higher premiums mean lower deductibles and lower premiums mean higher deductibles. It’s like a seesaw, but with your financial and actual health at stake. It’s a good starting point for trying to narrow down your health insurance plan options.
So how do you know which type of plan to pick? Well, let’s look at what kind of healthcare consumer you are.
If you regularly use healthcare services – say you have a condition that requires ongoing medications, doctor visits, tests, and/or are a hypochondriac – you’ll probably be better off with a higher premium plan that requires you to pay more monthly (boo!) but has a lower deductible, meaning your insurer will take over most of the costs more quickly (yay!). The same goes for if you know you need to plan a surgery or you’re trying to get pregnant; knowing about these high-cost procedures beforehand means you can go for the higher premium plans with a lower deductible.
On the other hand, if you see your doctor so infrequently that you barely remember her name – maybe you go for a yearly physical so you can brag about your low cholesterol – you’re probably better off with a higher deductible plan. If something major comes up, you’ll end up footing most of the bill, but that should be a rare scenario and you’ll probably save money in the long run. However, that raises another consideration: we can’t, unfortunately, predict the future. Even though you might be a healthy, rarely-see-the-doctor person now, that might not be the case next year. So even if you opt for a higher deductible plan (to save on premiums), you should be sure that you’ve got the savings to cover that deductible if it hits you all at once in a worst-case scenario (like an ER visit).
Luckily, there are ways to save on health insurance in the form of subsidies. If you’re income is at or below 400% of the poverty, you’re eligible for a subsidy. That could take the form of a tax credit, cost-sharing reductions, or Medicaid-provided insurance. If you don’t qualify for a subsidy, aiming to spend 5% of your annual gross income on health insurance premiums is a handy benchmark; that’s how much consumers spend, on average, on health insurance according to the government’s Consumer Expenditure Survey. It even leaves you some room to pay for your deductibles and any healthcare-related items that aren’t covered by your insurance.
If, going into this section of the article, you knew more about Luke Skywalker and Darth Vader than premiums and deductibles, you’re not alone. We recently ran a national survey that revealed that only 4% of Americans could correctly define: copay, co-insurance, deductible, and out-of-pocket maximum. Those are the pillars of knowing how much money you’ll actually be paying for healthcare. That’s like going all in on a poker hand and not knowing what flush, straight, and three of a kind mean. So quickly brush up on some health insurance terminology. You’ll be better equipped to make healthcare decisions (definitely) and also be a hit at parties (probably not).
But how do I know what coverage I need?
The best things in life may be free, but the best health insurance plans are probably not affordable. Because of that, you have to make tradeoffs. If premium vs. deductible is the headliner, you can think of these other compromises as the opening acts.
What do you need to consider when you’re figuring out this balancing act? How about:
Are your preferred doctors in your network?
Do you care about getting a referral to see a specialist?
What medications do you absolutely need covered?
The easiest way to figure out this out is to divide your needs into must-haves and nice-to-haves. Maybe you’d prefer to have the same doctor you’ve gone to for years, but you don’t mind going to a new one because he’s in-network and only 15 minutes from your work. On the other hand, you have a medication that you absolutely need, and you want to stick with plans that cover the cost.
Grouping plan features this way is great because it’s simple, easy, and quick for those of you on a time crunch to beat December 15. It’s like a classic pros and cons list: a shorthand way to see where you’re getting a better deal.
I don’t know how to compare plans. I’ll just pick one randomly.
Okay, wow, that’s not the best idea. I get it though: you’ve just gone through the decision-making process and now you’ve got a few plans that all look kinda the same, and we’ve been talking the whole time about an impending deadline, so why not throw a dart at one of them and be done with it.
Or just use PolicyGenius.
First of all, those decisions you had to make? We help you out with that. Handy sliders let you adjust the premium and deductible you can afford to/want to pay. We’ll find your doctors and your medication and let you divide everything into must-haves and nice-to-haves (told you that was a good system).
Once you do all of that, we crunch some numbers and show you all of the plans that meet your needs. Then you can sort those plans however works best for you. Want to see the plans that most meet your needs? You can. Rather sort them by cost? Go for it. And you can compare them literally side by side so you get an apples-to-apples comparison of the plans you want.
That means no jumping back and forth between websites, no creating an unwieldy spreadsheet that you abandon after you remember you hate spreadsheets, no giving up and just settling on a plan. It saves you money – and time, which is exactly what you need as December 15 approaches.
So...what happens if I miss the deadline?
Missed the December 15 deadline? It’s okay, it happens. Well, it’s not entirely okay because there will be some consequences, but don’t panic just yet.
First of all, like we said, December 15 isn’t the final deadline. That’s actually January 31 for 2017 coverage. But if you want health insurance ASAP, you need to enroll by December 15.
Now, what if you miss the January 31 deadline? You should really try not to do that, because you’ll be fined if you do. The individual mandate that came along with the Affordable Care Act means that if you don’t have health insurance, you pay the greater of:
- 2.5% of your annual income
- $695 per person ($347.50 for children)
So unless you like paying for things and not getting anything back in return, you should buy health insurance.
Luckily, there’s a loophole if you qualify for a Special Enrollment Period. If you’re turning 26 years old (and are getting kicked off your parents’ health insurance), move, have a baby, or lose your job, you may be eligible to apply for health insurance outside of the Open Enrollment period. So don’t fret if you didn’t apply – just make sure you haven’t exhausted all of your options.
There you go: three easy steps that will have you applying for health insurance in no time. December 15 doesn’t seem so scary anymore, does it? Now all you have to worry about is building your holiday shopping budget and figuring out how you can avoid your family this year. Because that deadline is coming up soon, too.