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4 Important Tips for Choosing a Health Insurance Plan Thumbnail

4 Important Tips for Choosing a Health Insurance Plan

Often times, we try to look past the grim nooks and crannies of life in the guise of living in the moment. We take it one step at a time, living life to the fullest without being held back by things yet to come. But still, we can’t run from the uncomfortable reality that something unexpected may happen at any moment, even so at the worst times. During which, you’d wish you had been more prepared. 

Among those that you have to be prepared for are injuries and illnesses that may fall upon you and your loved ones. Here’s some breaking news: an apple a day does not keep the doctor away, unaffordable healthcare does.

It’s in these times that you’ll be needing that health insurance to cover your visits to the doctor, treatments, procedures, and medications. One of the types of health insurance is the Affordable Care Act (ACA) marketplace.

What is the Affordable Care Act (ACA)?

The ACA was passed in 2010 to provide a health insurance option for Americans who can’t get employer-sponsored coverage. It pushes a more accessible healthcare forward by providing the following benefits, among others:

  • States can expand Medicaid to more people by lowering income requirements to get coverage.
  • Its exchanges offer subsidies, based on income, that help cut health insurance costs for Americans who qualify.
  • Parents can keep their children on their health insurance until the age of 26.
  • Insurers are forbidden from canceling health insurance unless there’s fraud, and from denying coverage because of preexisting conditions.
  • Insurers are required to use at least a minimum percentage of premiums to pay for members’ medical services.

Under the ACA, open enrollment (the annual period when you can enroll in major medical health insurance plans), begins November 1, 2022, and will remain open until January 15, 2023. You will need to enroll by December 15, 2022 for coverage that begins January 1, 2023. For someone looking to change or add coverage, this offers a short window of time to decide on and select your health insurance plan. To avoid a hasty decision to meet this deadline, take some time now to review and prepare. Below we’ve rounded up our top tips for choosing the right health insurance plan for you and your family’s needs. 

Why Is There An Open Enrollment Period?

To answer this, we need to know how health insurance works. Typically, premiums are paid by healthy people to offset the costs needed to cover for the sicker members of the plan. 

For this reason, an open enrollment period is in place to prevent people from buying health insurance when they’re sick, only to drop it later when they’ve recovered. That way, there will be enough healthy people to finance the costs for the sick.

Who Should Utilize Open Enrollment?

The Open Enrollment Period (or OEP) is for anyone looking to make a change to their health insurance coverage, whether through their workplace or the federal market. This could include looking for a cheaper plan with similar coverage, gaining coverage if you previously had none, or changing your coverage altogether to better meet your needs.

 Assess your current costs

When thinking about changing your health insurance plan, it’s important to reassess your healthcare-related expenses. Take a look at how much you’re currently paying per month for your plan as well as what sort of out-of-pocket expenses you paid over the past 12 months. 

These could include:

  • Routine doctor visits
  • Specialist visits
  • Prescriptions
  • Emergency room or urgent care visits
  • Unless you foresee any major changes in the coming year (such as pregnancy), this could be a helpful indicator when it comes to determining what type of coverage will be cost-effective and appropriate for you.

If you found your out-of-pocket expenses to be too high, now’s your opportunity to search for a plan with lower deductibles (although your monthly premiums will likely rise).

 choose your marketplace

You may be able to gain coverage through several marketplaces including:

  • Your or your spouse’s workplace
  • Federal marketplace
  • Local or state marketplace
  • Private exchange
  • Directly through insurance providers
  • If you have the option to gain coverage through your employer, this will likely provide you with the lowest premiums. That’s because your employer pays a portion of the premium, which tends to be lower anyway.

If your employer does not provide healthcare coverage (or you wish to look elsewhere for it), you can gain coverage through the federal or state marketplace. You’ll start at Healthcare.gov, which will then direct you to your state’s marketplace (if applicable). While premiums are likely to be higher, you may be eligible for premium tax credits to help offset the monthly cost.

 Decipher Your Available Plan Typles

There are four common types of health insurance plans you’ll come across when selecting coverage: HMO, PPO, POS, EPO.

Health Maintenance Organization (HMO)

Pros: HMOs tend to have lower monthly premium costs and out-of-pocket costs, as compared to other plan types. 

Cons: You’re typically limited to seeing providers only in your network, and these must be coordinated by your primary care provider (unless it’s an emergency). This gives you less overall flexibility.

Preferred Provider Organization (PPO)

Pros: PPOs offer the user more freedom when it comes to choosing healthcare providers and specialists. You can see people outside of your coverage network, although this will typically result in higher out-of-pocket costs. Additionally, you typically will not need a referral from your primary care provider to make appointments with specialists.

Cons: Out-of-pocket costs and premiums tend to be higher for PPO plans, especially when compared to an HMO.

Point of Service Plan (POS)

Pros: With a POS plan, you have the flexibility to visit out-of-network healthcare providers, but typically at a high out-of-pocket cost.

Cons: Similar to an HMO, you will likely need a referral from your primary care provider to see a specialist or have a medical procedure done. Additionally, your primary doctor will coordinate your care for you.

Exclusive Provider Organization (EPO)

Pros: An EPO will typically offer you lower out-of-pocket costs, and a referral is not needed to see specialists or have medical procedures done.

Cons: You will be required to visit specialists within your network unless it is an emergency. An EPO will typically provide less flexibility and freedom when it comes to choosing care providers.

 Account for your current providers

As shown above, every plan type either requires you to visit in-network providers or offers lower out-of-pocket costs for visiting an in-network specialist. If you already have preferred providers on your current plan, switching plans could jeopardize your ability to visit them in the future (or cost you more to do so). 

When comparing plans, make sure to check whether or not your current healthcare providers are in-network. If they are, you should have no problem continuing to see them as you did before. If they’re out-of-network, you’ll either have to find a new provider or prepare to pay more for every visit.

Picking the right health insurance plan for you and your family can feel daunting, confusing, and rushed. With some time left during open enrollment, do yourself a favor and create your plan of action now. Prepare now by determining what type of plan may be right for you, what coverage you know you’ll need and what marketplace you’ll be buying from. When the time comes to decide, you’ll be more than ready to make a decision that’s right for your healthcare needs.

This can all feel overwhelming, especially with the little time left. But, with the help of your financial advisor and planner, it will be easier to make sense of things before the open enrollment period ends.

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The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor's particular investment objectives, strategies, tax status, or investment horizon. You should consult your financial advisor, attorney, or tax advisor.  For additional information and disclosures, please visit our website at mbewealth.com.  MBE Wealth Management, LLC is a registered investment advisor.

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