How to Choose Health Insurance [Complete Guide]

Sarah Sullivan
July 25th, 2019 July 25th, 2019 |
Read time: 41 minutes

Products mentioned in this blog post:

Find out if you qualify for temporary coverage for emergencies and hospitalization – Don’t go uninsured between major medical plans.

Get help with the high costs of hospitalization – Fixed indemnity benefits may be paid per day, week, month, visit or event.

Get additional lump sum cash benefits to supplement your major medical policy for covered accidents.

Get additional lump sum cash benefits to supplement your major medical policy for qualifying illnesses.

Cover your mouth – From routine cleanings to root canals, dental coverage can help keep your teeth and gums healthy.

Get help with a high deductible health plan – Fixed, lump-sum benefits can be used however you wish.

Choosing health insurance coverage for you and your family is no small decision.

We’re going to cover everything you need to know when it comes to shopping for insurance and comparing policies so that you can find the right health insurance plan for you.

We’ll cover three main areas:

  1. What to consider regarding your personal (and family) healthcare needs and budget.
  2. An overview of the different kinds of health coverage available and what situations they might be best suited for (there are more options than just major medical insurance).
  3. Once you’ve identified the type of coverage you need, learn what to look at when comparing individual policies (e.g., out-of-pocket costs, exclusions, etc.).

By the end of this blog post, you should have the information you need to identify which type of health insurance you should get. If you already know what information you’re looking for, just click the corresponding link above to jump right to that section.

Let’s get started!

Accessing Major Medical Insurance – Open Enrollment Only
In order to enroll in ACA-qualifying major medical insurance you must do so either during the annual open enrollment period or during a special enrollment period unless you’re a member of a federally recognized American Indian tribe or Alaska Native Claims Settlement Act (ANCSA) shareholder, in which case you can enroll in a marketplace plan anytime.1

Keep this in mind as you assess your needs and review your options below. In some cases, it might be necessary to obtain another form of insurance temporarily until you are able to access a major medical plan.

Learn about qualifying for a special enrollment period.

Assess your Individual or Family Healthcare Needs and Budget

The first step in choosing the right health insurance is being clear about what your coverage needs are. This is a completely personal and individual assessment – the best health insurance for your neighbor or sister may not be right for you.

The main points to consider when assessing your needs and options are:

  • How old are you?
  • Who needs coverage (you, a spouse, a child)?
  • How much healthcare do you think you’ll need?
  • What can you afford?
  • What state do you live in?

We’re going to cover each of these points below in detail and by the end of the section, you should have a clearer understanding of the type of health insurance to target.

Learn more about assessing your healthcare needs.

How Old Are You?

Most U.S. adults with access to employer health insurance benefits use them, 81%, according to the U.S. Bureau of Labor Statistics.2 If you don’t have access to health insurance benefits at work there are other ways to obtain coverage, both minimum essential coverage either from a public or private insurance marketplace, and non-ACA insurance products.

You may have different options available to you depending on your age, household income and family size, and if you have a disability. The following table outlines the types of coverage you may be eligible for based on your age.

You’ll need to do further research to determine if your income or disability status makes you eligible for any of the low- or no-cost insurance programs run by the federal government.

Health Insurance Eligibility Based on Age

Under 193 19-264 26-305 6 Up to 65 65+7
Children’s Health Insurance Program (CHIP)
Medicaid
Parent’s Employer or Individual Major Medical Plan as a dependent
ACA Metal Level Plan
Non-ACA Health Plan
ACA Catastrophic Plan
Medicare

If you think you or your child may qualify, you may want to learn more about these low- or no-cost federal health insurance programs:

We’ll talk more about the ACA metal level plans (that is, major medical insurance) and non-ACA health insurance options like short-term medical insurance later in this post.

Who Needs Coverage (just you, you + spouse, kids too)?

You can obtain a health insurance policy that covers just you (an individual policy) or multiple people (a family policy). When multiple people in your household are covered, even if it’s just you and your spouse, anyone that is not the main policyholder is considered a “dependent” and the policy is considered a “family” policy.

Just You – An Individual Policy

It’s usually pretty straightforward to assess your own healthcare needs and make cost comparisons when reviewing individual policies.

Families of Three or More – A Family Policy

It also tends to make sense for families with three or more people to share the same policy since each individual’s medical costs will be counted towards a single deductible and out-of-pocket maximum.

Couples – Consider Deductibles + Annual Out-of-Pocket Maximums

But it‘s not always so clear whether or not you should share a policy with just your spouse, especially if you require very different levels of healthcare.

In 2019, the ACA annual out-of-pocket maximum was capped at:

  • $7,900 for an individual policy and
  • $15,800 for family policies (including those consisting of just a married couple).8

The 2018 Employee Benefits Survey conducted by the International Foundation of Employee Benefit Plans found the average annual deductibles for group plans to be:

  • $1,491 for individuals
  • $2,788 for families9

If you have a chronic disease for which you need routine medical services but your spouse is healthy and only sees the doctor once a year for an annual exam (accruing a hypothetical $100 office visit bill), sharing a family plan may not make sense financially.

Using the deductible averages cited above, you’d be paying $2,788 out of pocket before your coinsurance kicks in and the insurance company starts to pay a portion of covered medical services. However, you’d only be responsible for $1,491 in deductible on an individual plan. Your spouse’s $100 payment for their annual exam doesn’t make enough of a dent in your family deductible to justify the shared policy and higher deductible.

The same logic applies to the out-of-pocket maximum – once you reach that amount, your insurance company pays 100% of covered services. It makes financial sense to choose the plan that has the lowest out-of-pocket costs associated with it in order to access the plan’s benefits.

Keep this in mind as you review the rest of this blog post, assess your healthcare needs and review your insurance options.

Want to take a deeper dive on health insurance for couples? Learn more about health insurance for married couples.

How Much Healthcare Do You Need?

Consider the following as they relate to a typical year for everyone in your household:

  • How often do you seek medical care?
  • What is the nature of your healthcare needs (e.g., routine or maintenance care, hospitalization, regular lab tests, surgery, emergency department visits)?
  • How much do you spend out-of-pocket on healthcare?
  • Do you take a prescription drug?
  • Are you planning on starting a family?
  • Are you facing a planned surgery soon?
  • Do you or your dependents need dental or vision care?

A Note about Dental + Vision Care…

For children up to age 18, ACA plans include dental10 and vision11 coverage as an essential health benefit. For adults, major medical plans (including ACA plans) don’t generally include dental and vision benefits, though some may. If adults in your household anticipate needing dental or vision care next year, you may need to obtain a stand-alone vision plan and/or additional dental coverage.

Tips for Assessing Your Healthcare Needs
If you’re not sure how to assess your healthcare needs, keep these tips in mind:

  • Track your claims for the coming year. What do you pay for and what does your insurance cover? Are there unexpected gaps in your benefits? Do you reach your deductible or out-of-pocket maximum?
  • Complete your preventive care early in the year. This helps ensure that you know the full scope of your healthcare needs, including any new medications or treatments, so that you can factor them in to your decision next time you need to enroll in a policy.

Be aware that if you’re considering non-ACA policies you’ll need to closely review the benefits that are included, limited and excluded, any applicable waiting periods, and understand exactly what coverage you’re getting (more on that later).

ACA-qualifying major medical plans provide a standard set of essential health benefits and is the most comprehensive type of coverage you can obtain. You can review the full list of what major medical plans cover at healthcare.gov.

The table below includes common types of healthcare that you may need now or in the future, and the types of health insurance plans that typically (but not always) provide that coverage. Note that for non-ACA insurance, different healthcare services may be included depending on the insurance company offering the policy and any state laws that apply.

Types of Health Insurance Based on Healthcare Needs

You Need…  ACA Major Medical Supplemental Dental Supplemental Vision Non-ACA Insurance
Preventive Care, Vaccinations, Screenings *
Coverage for a Pre-existing Health Condition
Prescription Drug Coverage (incl. birth control for women)
Oral Care for kids up to age 18
Oral Care for adults 18+
Prenatal and Maternity Care
Vision Care for kids up to age 18
Vision Care for adults 18+
Mental Health + Substance Abuse Care **
ER and Hospitalization Coverage
Coverage for accidents or critical conditions that are not pre-existing *
Urgent Care *

*Additional coverage may be able to be added to the non-ACA insurance policy for more premium.
**May be included depending on your state’s regulations.

There will be more about covered services, exclusions and limitations associated with different kinds of policies later in this post.

What Can You Afford?

The U.S. Bureau of Labor Statistics found that in 2017 (the most recent year for which data was available), U.S. households spent $3,414 annually on health insurance.12 This represents about 6% of total average household expenditures for the year, which amounted to $60,060.13

And monthly premiums have generally gone up each year that the ACA has been in effect, sometimes dramatically.

Average Unsubsidized Individual Benchmark Plan Premiums 2014 – 201914

Year Premium
2014 $273
2015 $276
2016 $299
2017 $359
2018 $481
2019 $477

We know that healthcare costs continue to rise, as does the annual out-of-pocket maximum, and health insurance costs. So it’s reasonable to expect that in 2019 and beyond, you will spend more on health insurance and on healthcare in general.

There are three areas of affordability to consider when it comes to health insurance and healthcare spending:

Monthly Premium: This is a fixed monthly amount you pay to the insurance company to maintain your policy during your policy’s term.15 This amount may go up when you renew your policy. These payments do not go towards your out-of-pocket costs at all.

Based on your household expenses and monthly cash flow, what amount can you afford to pay in monthly premium?

Out-of-Pocket Costs: Includes deductible, coinsurance and copays, which are costs you pay when you receive medical services. These costs are not reimbursed by your insurance company.16 For example, if your annual deductible amount is $3,000, you will pay that amount out of your own funds before your insurer begins to pay a portion of the covered expenses (coinsurance).

If your coinsurance rate is 80/20, once your deductible is paid, your insurer will cover 80% of the costs of covered medical services and you’ll still be responsible for 20% of the costs until you reach the annual out-of-pocket-limit, at which point the insurance company pays 100% of covered medical expenses.

We’ll discuss these different costs in more detail later in this post. You can also get an even more detailed discussion and example scenarios illustrating how these of out-of-pocket costs work.

For now, the question to ask yourself is: how much can you afford to pay for your policy’s annual deductible? (Whether that results from a single large claim or multiple smaller claims throughout the year.)

Healthcare Services Not Covered: Remember, some healthcare services aren’t covered at all by any health insurance policies and you’ll be responsible for paying for them completely out of pocket.

Examples of these kinds of services could include: “alternative” healthcare like therapeutic massage, acupuncture and chiropractic; cosmetic surgery; nursing home care; weight loss surgery; and adult dental and vision care.17

In addition, even when your doctor recommends a procedure, it may not be considered “medically necessary” by an insurer and they may decline to pay a claim.18

Do you rely on any healthcare services not typically covered by health insurance or anticipate needing these services in the future? If so, how much do you plan to spend towards them?

Learn how to save money on health insurance.

Your Employer’s Group Health Plan
Do you have access to an employer’s health plan or will you soon? While you don’t have to enroll in your employer’s health plan, it’s the first option you should research and consider if you have access to one since your employer will pay a portion of your monthly premium.

If you are currently in a new hire waiting period for benefits or need temporary health insurance while you’re between jobs, consider a short term health insurance plan.

Now that we’ve considered the range of healthcare costs you may be facing: premiums, out-of-pocket costs, and healthcare that’s not covered, let’s look at options you may have to help mitigate some of those costs.

Whether or not you qualify for a subsidy may be an important consideration in the type of health insurance plan you ultimately purchase.

Subsidies for Major Medical ACA Health Plans

The majority of enrollees in the ACA exchanges receive premium tax credits.19 However, if you don’t qualify, i.e., your household income is not at least 400% of the Federal Poverty Level (FPL), you’ll be responsible for the full cost of your major medical insurance premium.

As an example, for 2019, an individual with an annual household income of at least $48,560; or a family of four with an income of $100,400 or more wouldn’t be eligible for subsidies for ACA plans.20

ACA subsidies include:

  1. Premium tax credits: Lower your premium amount (monthly or annually);21
  2. Cost-sharing reductions (silver plans only): Reduce what you pay out-of-pocket for medical care by lowering your policy deductible and other cost-sharing including coinsurance, copayments and other similar charges.22

To obtain subsidies you must meet certain household income requirements and buy your health insurance through HealthCare.gov or your state-based exchange. Learn more about Obamacare subsidies.

Find out if you could qualify for a subsidy.

ACA Subsidy Calculator

 

Medicaid + CHIP
Don’t forget about Medicaid and CHIP. If your income qualifies, one of these subsidized federal health insurance programs will probably be your most affordable option for major medical coverage.23 Learn more about qualifying for Medicaid or CHIP.

Additional Protections for American Indians + Alaska Natives

Members of federally recognized tribes or ANCSA shareholders have special protections under Medicaid and CHIP, which include no premium or out-of-pocket costs.24

They are also eligible to pay no out-of-pocket costs, regardless of income, for medical services obtained through the Indian Health Service (IHS), tribal programs, or urban Indian programs.25

Don’t qualify for a subsidy?

If you do not qualify for a subsidy, you may want to shop around for major medical plans away from the exchanges (i.e., directly from a carrier or from a private online marketplace) as you’ll have more plan options to compare. Decide if you should buy coverage from the public ACA exchange or the private marketplace.

You may even consider non-ACA health insurance, like short term medical, as premiums are less than major medical because they provide less coverage. It’s important to make sure any non-ACA plans you’re considering still meet your healthcare needs.

What state do you live in?

Major medical health insurance plans are regulated at the federal level via the ACA. These plans are available in every state, however, the number of carriers and plans to choose from can vary a great deal depending on which state (and county) you live in.

In 2019, 35.3% of counties in the U.S. only had one health insurance carrier offering plans on the public ACA exchange; and 12.4% of counties had more than three carriers offering plans.26

Different major medical policies are available through different insurance carriers in different states, and costs will be reflective of geographic location. All of these plans will cover the same essential health benefits as required by the ACA, however, some states require that insurers cover additional services and procedures.27

For example, the number of plan options available, the companies offering those plans, the cost of those plans, and specific medical services covered in Arizona will be different than they are in New York, but the plans in both states being sold as “ACA-qualifying major medical insurance” will all offer the same basic healthcare coverages as mandated by law, whether purchased on or off the public exchange.

Other forms of non-ACA qualifying health insurance are also available in most states. These products are sold in the private marketplace, directly to consumers, and are not generally regulated at the federal level but at the state level. Some states don’t make these plans available to residents at all, others closely regulate them, and still others make them readily available with very few restrictions.

Find out if short term health plans are available in your state.

As a result, the state you live in will have an impact on what non-ACA health insurance options are available to you. Whether or not these plans are accessible in your state is an important consideration as you explore different types of health insurance coverage to determine which might best fit your needs.

Want Supplemental or Non-ACA Insurance?

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What are the different types of health insurance coverage?

In the next section, you’ll get a quick overview of the different kinds of medical coverage available, including:

  • ACA-qualifying major medical insurance
  • Non-ACA qualifying health insurance like short term medical and supplemental insurance (gap coverage and hospital indemnity insurance)
  • Other medical benefits policies like life, disability, auto and travel insurance.

The table below outlines some basic, general features of the different types of health insurance plans that are covered in more detail throughout the rest of this section. There will be exceptions or differences when it comes to specific policies, so remember to closely review any policies you’re considering.

Health Insurance Plans Feature Overview

Major Medical Short Term Hospital Gap Dental + Vision
Duration Limit NA 30-364 days† NA NA NA
MEC Plan Yes No No No No
Guaranteed Issue Yes No No Maybe‡ Maybe‡
Guaranteed Renewable Yes No Yes Maybe‡ Maybe‡
Year-Round Enrollment No* Yes Yes Yes Yes
Unsubsidized Premium Cost $$$$ $$$ $$ $ $
Waiting Period No Yes Yes No Yes (dental)
ACA Subsidy Eligible Yes** No No No No
How Benefits Are Paid % paid to provider % paid to provider Fixed benefit to insured Fixed benefit to insured % paid to provider

*May be available during a special enrollment period if you are eligible.
**When purchased from healthcare.gov or a state-based exchange.
† Duration limits vary by state.
‡ Depends on the individual carrier


Major Medical Insurance

What it is: All major medical insurance plans available today, regardless of where purchased, follow the coverage requirements in the ACA. Most importantly, that means they cover the essential health benefits (preventive care, prescription drugs, etc.) and are guaranteed-issue, meaning you cannot be denied coverage or charged more if you have a pre-existing condition.

In fact, the only things that impact your premium are: geographic location, age, whether you have an individual or family policy, the plan category you choose (bronze, silver, gold, platinum or catastrophic) and whether or not you’re a tobacco user.28

How benefits are paid: Typically, a percent is paid directly to the provider. However, for PPO plans, out-of-network payments may be made to the provider or you.

Who can get it: Just about anyone can enroll in an ACA metal level major medical health plan, though depending on your age, income, and disability status, you may be able to find other lower or no-cost minimum essential coverage in the form of Medicare, Medicaid, or CHIP.

You can enroll just your child, though it’s a good idea to make sure adults in your household have healthcare coverage too.

Learn more about child-only health insurance options.

Who it’s good for: Because it’s the most comprehensive of the insurance options available it’s good for just about anyone that needs or wants health insurance on an ongoing basis.

Major medical includes coverage for most healthcare needs and situations, from a child’s developmental screenings to annual exams for women to hospitalization, treatment for chronic or acute illnesses, and emergency care. However, it’s particularly beneficial for people who:

  • Have a pre-existing condition that may disqualify them for other types of insurance
  • Qualify for a subsidy for major medical insurance

Comparative Cost: Unsubsidized major medical plans generally have the highest premiums compared to other forms of health insurance. Again, that’s because they provide more coverage.

The other cost consideration with major medical plans is the ACA metal level tiers, with each tier representing a different cost-sharing ratio between you and the insurance company. The cost-sharing percentages for the four metal levels are as follows:29

  • Bronze – 60% of covered medical expenses paid by the policy; 40% by the consumer
  • Silver – 70% of covered medical expenses paid by the policy; 30% by the consumer
  • Gold – 80% of covered medical expenses paid by the policy; 20% by the consumer
  • Platinum – 90% of covered medical expenses paid by the policy; 10% by the consumer

Bronze policies generally have the lowest monthly premiums and highest cost-sharing percentage (deductibles, co-insurance, copay). Platinum policies generally have the highest monthly premiums and lowest cost-sharing percentage.30

Learn more about how the ACA plan metal levels work, cost sharing, premiums and deductibles.

Where + When to get it: Remember, you can only enroll in these plans during the annual open enrollment period or a special enrollment period. You can enroll on the federal exchange (or your state exchange if it operates one) and that’s the only place you can use a subsidy.

Or, you can enroll in a plan in the private marketplace, where you may find more options to choose from, in the event you don’t qualify for a subsidy and/or want more options.

Learn more: What is Individual Major Medical Insurance + is it Right for You?


Non-ACA Short Term Health Insurance

What it is: Short term health insurance (also referred to as temporary health insurance and short term medical) is a medical plan lasting from 30 to 364 days (depending on your state, these plans are not available in all states), to help cover the cost of qualifying accidents or illnesses that require physician services, surgery, outpatient and inpatient care.

Short term plans are not ACA-qualifying minimum essential coverage. These plans are not guaranteed issue, meaning you can be denied coverage due to pre-existing conditions or health history. And policies typically have a long list of exclusions and limitations, so it’s very important to review policies closely to ensure you’re getting the coverage you need.

Some of the highlights of short term plans include:

  • Policyholders can often choose their own doctor and hospital without restrictions, although there may be financial incentives for using in-network providers.
  • They are available now – They are not subject to the annual open enrollment period, so you can apply anytime during the year in most states.
  • Enroll and begin coverage right away if you qualify (there’s typically no waiting period).
  • Monthly premiums are lower than major medical premiums because they provide less coverage.

How benefits are paid: Typically, a percent is paid directly to the provider. However, benefits can be paid directly to you.

Who can get it: Anyone that qualifies in a state where short term health plans are available can enroll in a plan. Individual, family, and child-only plans are available.

Who it’s good for: These plans tend to be a good fit for healthy people who need short term medical coverage—those who missed Obamacare open enrollment and are waiting for the next open-enrollment period to begin, recent divorcees, those between coverage due to job loss, or those waiting for coverage to begin under a new employer. Remember, pre-existing conditions are excluded on short term medical policies.

Comparative Cost: Short term medical plan premiums are lower than major medical premiums because they provide less coverage. They can be as little as one-third the cost of major medical premiums.31

Where + When to Get it: As previously mentioned, you can shop and apply for short term plans year-round.

Temporary health insurance plans are not available through state-based and federally facilitated health insurance exchanges. They may be purchased in the private marketplace through a health insurance agent, carrier-specific website, or a website such as healthedeals.com.

The best way to get plan availability and find out what a short term health plan may cost you is to get a quote.

Get a Short Term Health Insurance Quote

(It’s free and takes just a minute to see multiple plan options and price points.)

Learn more:


Supplemental Hospital Indemnity Insurance

What it is: Hospital indemnity insurance is a form of supplemental coverage to help fill the gap for those that already have major medical coverage but find themselves facing high out-of-pocket costs associated with their plan.

These types of plans generally pay benefits for medical services associated with being hospitalized due to an injury. However, hospital plans tend to be highly customizable, so you can add on coverage for some critical illnesses and other services like preventive care and urgent care for additional premium.

These are “fixed indemnity” plans, meaning you receive a set benefit amount regardless of the amount charged for eligible medical expenses. Benefits may be paid per day, per week, per month or per event.

For example, your plan may pay $500 per day for inpatient hospitalization and cover one doctor’s visit per day while hospitalized at a rate of $100 per visit. If you are hospitalized for 5 days and see the doctor one time each day, your fixed benefit payment amount will be $3,000 for these services. If your major medical deductible is $3,000, your hospital plan benefit may be used to pay that deductible.

If the actual bill for services was $5,000, you’ll then work through your major medical insurance to pay the remaining $2,000, with cost sharing based on your coinsurance rate.

How benefits are paid: Fixed benefit to the insured. You can also assign these benefits directly to a provider or facility.

Who can get it: Anyone that qualifies can enroll in a plan. In some states, hospital insurance is strictly defined as a supplemental policy so you must already have a major medical policy in order to qualify and enroll.

Who it’s good for: If you have a high deductible major medical plan and/or very little in savings you may want to consider adding supplemental hospital indemnity insurance.

Consider the following data from 2017 (the most recent year for which this data is available):

  • The average daily cost for a hospital stay in the U.S. was $2,424.32
  • The average hospital stay in the U.S. was between 5 and 6 days (5.4 to be exact).33
  • Unsubsidized individual ACA deductibles averaged $4,449 for individuals and $8,232 for families.34

If we just compare the 2017 numbers (keeping in mind that costs for healthcare and insurance tend to increase year over year35) we can see that for a single injury resulting in hospitalization, most people will have to contend with paying their entire deductible amount before their major medical benefits kick in.

Comparative Cost: Again, these plans are highly customizable. If you select more coverage or include more people on your policy you’ll pay more. However, hospital plan premiums tend to be less than major medical because they provide less coverage.

A good way to find out how much a hospital insurance plan could cost you is to get a quote.

Get a Hospital Insurance Quote

Where + When to Get it: Hospital plans are not available through state-based and federally facilitated health insurance exchanges. They may be purchased in the private marketplace through a health insurance agent, carrier-specific website, or multi-carrier website such as healthedeals.com.

Learn more: Why Hospital Indemnity Insurance?


Supplemental Critical illness + Accident Insurance

What it is: Critical illness insurance pays a lump sum benefit upon diagnosis of covered (acute, not chronic) critical illnesses. Most plans cover 6 to 12 different critical conditions, which may include life-threatening cancer, kidney failure, heart attack, stroke, coma, cancer in situ, major organ transplant and severe burn.

Critical illness health insurance can help with expenses related to being laid up with an illness or injury beyond doctor and hospital bills, including lost wages, childcare, travel, mortgage or rent, your major medical deductible and copay; and even your major medical premiums (which you’re still responsible for even while you’re undergoing treatment).

Again, it’s important to note that this is a “lump sum” benefit that typically pays a fixed benefit when you’re diagnosed with a covered illness (or seek treatment for a covered injury).

For example, if you’ve elected for $10,000 benefit for covered illnesses, including breast cancer, and you’re diagnosed with breast cancer you will receive a single benefit in that amount. You can use that benefit towards whatever expenses you have as you get treatment and recover from the illness.

This is another form of supplemental medical insurance and is not considered ACA-qualifying minimum essential coverage.

How benefits are paid: Fixed benefit to the insured.

Who can get it: Anyone that qualifies and lives in a state where these plans are available can enroll.

Who it’s good for: These plans may be good for people with high deductible major medical insurance policies, and/or those with little or no savings. Due to more healthcare costs being shifted to you, the policyholder, even people with major medical insurance can find themselves responsible for thousands of dollars of medical expenses.36

Responses from a 2016 Kaiser Family Foundation (KFF) and New York Times (NYT) medical bills survey indicated that:

  • 22% of respondents under age 65 with health insurance that they purchased on their own had problems paying their medical bills; 53% of people without insurance reported the same.
  • Respondents with higher deductible plans were more likely to report medical bill problems than those with lower deductible plans: 26% compared to 15%.
  • The conditions that lead to seeking medical treatment in the first place tended to be related to critical illnesses and accidents, with 36% of respondents indicating a specific disease or symptom; 16% reporting chronic pain or injuries; and 15% citing accidents and broken bones.37

Comparative Cost: Critical illness and accident premiums can vary widely depending on how much coverage you obtain. For example, a 50-year old may pay less than $15 a month for a very basic policy providing $10,000 of coverage for cancer, stroke, heart attack, kidney failure, or coronary artery bypass surgery, while other policies may provide up to $100,000 of coverage for as much as $300 per month in premium and provide more coverage.38

It’s especially important to closely review the exclusions and fine print on these types of policies prior to enrolling so you know exactly what qualifies you for the full benefit, a partial benefit, and what does not qualify at all.

A good way to get more information and find out what a plan may cost you is to speak to an agent.

888-855-6837

Where + When to Get it: Critical illness plans may be purchased in the private marketplace at any time throughout the year through a health insurance agent, carrier-specific website, or this website. They are not available through state-based and federally facilitated health insurance exchanges.


Supplemental Medical Gap Insurance

What it is: Gap health insurance is a form of supplemental insurance that works alongside your major medical policy (i.e. benefits are not coordinated between the two policies) to provide additional benefits often to help pay your major medical policy’s deductible for qualifying accidents and critical illnesses.

Gap may pay a benefit for treatment related to broken bones, heart attack, stroke, or severe burns for example. Of course, individual policies vary so you’ll need to review any plan you’re considering closely to understand what it covers and what it excludes.

How benefits are paid: Fixed benefit to the insured

Who can get it: Anyone that qualifies and lives in a state where these plans are available can enroll.

Who it’s good for: These plans may be good for people with high deductible major medical insurance policies, and/or those with little or no savings. Even with a major medical policy, more healthcare costs are being shifted to you, the policyholder, and you may find yourself responsible for thousands of dollars in deductible before your major medical policy pays anything.39

Comparative Cost: Medical gap premiums are typically relatively affordable. It’s not uncommon for monthly premiums to be under $100, however, rates are based on your age and health.

The best way to find out how much a medical gap policy would cost you is to get a quote.

Get a Medical Gap Quote

Where + When to Get it: Gap medical plans may be purchased in the private marketplace at anytime throughout the year through a health insurance agent, carrier-specific website, or this website. They are not available through state-based and federally facilitated health insurance exchanges. Remember, you have to qualify in order to enroll in medical gap insurance.


Supplemental Dental Insurance

What it is: Dental insurance helps cover oral health care costs such as cleanings, root canals, extractions, fillings, crowns and bridges that medical insurance doesn’t cover. Many health insurance plans do provide coverage for non-cosmetic dental work resulting from an accident.

Some highlights of dental insurance are:

  • Generally they exclude pre-existing conditions.
  • You can typically apply and enroll year round – dental plans are not subject to an open enrollment period.
  • Plans are flexible – you can select varying amounts of coverage to find a plan that fits your health needs and budget.
  • Annual deductibles for dental plans are quite affordable (often under $200 for the year).40

How benefits are paid: Percent is paid directly to the provider.

Who can get it: Just about anyone can get dental insurance.

Who it’s good for: Pediatric dental (and vision) is a minimum essential health benefit for children up to age 18 on major medical plans. However, insurers can opt out of providing these benefits. Adults are not required to carry dental insurance and dental benefits are generally not included in ACA plans for adults.

Adults that need oral healthcare will generally have to obtain a policy on their own.

Comparative Cost: Compared to the major medical health insurance costs that we’re accustomed to, dental insurance premiums and deductibles are very affordable.

A good way to find out what a plan may cost you is to submit a quick quote request form to compare coverage and premium options.

Get a Dental Insurance Quote

Where + When to Get it: Adult dental insurance may or may not be available through state-based and federally facilitated health insurance exchanges. Dental plans may also be purchased in the private marketplace through a health insurance agent, carrier-specific website, or this website. You can enroll in a dental plan at any time throughout the year.

Learn more:


Supplemental Vision Insurance

What it is: Vision insurance helps cover the costs of periodic eye examinations or corrective lenses. Many major medical health insurance plans do provide coverage for medical care related to eye injury or disease.

Vision care is most often covered on a scheduled basis that pays a fixed dollar amount for examinations, lenses and frames.

How benefits are paid: Percent is paid directly to the provider.

Who can get it: Just about anyone can get vision insurance.

Who it’s good for: Pediatric vision (and dental) is included as a minimum essential health benefit for children up to age 18 on major medical plans. However, insurers can opt out of providing these benefits. Adults are not required to carry vision insurance and vision benefits are generally not included in ACA plans for adults.

Adults that need corrective lenses or other vision care will generally have to obtain a policy on their own.

Comparative Cost: Compared to the major medical health insurance costs that we’re accustomed to, vision insurance premiums and deductibles are very affordable. You may be able to get a policy for less than $20 per month.41

Where + When to Get it: Vision insurance may be purchased in the private marketplace through a health insurance agent, or carrier-specific website.


Non-Medical Insurance Products that Include Benefits for Illness or Injury

The following forms of insurance are not explicitly health insurance, but some cover healthcare services, and may have a place in your overall financial planning toolkit alongside your medical policy.

Life Insurance: In the event of your death, life insurance pays a death benefit that helps care for your dependents. Life insurance is not required under the ACA. Life insurance may be purchased through an insurance agent or directly from life insurance companies. Many employers also offer life insurance as part of a comprehensive benefits package.

Auto Insurance: Most states require that drivers carry some level of auto insurance.42 Auto policies may include some different forms of coverage for medical expenses to some extent:43

  • Medical payments (also referred to as “MedPay”): A form of supplemental coverage to help cover the costs of injuries to you and your passengers sustained in an accident regardless of who is at fault, as well as injuries you sustain as a passenger in someone else’s car or as a pedestrian or bicyclist. The benefit can be used towards your major medical deductible, or to help cover medical costs not covered by your major medical plan.44
  • Personal Injury Protection (PIP): Similar to MedPay, PIP is supplemental insurance that covers you and your passengers when you sustain injuries in an accident regardless of who is at fault, as well as when you’re a passenger in someone else’s car or a pedestrian or bicyclist. However, you can also use the PIP benefit for non-healthcare related expenses like lost wages or childcare costs.45 Very few states offer PIP policies.
  • Uninsured/Underinsured Motorists Bodily Injury Coverage (UM/UMBI): This coverage includes benefits for healthcare related to injuries sustained by you and your passengers in the event another motorist causes an accident and they do not have auto insurance or do not have enough insurance to cover your medical bills.46

Not all of these auto insurance medical coverages are available in all states. And some states require some of these additional medical coverages to be part of auto policies sold in that state, so it’s important to understand what the availability and requirements are in your state if you’re considering this option.

All of these auto insurance medical coverages are supplemental in nature and may not provide you enough coverage in the event you need emergency care and/or become hospitalized as a result of an auto accident. None of them should be viewed as a replacement for a major medical health plan.

Disability Insurance: This type of insurance pays a portion of your income for anywhere from a few months to several years if you are unable to work because of an illness or injury. Policy terms, coverage and benefits vary considerably between plans so you’ll want to shop carefully. Many employers offer disability insurance as part of a comprehensive benefits package.47

Travel Insurance: These policies can cover a range of scenarios you may encounter when traveling, from lost luggage to canceled trips. But the most useful coverage may be medical benefits when traveling abroad in the event you become sick or injured and need to seek medical care. This could be a worthwhile purchase since typically your health insurance policy is only effective in your geographic area (but it is worth checking with your insurance carrier before you opt for additional travel insurance).48


What to Consider When Shopping For + Comparing Policies

So far, we’ve covered two factors when choosing health insurance:

  • Your individual and family coverage needs and
  • What kind of medical coverages are available.

Now, we’re going to review several parts of an average health insurance policy. These factors are important to understand as you compare your options as they will impact your total health insurance costs, including how much you pay out of pocket and what you pay in premium. They include:

  • The type of insurance network the plan uses
  • What services are covered and what’s limited or excluded
  • Out-of-pocket costs: copays, coinsurance, and deductible
  • Monthly premium

Type of Managed Care Plan – Networks

It’s important to understand what kind of network is associated with any health insurance plan you’re considering. A few things to keep in mind when selecting a network type are:

  • Do you live in a city or rural area? It will be easier to stay in-network for your healthcare services if you live in a more densely populated urban area than in a rural area where there are fewer providers and they’re more spread out.
  • Do you have a pre-existing condition? You’ll want to make sure that any networks you’re considering have providers in-network as some narrow network plans may not actually have providers in all specialties.49
  • Do you have a family doctor or preferred hospital? If you have a preferred provider that you want to continue to see, validate if they’re in the network for any plan you’re considering. If not, you’ll need to either consider other plans or find a new provider.
  • After hours + emergency care: What are the nearest in-network ER and urgent care facilities? While many states require plans to cover ER care at in-network rates if you’re taken to a provider that’s not in your network, you want to be clear about your options before you need critical care.50

What’s a “narrow network?”
Also referred to as a “restricted network”, insurance companies will select networks comprised of low-cost providers. These providers agree to accept reduced fees in order to receive a higher volume of patients. Some companies choose to exclude higher-cost providers.51

As a result, narrow network plans can be comprised of as few as 25% of local physicians.52 Comparatively, broad network plans generally have participation of 70% or more of local providers.53

Learn more about narrow networks and what to watch out for.

Below is a quick guide to finding the network type that may work best for you based on your preferences. You can take a deeper dive into health insurance networks to learn more.

HMO: You prefer to pay less in monthly premium and are able to stay in-network for all your healthcare services. In addition, you either already have or don’t mind designating a primary care physician (PCP). You’ll be scheduling an appointment with this individual before accessing any other covered healthcare services, for which your PCP will need to coordinate and refer to in-network specialists.54 Typically, there is no coverage for healthcare services obtained outside of your network except for very specific extenuating circumstances.

PPO: You prefer to exercise more control and choice when it comes to your healthcare and don’t mind paying more in premium to do so. With a PPO plan you can see providers in or out of your network but you’ll pay less for in-network services.

You have the ability to see a specialist without a referral by a PCP, however, you’ll need to coordinate with your insurance company before doing so to obtain pre-authorization, which means a bit more administrative work for you.55

EPO: Neither an HMO or PPO quite meets your needs – you’re looking for a plan with moderate premium rates and are able to stay within your provider network (like an HMO). However, you prefer to exercise more choice and control when it comes to seeing specialists and don’t want to have to rely on a PCP referral to access these services.

Again, you’ll be obtaining pre-authorization from your insurance company when seeking specialty care, so performing some of the additional administrative work on your own rather than working through your PCP.56 EPOs typically do not cover any healthcare services obtained outside of the pre-determined network.

POS: Again, neither an HMO or PPO quite meets your needs but in this case you prefer to work through a PCP who coordinates specialist referrals within the network. This is essentially an HMO with a PPO added on and you decide which network to utilize when you’re obtaining healthcare services. These types of plans are primarily only available for rural employees in group health plans.

You still have flexibility to obtain services out-of-network but you’ll be paying more out-of-pocket for these services. Again, this plan type has a premium cost somewhere between HMO and PPO plans.57

Covered Services + Health Benefits

ACA-qualifying major medical plans all cover the same essential health benefits, however, outside of this list of services, policies will differ as far as what specific treatments, services, prescription drugs, specialists, and other medical expenses are covered and at what rate.58

As you compare policies, consider how each one covers healthcare and services like:

  • Urgent care and ER visits
  • In-patient hospital care
  • Surgical care
  • Mental health services
  • Rehabilitative and habilitative services and devices
  • Pregnancy, maternity and newborn care
  • Prescription drugs (including birth control for women59)

Where can you find this information? Look for a “Summary of Benefits and Coverage” (SBC). Under the ACA, you have the right to an easy-to-understand summary about a health plan’s benefits and coverage.60

See a sample Summary of Benefits and Coverage. HealthCare.gov, state-based exchanges, carrier websites and other websites that sell ACA policies will also provide this information when you request a quote.

Non-ACA-qualifying health insurance plans (like short term medical, hospital, and critical illness insurance) are highly customizable and are not regulated by the ACA, so it may be more difficult to compare coverages and costs.

Additionally, these plans do not have to adhere to the ACA’s consumer protections, so it’s even more important that you read the fine print closely and if you still have questions contact the carrier of the policy.61

Exclusions and Limitations

As the saying goes, “the devil is in the details.” And when it comes to health insurance, that’s the exclusions and limitations list. Exclusions and limitations can include both pre-existing health conditions and medical services.

ACA Health Plans: All major medical health plans sold today are guaranteed issue, meaning you won’t be denied coverage or charged more if you have a medical condition, referred to as a pre-existing condition, or if you have a health history that includes them.62

This includes pregnancy. An insurance plan cannot reject you or charge you more because you are pregnant. And your pregnancy and childbirth are covered from the day your plan starts.63

There are some healthcare and medical services that are not included in the essential health benefits for major medical plans, so are not regulated at the federal level. These services may still be required and regulated at the state level, and may or may not be available in plans you’re reviewing. While not an exhaustive list, examples of these types of services include:

  • Infertility treatment64
  • Elective cosmetic surgery65
  • Weight loss surgery66
  • Dental + vision (for adults)67
  • Long-term care68
  • Chiropractic + acupuncture treatments69
  • Abortion care and male contraception like vasectomy or condoms70

Non-ACA Health Plans: Most health plans that are not ACA-qualifying major medical plans will have a list of exclusions and limitations of both pre-existing conditions and medical services.

That means that if you have a medical condition (from asthma to high blood pressure as examples) you could be denied coverage, charged more, or have limitations or exclusions relating to your health condition placed on your coverage.71

Typical medical service exclusions for these types of policies can include maternity care, prescription drugs, mental health and substance abuse, and tobacco cessation treatments.72

Prescription Drug Coverage + Drug Formularies

  • Major medical insurance will help pay the cost of certain prescription medications, however, you have to pay close attention to the drug formulary.73
  • Non-ACA health plans place limitations on prescription drug coverage. For example, a hospital indemnity plan may cover a portion of prescription drug costs while you’re hospitalized, but not once you’ve been released from the hospital.

Premiums

Your health insurance premium is the money you pay (typically each month) to your health insurance company to maintain your policy. As long as you pay this bill, you should have access to your policy’s benefits. This payment does not count towards your annual deductible.

Typically, the lower your annual deductible, the higher your monthly premium and vice versa.

ACA Health Plans: ACA-qualifying health plans can only use five factors when setting premiums: age, location, tobacco use, individual or family enrollment, and plan category.74

For example:

  • Older people will generally pay more
  • Your geographic location will impact competition, cost of living, and state and local rules may apply that could cause premiums to be higher or lower where you live
  • Tobacco users may be charged up to 50% more
  • If you have two or more people on the policy it will cost more each month
  • Bronze plans usually have lower monthly premiums but higher deductibles and the opposite is true for platinum plans.75

Non-ACA Health Plans: Non-ACA health plans may use all of the factors mentioned above and perform medical underwriting using your medical history to determine how much to charge you in premium, whether or not to even offer coverage and if certain exclusions or limitations will apply.76

Out-of-Pocket Costs

After you’ve paid your health insurance premium each month to maintain your policy, you’re still responsible for a portion of the costs when you receive healthcare. Your health insurance company may also cover a portion of the costs. This is referred to as “cost sharing” because you’re sharing costs with the health insurance company.

These shared costs are collectively referred to as “out-of-pocket” costs. It’s important to understand them as they pertain to any policies you’re considering since, typically, when a plan has a lower premium it has higher out-of-pocket costs associated with it and vice versa.

Coinsurance: The percentage of healthcare costs you pay even after you meet your annual deductible.77 A common coinsurance rate is 80/20, which means that after you’ve paid 100% of your healthcare costs up to your deductible amount, you’re still responsible for 20% of your covered healthcare costs until you reach the annual out-of-pocket maximum.

Copays: A set fee you pay for covered healthcare, for example, for an office visit, urgent care, or when getting a prescription medication. This fee is usually relatively affordable – a common office visit copay may be $20 to $50. Plans with lower monthly premiums have higher copayments and vice versa.78

Learn more about coinsurance and copays.

Deductibles: The total annual amount you have to pay for covered health services before your insurance company begins to pay a portion.79

Take a deeper dive into health insurance deductibles.

Out of Pocket Maximum: The out-of-pocket amount you have to spend for covered services during the plan year before your policy will pay for covered services 100%.80

Putting it All Together – Healthcare, Health Insurance Types + Policies

It all comes down to your individual healthcare needs and finances. But here are a few general guidelines to get you started when it comes to balancing premiums, out-of-pocket costs and your healthcare needs:

You have a pre-existing health condition that requires regular healthcare

If you have a pre-existing health condition that requires regular healthcare or you anticipate needing more services in the coming year, such as you’re planning to start a family, then you should consider an ACA-qualifying major medical policy such as a gold or platinum plan.81

Don’t just enroll in the lowest premium bronze plan but consider the full spectrum of out-of-pocket costs. It may make more sense instead for you to enroll in a lower deductible plan in order to access your policy’s benefits earlier in the year.

Find out where to shop for ACA medical plans by state.

Go to Healthcare.gov right now.

You qualify for a premium tax credit

If you qualify for a premium tax credit, you should consider an ACA-qualifying major medical plan. If you’re eligible for a premium tax credit, enrolling in a plan through the Federal Marketplace or a state exchange will qualify you for a tax credit you can use to lower your monthly insurance payment.

See if you could qualify for a premium tax credit.

ACA Subsidy Calculator

You qualify for a cost-sharing reduction

If you qualify for cost-sharing reductions (subsidies), you should consider an ACA major medical silver level health plan. Silver plans are the only ACA plans for which you can use subsidies to lower your deductible. You’ll also pay less each time you get healthcare.82

See if you could qualify for a subsidy.

ACA Subsidy Calculator

You don’t expect to use regular medical services

If you don’t expect to use regular medical services, don’t take prescriptions, and don’t qualify for a subsidy you may want to consider:

Want to compare temporary insurance coverage, premiums and deductibles?

Get a Short Term Health Insurance Quote

You may want supplemental dental or a gap plan

You may want to supplement a major medical or short term insurance policy if:

  • You want adult dental or vision coverage
  • You want additional benefits to avoid being underinsured or help with a high deductible health plan: Medical Gap, Hospital Insurance, or Accident + Critical Illness

Summary + Next Steps

After you’ve determined what the best health insurance is for you:

Remember, if you’re unable to enroll in major medical coverage right now, don’t go without any health insurance at all. You may still qualify for a temporary health insurance plan to help in the event of a critical illness or accident that lands you in the ER or hospital.

Input a few pieces of information and get multiple quotes right away. Apply and find out within minutes if you qualify and if you do, you can enroll in coverage starting as soon as the next day.

Get a Short Term Medical Insurance Quote

Want one-on-one help navigating your options? Call 888-855-6837 or find an agent near you to work with.

Need Supplemental or Short Term Insurance?

Apply in 3 Easy Steps

  • Get a quote within seconds
  • Compare multiple plans
  • Finish application online
Originally Published On July 25th, 2019
Independence American Insurance Company and/or Madison National Life Insurance Company, Inc. may underwrite the products referenced on this website. Legal Disclaimers.

Footnotes