Buying health insurance: A handbook

(Posted August 2019; updates planned) How do you buy health insurance?

We are frequently asked to help people buy health insurance. Our specialty is the cost of health care, not buying insurance. We don’t do individual consultations on what insurance to buy. We’re not really qualified for that, and also people must be certified and licensed to sell insurance or make recommendations in this highly (ineffectively) regulated industry.

But we know more than a lot of people about insurance, so we can set out a few basic ideas.

If you’re employed, your employer will have insurance offerings. Ask human resources for help, or wade through the written enrollment materials they distribute.

If you’re buying insurance outside of a job, you will be working on the same schedule everyone uses — open enrollment, which is at the end of the year (usually starting Nov. 1 or Nov. 15) for the next calendar year.

Buying on the exchanges, or Affordable Care Act plans

Outside of open enrollment: If you lost your insurance through a “life event’ like divorce, job loss etc., you can go on New York State of Health (or your state exchange or healthcare.gov) and go through the application process. Check here to see whether your state has its own site. The will tell you what the various levels of coverage available, and the prices/deductibles/what’s covered.

You will be asked to input income. Exchange insurance (under the Affordable Care Act) gives subsidies depending on your income level (either reduced premiums at the time of purchase, or a tax credit the following year).

You can only use the A.C.A. state or federal exchange websites outside of open enrollment to buy insurance if you have a “life event” — if not, you’ll need to either:

1. Wait for open enrollment. Usually around Nov. 1 or Nov. 15, depending on the state
2. Look for a short-term plan in the interim, though they are notoriously skimpy

If you don’t qualify for a subsidy, or non-A.C.A. plans

If you don’t qualify for an income subsidy, you can go directly to a company in your city/state to see if they will sell you individual insurance outside of open enrollment.

These off-exchange insurance policies tend to have larger networks and better benefits. They also tend to be more expensive than A.C.A. plans. Some companies don’t sell to individuals in certain states, and many also require a “life event” to sell outside of open enrollment. This would be the usual suspects — Blue Cross, Cigna, Aetna, Humana, UnitedHealthCare.

If you have kids, you might consider putting the kids on the CHIP insurance. This is limited by income level. States have their own rules, and you can apply any time of year.

Many families automatically put their kids on their own policies. But I know several families who have chosen the CHIP route and saved thousands and thousands of dollars.

Recent news coverage shows that 70 percent of kids on Medicaid and CHIP have parents who work at large private companies. Check the income guidelines in your state.

Coverage is generally worse on exchanges. There’s a bias built into these plans — a bias against people who are contractors and freelancers (assumption they don’t take good care of their health).

So, if you buy on exchange, you may get worse coverage. Something like 80 percent of buyers via the exchanges qualify for a subsidy (400% of poverty level).

What kind of plan should you actually buy?

Write out what health issues you have.

Planning to get pregnant? You’re likely to blow through even a high deductible.

Need a specific medication? Check that it is on your chosen insurer’s formulary, or list of approved drugs.

Need a specific doctor? Check the provider lists on the website. (Pro tip: These provider lists can change or be strangely screwed up in many ways. Take a screenshot showing that your doc or hospital is on the list, and make sure there’s a date. Who knows? You might need it to yell at somebody later.

Ask your doctor or her billing office,  which insurance do they recommend?

What’s important to you?

Do you need to have acupuncture covered?

Will you have coverage for the entire family? If applicable, does your spouse’s insurance have better terms? It’s worth examining this every year at open enrollment. Yes, it’s a lot of work, but you could be leaving money on the table.

Do you travel a lot? Some policies don’t work well across state lines.

What’s your general health status and risk tolerance? The bronze metal plans have lower premiums and generally higher spending for co-insurance, higher deductibles and so on. Platinum and gold have higher premiums and lower spending for co-insurance and deductibles.

The A.C.A. exchanges make it relatively easy to compare your expected outlay under comparable plans — gold, silver, bronze for each company and plan design.

Separate from the premium and deductible, you should look for co-insurance. This is a term for what percentage of costs you pay AFTER meeting your deductible. These charges can be hefty — 10 percent, 20 percent of the charge (or the negotiated amount — and can really add up fast.

One way insurance gets you, until you meet your deductible you must pay full price for labs — increasingly, we are hearing, even paying the charged price (chargemaster) instead of the negotiated rate, depending on your plan language. But you can get labs much cheaper if you buy on cash at some locales. You can find low cost providers using our search and share tool. It may be that your insurance is paying $200 for thyroid blood panel, when you could get it for $47 in cash (though that would not fall against your deductible — so if you think you’ll meet your deductible, then it may make sense to pay the higher rate.) To find out what stuff costs in advance, look at our handbook on the topic.

Quite often, you can save money by buying on cash rather than using your insurance. Check out our blog post on that, and also on how to save money on prescriptions; it might be true that cash is cheaper than the insured rate.

Pro tip: Go through this assessment of plans and your needs every year. Plans change, and needs change. You could find that you save a ton of money, or get better coverage than you did last year.

Expert help

There are people who do consultations on what insurance to buy in many states and locales, with federal funding, called “navigators.” In New York, for example, the Community Service Society of New York heads an umbrella organization of navigators; find details here.  Here is one in New Jersey. The current administration has cut back funding for navigators, though you can most likely find them on the New York State of Health (or other exchange) website, or by googling “health insurance navigator” in your area.

There is a page on healthcare.gov that suggests that it will serve up local help, but it didn’t work when I tried to use it; it’s here. States that have their own exchanges, like New York, may not be represented on that search page, because that page serves the states on healthcare.gov. Also, because of the funding cutbacks, there may not be a navigator in your town.

Sometimes libraries or other public service organizations will have assistance, particularly during open enrollment.

I usually tell people to ask all their friends who are in a similar situation, and to value the recommendations of the best-informed — sort of like reporting out a news story.

We also convened a Facebook group here in my village, in southern Westchester County, N.Y., where we all compared notes on what we needed and what we were buying. I  don’t like the idea of having too much info on Facebook, but it helped people share their research and compare with others.

Navigators are supposed to be unbiased sources of information.

Separately, health insurance brokers exist who will do that service for a fee, or sometimes without a fee, but you might want to consider this: They sell what works for them (earning commission, for example) rather than what’s necessarily best for you. They’re supposed to be licensed to give advice on insurance.

So we don’t routinely recommend going with a broker. This provokes great yelps of indignation from the broker community, which wants us to know that they are the best source of information on plans. You should do your homework in any case, whether you use a broker or not.

Going online or not

We are often asked which of the online insurance marketplaces are the best (getinsured.com, healthsherpa.com, ehealthinsurance.com etc.), and I routinely say I don’t endorse any of them. It is not clear to me that you are getting full information or expert handholding, though it may seem quick and easy. Also, I believe they make commissions on what they sell you, which immediately makes the information subject to doubt in my mind.

I had an opportunity to compare some offerings of an online marketplace with a local source recently, and the online opportunity was abysmal. I called through to speak with a representative, and her information, too, was spotty and questionable — perhaps not surprising, given that she’s looking at a computer monitor in Florida and has never actually done a deep dive in New York.

One important note: DO NOT go to a series of web sites and type in your name and phone and email and say you are looking for insurance. You will be driven crazy by telemarketers and emails.

HSA or not

There is a big movement to sell people on tax-deferred Health Savings Accounts. These benefit mostly well-to-do people who have the money to set aside for deferred savings. Many insurance plans do not accommodate an HSA. If this is important to you, you’ll be limited in your choices.

Do your own research and decide whether this makes sense for you. Don’t take somebody else’s word for it.

A Health Savings Account is not going to reduce the amount you spend, but you might receive money from an employer, enjoy tax benefits and so on. The Health Savings Account is not the magic answer to all your health cost problems.

Here are some resources: This story from CNN and Kaiser Health News; this story from Kaiser;  and this story from BenefitsPro. As we said: do your homework.

going direct to a company: How to do it

The idea here is to send an email to individual companies and get an apples-to-apples quote.

Remember that the insurance companies rely on fear, uncertainty, doubt (FUD precept): They want you to be afraid you’re going to have a huge bill if you don’t buy more of that insurance stuff.

If you could compare plans one up, you would have less FUD. But you look at this big black box that scares you — buying insurance is complicated, isn’t it?! — so you wind up paying more for a platinum plan.

You can look at the plans and say, I accept that amount of risk, and not that amount of risk. It’s like buying a car, or a house, except it’s not, because it’s your body.

Plans are labeled with metal levels for consistency. These are general rules of thumb, but again — you should analyze all the information carefully.

Bronze – typically, pay lower premium, highest out of pocket responsibility

Silver – higher premium

Gold – still higher premium

Platinum – highest premium, lowest out of pocket responsibility

If you have systematic approach and can get data to compare health plans and get information that you can pair with what matters for you, then you can make a decision.

If you go with a broker, that broker may sow fear, uncertainty and doubt. So here’s some advice.

Know from the outset you are going to hate your insurance company. The system is stacked against the patient. But since you are being systematic, think of this: send this/use this for a script with/ insurance companies and also brokers. Though I am really skeptical about brokers, as advertised.

Some of the companies have “shop plans” sites like this, but you will see that they say “Empire offers dental and vision insurance for you and your whole family. For health insurance coverage options visit https://nystateofhealth.ny.gov, contact your broker, or call 844-285-2036. We currently do not offer term life insurance in New York. To purchase dental or vision insurance select Shop Plans.”

Also, a company site won’t let you easily compare with others’ plans.

Again: The New York State of Health and the other state exchanges and federal exchanges are most advantageous for those who qualify for subsidies, and who can accept in return for that a narrower network or a lower level of coverage. So you might be better off going direct to an insurer.

Going direct to insurer? Ask simple questions, so you can compare apples to apples

Going direct you will probably pay more (because you won’t get a subsidy), but you will probably get a bigger network and better coverage. Some of the companies will absolutely not sell individual coverage, though. Here’s a possible script.

Hi, I’m selecting health insurance for myself.

I had a “life event” — my employer stopped offering insurance (however you want to word this, but “life event” is important) –and I need to get health insurance starting xxx xxxx, 2019.

I am a single woman, age xx. I live in New York and travel a lot nationally for business. I have no major health issues.

(Or: I’m buying for my family — myself, my spouse and two kids. We live in Westchester, and both of us are employed at our family business. One of our kids has asthma, and we are planning a third baby next year.)

I would like a quote from you for my health insurance for the remainder of the year, starting xxx xxx, 2020 (or for calendar 2020).

1. Platinum, gold, silver, and bronze plans

2. I do not qualify for subsidies on the exchanges, so I want to buy insurance directly from ( x company) for the remainder of this calendar year.

3. I reside in xxx (could add “but require insurance coverage for occasional business trips to xx and xx, so I will need national coverage) and here is my business address.

This could change for many reasons, but is a reasonably good starting script.

Make a spreadsheet if you can. It will help you compare options.

The PEO option

We’ve been hearing from entrepreneurs and self-insured individuals (freelancers, for example, or founders) who are trying to avoid high costs and get better coverage by setting up insurance via a Professional Employer Organization (PEO).

The two most common paths to get health insurance for people not covered by employer-sponsored insurance are either buying insurance via healthcare.gov or the state exchanges, or buying off the exchanges via an individual broker.

But these PEOs — TriNet, JustWorks, Gusto and Insperity are among the names you may have heard — can be an alternative for self-employed individuals, entrepreneurs and small businesses. What they do: Set up payroll, taxes, compliance, benefits and other employee management tasks, freeing the business from doing all of that in-house.

We are hearing of entrepreneurs who are seeking health insurance via a PEO and accepting the outsourcing of management tasks like payroll as a side benefit. Often when a business sets up a PEO arrangement, it’s the other way around: Outsourcing management tasks comes first, with health insurance, etc., as a side benefit.

Here’s a piece I wrote about this for Forbes not long ago. Again, do your homework. I know people who got a “too good to be true” offer for a PEO coverage option. Indeed, it was too good to be true, and they had to retrench.

Health care sharing ministries

We have heard some hair-raising stories about these ministries, which are not actually insurance. Members pay a monthly fee, in most cases, which is supposed to cover their medical expenses. Sharing ministries, most of them faith-based, have spread nationwide, and they may look attractive because of  low costs. But the number of complaints from unhappy customers complaining that their bills were not paid has increased. The FBI is looking into their business practices in some states.

Here’s an article by Andy Miller from Georgia Health News about the state insurance commissioner waving some red flags, and mentioning activities by law enforcement in states other than Georgia.

Here’s a post on our blog by a member who took the time to write about the trouble he had in getting his bills covered.

 

Some takeaways

I you’re a savvy shopper, you will compare your options every year. Things are changing rapidly — Your choices will be quite different this year, partly because state regulators and individual insurers are reacting differently to the events in Washington. Also, in many cases, the government tax credit subsidy to people who buy insurance on the exchanges has changed – so even if you didn’t qualify last year, you might this year.

The tips here are most useful for people who are getting health insurance under the Affordable Care Act, outside of employer-sponsored offerings – those who use either healthcare.gov or the insurance exchange in their home state (California and New York, for example). If you have an employer-sponsored plan, you too will be required to know more than in past years, but your questions are likely to be different from those of A.C.A. customers.

Increasingly, we are hearing from people whose employer-sponsored plans are so awful that they are looking to go on the exchanges and buy better care. We hope this guide will be of assistance.

For Affordable Care Act purchasers, the administration has cut the advertising budget that was intended to encourage  enrollment as well as cutting funding for navigators, the people paid to advise enrollees about the subtleties, making it harder to know what to do.

The administration also cut the enrollment period to Nov. 1-Dec. 15 , for coverage beginning Jan. 1, 2019, in the states where healthcare.gov, the federal site, runs enrollment; in states that have their own exchanges, enrollment deadlines can be as early as Dec. 15 or as late as Jan. 31 for 2018 coverage. Know your deadline.

Another big hurdle for all of us: Information is fragmentary and seems to be changing constantly. This brings anxiety, and it also threatens your ability to be calm and do your best research. Stay calm. Do your homework.

In preparation, you’ll want to do all the normal things – think ahead. If you’re planning to have a baby or major surgery, for example, you’ll choose to go one way. If you don’t expect to have big spending, you’ll go another way. Check that your providers are indeed in the network of the plan you’re contemplating. If you have big medication expenses, you’ll factor those into your decision, just as in previous years.

Here are our five smart tips.

  1. Do your research carefully. Decisions will vary greatly state by state, and family by family. For example, you may qualify for tax credits this year, even if you did not last year. About 80 percent of people who buy insurance on the exchanges qualify for a the tax-credit subsidy – so don’t be scared by a sticker price on a plan, but rather go through the entire process of inputting your income, number of children etc. Resist the impulse to take the “silver is always better” advice from people who don’t know your situation and your state’s regulatory decisions. Resist the impulse to renew what you had last year, because there have been big changes. This is all mind-numbingly complicated, and we will all of us hate our insurers forever. But we must plow ahead, and research carefully.
  2. Look at this site, and this state-by-state breakdown for insights. Charles Gaba is a web developer in Michigan who has become a national expert on the arcane ways of the A.C.A. He and some colleagues did amazing research on the effects of the administration’s last-minute decision to throw into doubt the payments made to insurers to ease out-of-pocket costs for some insured people (the Cost Sharing Reductions), and other factors. He credits fellow A.C.A. nerds Dave Anderson (Balloon Juice), Louise Norris (healthinsurance.org) and Andrew Sprung (Xpostfactoid) for assistance. Their work fills an important gap with the cut in navigators. Without going into deep detail, I strongly suggest that you read this post and then keep an eye on Gaba’s site and this spreadsheet for updates and this explainer for details if you want. In some states, for example, a silver plan can cost more than a gold plan this year, depending on your income. In some states, a bronze plan will be free, depending on your income. Last-minute changes are still turning up. (Disclosure: Gaba and I talk from time to time, though we have never done business together.)
  3. Look outside the exchanges. You might think you are better off on the exchange in your state, or that you don’t qualify for a tax credit subsidy. If you don’t qualify for a subsidy, you might well be better off outside of the exchange. In New York State, where I live, some insurance companies are selling individual plans both on the exchange and off the exchange — and some are selling little or no individual business directly, off the exchange. Gaba’s advice: “The main point is that EVERYONE should shop around REGARDLESS of which state they live in since there are so many other variables. If someone is 100% certain that they don’t qualify for subsidies, they should make sure to compare on- and off-exchange options.”
  4. Ask friends and neighbors. Many of us do this already, but this year it makes even more sense. You may find official assistance,  though even if you can, real people may know more than a navigator or an off-exchange broker (a broker, too, is probably making money by selling you something). In my village, for example, there’s a Facebook group of people researching this topic with information like “Susie at Medical Group A says they won’t be taking Insurance X this year” or “I found this broker through a friend – he sells off-exchange policies and may be a resource. Please report back.” Or “This broker says he’s the only one, but I found this one too.” Or “I searched my GP and the insurer’s website says she isn’t a participating provider — but another doctor in her practice is. Then I called the doctors’ billing department and they told me if one doctor in the group participates they all do.”
  5. See if you have any non-obvious opportunities, like a union or trade group. We hear that many people find USAA to be a good choice, but it requires a military affiliation in your family. Others may have access to a Chamber of Commerce insurance plan. Here’s a list of organizations compiled by PEN America, the writers group, listing options that you may not have thought of as membership organizations. One example: A friend’s wife is a lighting designer, and she’s insuring him through her union membership.

Other resources

Here are a few other resources.

An economist who won the Nobel Prize, Richard H. Thaler, wrote two pieces for The New York Times about how to think about choosing wisely, and how to actually calculate (paywall). Read these, and you’ll be on solid ground.

This New York Times guide has some handy tips (paywall). It was written in 2017 for the 2018 enrollment season, so it’s a bit dated.

Kaiser Health News offers five things you need to know about open enrollment.

Here’s the Kaiser subsidy calculator, which the Kaiser folks have updated with 2019 plan info. I have not checked it, but in the past their track record has been very good. They update regularly, so expect 2020 data at the right time.

Get America Covered offers a tool that lets A.C.A. enrollees search by zip code to see the closest Obamacare navigators and make appointments.

This insurance forum is for brokers. You can find some really surprising information here.

Do your research — and let us know your best hints and resources in the comments.