Getting Your Own Health Insurance Plan

Quick answer

• Understand your healthcare needs and budget.
• Explore options on the Health Insurance Marketplace or directly from insurers.
• Compare plans based on premiums, deductibles, copays, and coverage.
• Look for subsidies or tax credits that can lower your costs.
• Read the fine print regarding exclusions and limitations.
• Consider bundling with other insurance for potential discounts.

What to check first (before you buy or change coverage)

Coverage Needs

Before you even look at plans, take stock of your healthcare situation. Consider your current health status, any ongoing medical conditions, prescription drug needs, and whether you have dependents who will also need coverage. Think about how often you typically visit doctors or specialists.

Deductibles and Premiums

These are two of the most significant cost factors. Your premium is the amount you pay each month to have insurance. Your deductible is the amount you pay out-of-pocket before your insurance starts covering most services. A lower premium often means a higher deductible, and vice-versa.

Exclusions and Limits (General)

No health insurance plan covers everything. It’s crucial to understand what services or treatments are excluded from coverage and if there are any annual or lifetime limits on what the plan will pay. This information is typically found in the plan’s summary of benefits and coverage.

Claim Process

Familiarize yourself with how to file a claim and what the typical turnaround time is. Understanding the appeals process in case a claim is denied is also important. Knowing this upfront can save you stress if you need to use your insurance.

Bundling and Discounts (General)

Some insurance providers offer discounts if you purchase multiple types of insurance from them, such as health and auto insurance. While less common for individual health plans, it’s worth inquiring about any potential savings.

Step-by-step (simple workflow)

Step 1: Assess Your Healthcare Needs

What to do: List your typical healthcare usage, any chronic conditions, and prescription needs.
What “good” looks like: A clear, written list that helps you identify the types of services you’ll most likely need.
Common mistake: Underestimating your needs or assuming you won’t need much care. This can lead to choosing a plan with inadequate coverage. Avoid this by being realistic about past usage and potential future needs.

Step 2: Determine Your Budget

What to do: Calculate how much you can afford for monthly premiums and potential out-of-pocket costs like deductibles and copays.
What “good” looks like: A realistic monthly and annual figure that you’re comfortable spending on healthcare.
Common mistake: Focusing only on the monthly premium and ignoring the total potential cost, including deductibles. Avoid this by calculating the worst-case scenario of hitting your deductible each year.

Step 3: Explore Your Options

What to do: Research plans available through the Health Insurance Marketplace (Healthcare.gov) and directly from insurance companies.
What “good” looks like: A list of potential plans from different sources, noting their plan types (HMO, PPO, etc.).
Common mistake: Only looking at one source for plans. Avoid this by checking both the Marketplace and directly with insurers, as sometimes different plans or pricing are available.

Step 4: Understand Plan Types

What to do: Learn the differences between HMOs, PPOs, EPOs, and POS plans.
What “good” looks like: A basic understanding of how each plan type affects your choice of doctors and the cost of care.
Common mistake: Not understanding how referrals work or network restrictions. Avoid this by noting if you need a referral to see a specialist or if you have flexibility in choosing providers.

Step 5: Compare Premiums and Deductibles

What to do: Create a spreadsheet or list to compare the monthly premiums and annual deductibles of your shortlisted plans.
What “good” looks like: A side-by-side comparison that clearly shows the upfront costs of each plan.
Common mistake: Picking the plan with the lowest monthly premium without considering the deductible. Avoid this by looking at the total potential annual cost if you were to meet your deductible.

Step 6: Analyze Copays and Coinsurance

What to do: Examine the copayments (fixed amount for services) and coinsurance (percentage of cost you pay) for doctor visits, specialist visits, and hospital stays.
What “good” looks like: A clear understanding of your out-of-pocket costs for common medical services.
Common mistake: Overlooking these costs, assuming they are included in the deductible. Avoid this by noting that copays often apply before you meet your deductible, while coinsurance applies after.

Step 7: Check Prescription Drug Coverage

What to do: Review the plan’s formulary (list of covered drugs) to ensure your regular medications are included and understand their tiering and associated costs.
What “good” looks like: Confirmation that your essential medications are covered at a reasonable cost.
Common mistake: Assuming all prescription drugs are covered equally. Avoid this by verifying your specific medications are on the formulary and checking the copay/coinsurance for each tier.

Step 8: Investigate Network Providers

What to do: Verify if your preferred doctors, hospitals, and specialists are in the plan’s network.
What “good” looks like: A list of your essential providers confirmed to be in-network for the plan you’re considering.
Common mistake: Assuming a doctor is in-network without verifying directly. Avoid this by checking the insurer’s provider directory and confirming with your doctor’s office.

Step 9: Review Out-of-Pocket Maximums

What to do: Understand the maximum amount you would have to pay for covered services in a year.
What “good” looks like: A clear understanding of your financial safety net in case of a major medical event.
Common mistake: Not understanding that deductibles, copays, and coinsurance count towards this maximum. Avoid this by recognizing this is the absolute most you’ll pay for covered care in a year.

Step 10: Look for Subsidies and Tax Credits

What to do: If purchasing through the Marketplace, check your eligibility for premium tax credits or cost-sharing reductions based on your income.
What “good” looks like: A reduction in your monthly premium or out-of-pocket costs.
Common mistake: Not applying for available financial assistance. Avoid this by completing the application thoroughly on the Marketplace website.

Step 11: Read the Fine Print (Summary of Benefits and Coverage)

What to do: Carefully review the Summary of Benefits and Coverage (SBC) for any plan you are seriously considering.
What “good” looks like: A thorough understanding of what is covered, what isn’t, and how much you’ll pay.
Common mistake: Skipping this document, assuming it’s just more jargon. Avoid this by treating the SBC as your primary guide to the plan’s details.

Step 12: Make Your Decision and Enroll

What to do: Select the plan that best fits your needs and budget, and complete the enrollment process before the deadline.
What “good” looks like: Successful enrollment in a health insurance plan that provides the coverage you need.
Common mistake: Missing the enrollment deadline. Avoid this by noting the open enrollment period dates and acting well in advance.

Common mistakes (and what happens if you ignore them)

Mistake	What it causes	Fix
Focusing only on the lowest monthly premium	High out-of-pocket costs when you need care; potential for medical debt.	Compare total potential costs, including deductibles, copays, and coinsurance, for your expected usage.
Not verifying provider network	Unexpectedly high bills for out-of-network care; difficulty finding in-network doctors.	Always check the insurer’s provider directory and confirm with your doctor’s office that they are in-network for that specific plan.
Ignoring prescription drug coverage (formulary)	High costs for necessary medications; needing to switch prescriptions.	Verify your specific medications are covered and check their tier and associated costs before enrolling.
Not understanding copays vs. deductibles	Surprise costs for doctor visits or services before meeting the deductible.	Understand that copays may apply immediately for some services, while deductibles must be met before coinsurance kicks in.
Failing to check out-of-pocket maximums	Unmanageable financial burden during a major illness or injury.	Ensure the out-of-pocket maximum is a figure you can afford in the event of catastrophic medical expenses.
Missing enrollment deadlines	Being uninsured for a period, leading to significant financial risk.	Note open enrollment dates and special enrollment period triggers; enroll as soon as you’re able.
Not reading the Summary of Benefits and Coverage	Lack of understanding about what’s covered, leading to denied claims.	Treat the SBC as your primary document; review it thoroughly for exclusions, limits, and coverage details.
Assuming all plans are the same	Choosing a plan that doesn’t fit your specific needs or preferences.	Actively compare plan types, coverage levels, and provider networks to find the best fit for your situation.
Not considering pre-existing conditions	Potential for coverage limitations or higher costs if not handled correctly.	While ACA plans generally can’t deny coverage for pre-existing conditions, understanding how they’re covered is vital.
Overlooking the claims and appeals process	Difficulty navigating the system when a claim is denied.	Familiarize yourself with the insurer’s process for filing claims and appealing denials.

Decision rules (simple if/then)

• If you have a chronic condition requiring frequent doctor visits and medications, then choose a plan with a lower deductible and lower copays for prescriptions and office visits because your predictable costs will be higher.
• If you are generally healthy and rarely visit the doctor, then a plan with a high deductible and lower monthly premium might be suitable because your out-of-pocket costs will likely be minimal.
• If you want the flexibility to see any doctor without a referral, then look for a PPO plan because they generally offer broader network access and less restrictive referral requirements.
• If you are comfortable with a more managed care approach and don’t mind getting referrals, then an HMO plan might be a good choice because they often have lower premiums and copays.
• If you need to cover your children and want to ensure they have access to pediatric specialists, then check the plan’s network carefully for pediatric providers.
• If your income is within a certain range, then you may qualify for premium tax credits or cost-sharing reductions on the Health Insurance Marketplace because these subsidies can significantly lower your healthcare costs.
• If you regularly take expensive brand-name medications, then review the plan’s formulary and drug tiers carefully to understand your out-of-pocket costs for those specific drugs.
• If you anticipate needing surgery or a hospital stay in the coming year, then pay close attention to the plan’s coverage for inpatient services and the associated deductibles and coinsurance.
• If you want to ensure your current doctors are covered, then verify their participation in the plan’s network directly with the insurance company and your doctor’s office.
• If you are concerned about unexpected medical bills, then understand the out-of-pocket maximum for each plan because this sets the limit on your annual spending for covered services.
• If you are self-employed or not offered insurance through an employer, then the Health Insurance Marketplace is your primary starting point for individual health insurance options.
• If you are considering a plan with a very low premium, then be prepared for a potentially high deductible and understand how that impacts your overall financial risk.

FAQ

What is the Health Insurance Marketplace?

The Health Insurance Marketplace, also known as the Affordable Care Act (ACA) Marketplace, is a platform where individuals and families can shop for and enroll in health insurance plans. It’s designed to offer a variety of plans with standardized coverage levels and potentially provide financial assistance.

Can I get health insurance at any time?

Generally, you can only enroll in a health insurance plan during the annual Open Enrollment Period. However, certain life events, such as losing other coverage, getting married, or having a baby, may qualify you for a Special Enrollment Period.

What’s the difference between a deductible and a copay?

A deductible is the amount you pay for covered healthcare services before your insurance plan starts to pay. A copay is a fixed amount you pay for a covered healthcare service, like a doctor’s visit, after you’ve met your deductible.

What is coinsurance?

Coinsurance is your share of the costs of a covered healthcare service, calculated as a percentage (e.g., 20%) of the allowed amount for the service. You pay coinsurance plus your deductible.

What is an out-of-pocket maximum?

The out-of-pocket maximum is the most you will have to pay for covered services in a plan year. After you spend this amount on deductibles, copayments, and coinsurance, your health plan pays 100% of the costs of covered benefits.

How do I know if my doctor is in-network?

You can typically find a plan’s network of providers by visiting the insurer’s website and using their “Find a Doctor” tool. It’s also wise to call your doctor’s office directly and confirm they are participating in the specific plan you are considering.

What are premium tax credits?

Premium tax credits are financial assistance available through the Health Insurance Marketplace to help eligible individuals and families pay for their monthly health insurance premiums. Eligibility is based on income.

What is a Summary of Benefits and Coverage (SBC)?

The SBC is a standardized document that health insurers must provide to consumers. It outlines the key features of a health insurance plan, including what it covers, out-of-pocket costs, and coverage limitations, in a clear and easy-to-understand format.

What this page does NOT cover (and where to go next)

• Specific details on Medicare or Medicaid eligibility and enrollment.
• Complex tax implications of health insurance deductions or credits.
• Employer-sponsored health insurance plans and their specific features.
• International health insurance or travel medical insurance.
• Detailed analysis of specific insurance companies or their financial ratings.