You’ve Started Your Health Insurance. Now What?

Hi All,

Annette here. With the start of a new year comes the start of new health care plans. Some of you reading this may have coverage through your employer, some of you may be proactive and have already purchased a plan through the market place, and some of you may still be cringing at the very though of health insurance. So, I have decided to kick off this new blog with a break down of some health insurance terminology and, hopefully, shed some light on this topic.

Starting with some terms that may help you:

I signed on to the government marketplace at Healthcare.gov, just to see what type of plans were available to a 29 year old single woman with no dependents. The average premium was $120 a month, the average deductible was 5000, the average co-insurance was 70/30 and the average out of pocket was 7000 and the average copay was $50.

Let’s start with the easy one, and the one that most of you reading this should recognize. A sick visit to your doctor or a spinal adjustment with your chiropractor is usually a one time service. You get in, you get what you need, and after you leave you usually won’t come back until your next ailment. Typically, these small services would cost you a Co-payment. This is a one time fee that you pay up front at the office, then your insurance company will pay for any amounts above your copay. For example, let’s say a visit with you doctor costs $120. If you had the benefits listed above you would pay $50 at the office, and your insurance company pays the remaining $70 afterwards.

Reoccurring services (such as therapy) or “bigger” services (like surgery) typically (and I use this word loosely) wouldn’t cost you a copay, but would apply to your Deductible and Out of Pocket, instead. Pretend for a moment that you have two buckets. On the first bucket write the word “Deductible”. On the second bucket write the word “Out of Pocket”. If you have the benefits listed above then your deductible bucket can only hold $5000, while your Out of Pocket bucket only holds $7500. As you obtain services the cost of each service (i.e. $120 for a doctor’s visit, $320 for a surgery, etc) starts filling up the deductible bucket. As you fill that bucket, you will be responsible for 100% of those costs and your insurance company will cover 0% of those costs until that bucket is holding $5000 dollars worth of services. Once that bucket is full, your insurance company will then begin covering services (or Co-Insurancing these services) at 70%, leaving you responsible for 30%. That 30% co-insurance, that you pay for each service, then starts getting added to the Out of Pocket bucket. Once the Out of Pocket bucket has been filled, then your insurance company will begin paying 100% for your services.

Finally, the cost to keep this (above referenced) insurance plan would be a monthly bill of $120 Premium. Typically the higher the premium, the lower the deductible and out of pocket and Vice Versa. So you may think you are saving money up front by choosing the health plan with the lowest monthly fee but, you may be spending more money later if you plan to go to the chiropractor’s office.

It seems like a rip off, doesn’t it? But here’s the thing, doctors are allowed to bill whatever they want. Lets say an X-ray costs them $120 (taking into consideration the cost of the technician and the electricity). They are allowed to bill $320 for that $120 service. But lets say this doctor chose to become contracted with your health insurance provider (aka, In-Network) that means he/she entered a contract with your insurance company that says they are not allowed to get more than $120 dollars for this X-ray. So even though the doctor billed $320 for this X-ray, you are only responsible for the $120 that applied to your deductible. Or 30% of the $120 that applied to your out of pocket. If you did not have insurance you would be responsible for that $320 dollars. Your insurance card is like your grocery discount card, without it you are paying the full retail price for that item.

If you add a spouse, significant other, or a child to your policy, you will now be responsible for a family deductible and out of pocket, which is usually higher than if you were on the plan by yourself. So if you find yourself feeling bummed about being single, look on the bright side, your health insurance is cheaper 😉.

So, what happens if you choose to go without insurance?

An understandable question, we are talking about a lot of money here. Uncle Sam steps in to take his cut in the form of a Tax 😔

The healthcare reform is going to call it a fee, for an “individual mandate” but I call it as I see it and this is a Tax. Though, I like how they explain it on their website so I’ve copied it word from word from www.healthcare.gov here:

The fee is calculated 2 different ways – as a percentage of your household income, and per person. You’ll pay whichever is higher.

Percentage of income

  • 2.5% of household income
  • Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace

Per person

  • $695 per adult
  • $347.50 per child under 18
  • Maximum: $2,085

For example, if you make $25,000 a year, 2.5% of your income is $625. If you are over the age of 18, you would  pay the $695 fee because it is more than $625. If you are under 18 you would pay the 2.5% because $625 is more than the fee of $347.50. If you make $30,000 a year, 2.5% of your income is $750. You would be responsible for the amount regardless of your age because the 2.5% is higher than either fees.

 

This will be increasing for 2017. Keep in mind the Fee for 2015 was $325 per adult, $162.50 per child and only 2% of your income. I predict (but this is just a theory) that in the future this fee will follow in the footsteps of the Alcohol and Tobacco Tax, increasing (with some regulation) whenever the government needs money.

So, Annette what is your advice?

I am so glad you asked that question because I have an opinion about your options.

Beware! My advice comes with a disclaimer. ONLY take this advice if you are under the age of 35, make minimum wage, have no dependents, no health problems, and work in an industry where the worst health affects to occur could be a paper cut or carpel tunnel syndrome.

Go without and pay the fee.

Think about it. $120 dollars per month, will cost you $1440 a year just so you can say “I have insurance”. That does not include any copayments, deductibles, and co-insurance you would have to pay if you actually saw a doctor. In comparison, your penalty for going without health insurance for the year of 2016 will be $695 (assuming you make less than $25,000 a year). Please understand why this advice comes with a disclaimer. Accidents happen. An ambulance trip to the ER and an overnight stay in the hospital could run you the price of a new car.

Still need more time to decide? Although you have until January 31st to purchase insurance through the government marketplace (healthcare.gov), you can purchase insurance at anytime through a health insurance company such as Blue Cross Blue Shield, Aetna, etc. Just keep in mind, you would still be charged the fee when you file your taxes, but only for the months you were with out coverage, and the tax credits that may be available to you through the marketplace, may not be available through these insurance companies.

I realize this post consists of a lot of information, but hopefully its enough to empower you regarding your health coverage.

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