I Want to Get Health Insurance
Understand why health insurance is important.
When you’re healthy, paying for health insurance might seem like a waste of money. But having health insurance safeguards your finances and your health. It gives you access to health care services and provides discounted rates for these services, so you’ll use them and prevent yourself from having serious health issues. Without coverage, your routine office visits, prescription medicines and especially your unexpected hospital stays could really drain your wallet.
Find out what plans are available to you.
Depending on your situation, you may have several options to consider. Lay them all out before you begin comparing the pros and cons. If you think
If you have a job …
Your employer will probably offer some form of group health insuranceGroup health plans are benefit plans for employees run by an employer, organization or union., though you may or may not have a lot of choice in which kind of plan you can get.
If you’re between jobs …
Good news! You can temporarily extend the health insurance coverage you received from your previous employer. The bad news: This option, called COBRA (Consolidated Omnibus Budget Reconciliation Act), a series of federal health benefit provisions, is expensive. Another option is to buy an individual and family plan, or even short-term insurance, to cover the gap before you start another job. (If you’re interested in buying either of these, you’re in the right place! Keep following the steps.)
If you’re a student …
You have several options. Your parents can continue to cover you on their plan, you can purchase your university’s health plan, or you can buy your own individual planIndividual plans can cover an individual, couple or family and are purchased directly by the person seeking coverage..
If you’re a recent grad …
You can stay on your parents’ plan until you’re 26. Or, if you get a job, you can enroll in any group health insurance sponsored by your employer.
If you have a partner or spouse …
You can get your own health insurance or obtain coverage through your partner’s plan.
If you’re starting a family soon …
You can be covered under your partner or spouse’s plan, buy an individual or family plan or apply for a group health plan from your employer, union or other organization. (Again, if you want to buy your own, keep the following the steps to learn how!)
If you’re low-income …
Every state offers public programsPublic insurance plans, such as Medicare or Medicaid, are government-sponsored programs meant to cover people with low-income or disabilities. There are also programs that cover veterans, members of the military, federal and state government employees, and Native Americans. to help individuals or families who are struggling financially or cannot get approved for coverage, though the waiting lists can be very long.
If you don’t fall into any of the above categories …
You can buy your own health insurance plan online (which we’ll show you how to do) or through an organization or a union.
Determine whether you are eligible for any of these plans now.
For some health insurance options, there may be a certain window of time when you can sign up, or a waiting period until you’re fully covered.
You can apply to buy an individual plan anytime, though some have restrictions on certain benefits. Individual plans often have a waiting period (usually between 12 and 18 months) before they will cover prenatal care and delivery.
When you start a new job, you have a certain number of days to sign on to your employer’s health insurance plan—it’s normally between 60 or 90 days. However, sometimes there is a waiting period before you are fully covered.
Some employer-sponsored health coverage also has a specific time period during which you can sign up for a health insurance plan or make changes to your existing plan; this is often called open enrollment, and it typically happens in the fall. Read more about open enrollment here.
Finally, if you’re between jobs, you can apply for short-term insurance or opt for coverage sponsored by COBRA, which lets you extend health insurance coverage from your previous job. You can choose to sign up for COBRA any time in the 60 days after you leave your job.
Know this health insurance lingo.
All health insurance companies require that you chip in for the cost of covered health care services; this is called “cost-sharing,” and it varies with different types of health plans. The following terms will help you figure out how much you’ll pay for a given health insurance policy.
- Premium: The amount you pay to the insurance company to maintain coverage, usually on a monthly basis.
- Co-payment (aka Co-pay): The specific amount you pay upfront for a specific type of service. For example, your health insurance plan may require you to pay a $10 co-payment for every office visit or prescription refill, and then will cover the rest.
- Deductible: The amount some plans require you to pay out of pocket before your insurance kicks in and covers other costs. It can be an annual deductible (i.e., you must spend $2,000 of your own money before your insurance covers anything) or service-specific, like a $500 deductible for every hospitalization.
- Co-insurance (such as an 80/20 plan): The portion you pay for each medical service before your plan pays for the rest. For example, a plan may require you to pay 20% co-insurance for covered health services, then the insurer pays the remaining 80%. That’s known as an 80/20 plan.
- Out-of-Pocket Maximum: The most that you will have to pay for health services in a year, often a combined cost for co-payments, co-insurance and deductibles. After you’ve paid that amount, your plan pays 100% of covered services for the remainder of the year.
- Health Savings Account: Some high-deductible health plans let you open a health savings account (HSA), into which you can contribute funds to pay for medical expenses. Any funds you put in this account cannot be taxed when you deposit them, and any money left in the account at the end of the year will “roll over” to the next year if you haven’t spent it. This is a great option for people who would like to save money while they’re working to cover their health care costs during retirement.
- Flexible Spending Account: Like an HSA, you can deposit funds into a flexible spending account (FSA) for medical expenses, and these funds will not be subject to payroll taxes. Unlike an HSA, though, flexible spending accounts do not allow money to “roll over” to the next year, so if you don’t use it, you’ll lose it.
- Health Reimbursement Account: Like HSAs and FSAs, a health reimbursement account (HRA) sets aside money specifically for health costs not covered by the company’s health insurance. However, the employer, not the employee, funds the account.
Learn the types of health insurance plans.
With the key terms you learned in the previous step, you’ll now be able to discern between the different kinds of health insurance policies.
There are two main kinds of plans:
1. Those that let you visit any doctor, hospital or health care provider you want.
These so-called fee-for-service or indemnity plans give you a tradeoff for your freedom of choice: They will only pay for a portion of the total charges. Most such plans have a deductible you must pay every year before the company will begin covering expenses, and many also require you to pay co-insurance.
- Characterized by annual deductibles and co-insurance, as well as out-of-pocket maximums; costs vary greatly depending on coverage
2. Those that give you an incentive to stick to certain doctors, hospitals and other health care providers.
These so-called managed care plans have agreements with certain doctors, hospitals and other providers to provide medical services to plan members, so it’s usually much more expensive to stray from the health care providers in their network. There are three main types of managed care plans:
PPO (Preferred Provider Organization) plans let you choose your health care providers, but they give you an incentive to visit the doctors or hospitals in their network by giving you a discount with those providers. Plans that are HSA-eligible (Health Savings Accounts-eligible) are an important sub-category; they are usually PPO plans designed to work with individual bank accounts, and are similar to 401(k) accounts because they let you save pre-tax dollars to pay for future medical expenses.
- Characterized by lower out-of-pocket costs, higher co-payments and higher cost of treatment outside the PPO network
HMO (Health Maintenance Organization) plans require you to stick with a certain list of doctors and won’t pay for any care outside of the list. They usually require you to select a primary care physician (PCP) to manage your care.
- Characterized by lower co-payments and fewer fees; any treatment outside the network, however, is rarely covered
POS (Point of Service) plans require you to choose a doctor from the network to monitor your health care, called a primary care physician (PCP). Only when your primary care physician makes referrals outside the network can you get coverage for out-of-network treatment.
- Characterized by low co-payments, low out-of-pocket costs and no deductibles for network care; high co-payments and deductibles for non-network care
Assess your needs.
To begin shopping for health insurance plans, figure out your particular needs by asking yourself the following questions. Your answers will help determine the kind of policy you should buy.
How often do you visit the doctor? Are you on prescription medicines?
If you’re young and healthy (read: unlikely to get ill) and if you’re trying to cut costs, you may decide to buy a fee-for-service/indemnity plan with “catastrophic coverage.” That means you’ll pay much less every month, but if you do need medical treatment, you’ll have to pay more out of pocket. For example, your premium might be $50 a month instead of $500, but you’ll have to pay $10,000 out of pocket, instead of $1,000, before the insurance company covers any costs. As you can see, it could turn out to be a risky bet.
If you visit the doctor frequently for a chronic condition or regularly take prescription medicine, the opposite applies: you’ll probably want to pay a higher monthly premium to keep your co-payment and deductible low. In this case, you’ll probably want a form of managed care instead of a fee-for-service plan. You’ll have less choice of providers, but you’ll be able to keep costs down.
Are you pregnant, or do you have children?
If you are pregnant or planning to become pregnant soon, you’ll want to carefully examine plans’ maternity benefits. Individual plans often have a waiting period (usually 12-18 months) before they begin covering prenatal care and delivery. Group plans, which you can get through an employer or, in some states, your union or university, do not have the same restrictions, so if your employer, union or school offers a group plan, consider applying for one. Frequent doctors’ visits, as well as labor and delivery, can be very pricey; a plan that covers you 100% after a deductible, or an 80/20 plan, may be the best options. Both fee-for-service and managed health insurance plans offer maternity coverage, but they offer differing degrees of freedom. Fee-for-service insurance will let you pick your own medical doctor and hospital, but may limit the coverage for each health procedure. Managed plans will offer coverage for providers within the network, but will charge if you go outside the network. Don’t forget to find out how much it costs to add your baby to your plan.
If you already have kids, don’t automatically decide on a family plan without comparing your other options. Family plan coverage varies wildly. It may be best to choose a plan that’s best for you and your child, and have your partner or spouse buy a different plan or accept a plan offered by an employer or organization. You probably will want a form of managed care, since fee-for-service plans traditionally do not cover preventative medicine, making check-ups, office visits and shots expensive for families.
Do you have savings, or do you live paycheck to paycheck?
If you haven’t built up savings, you’ll want a health plan with a low deductible or no deductible at all, such as a Point of Service plan. That way, if you have an accident, you won’t have to pay a large sum out of your own pocket. You might even consider applying for your state’s public health care plan. On the other hand, if you have savings and can afford a higher deductible, you might opt for a plan with lower monthly premiums.
Search for your options.
Compare all of your health insurance options to find the policy that best suits your lifestyle. Even if your employer offers health insurance, don’t assume it will cover your specific health care needs. If you realize it doesn’t, it’s worth checking to see if you could be getting more bang for your buck with a different plan.
Go to eHealthInsurance.com and enter your age and ZIP code to get free quotes on different policies that may suit you, including individual and family plans, high-deductible health care plans and HSA-eligible plans.
Weigh the pros and cons of each plan by these criteria.
- Type of plan: Consider your needs and how much freedom in choosing providers you’d like, and decide whether an indemnity/fee-for-service plan or a type of managed care works better for you.
- Costs: Consider each plan’s premium, deductible, co-payments and co-insurance, and determine which plans are in your budget. Remember, a high-deductible plan is good if you want a low monthly premium and have savings, and vice versa.
- Health benefits: Buy the plan that offers the benefits that you need. Avoid expensive benefits, like prenatal care or prescription drugs, if they aren’t necessary.
- Physician: If you have a favorite doctor, figure out which plans she accepts and consider buying one. This could be important if you’re planning to start a family and you have an OB/GYN you really trust.
- Brand: Are there brand-name carriers that you prefer or want to avoid because of a bad past experience? Is there a prescription medicine you need that is covered by one plan but not another, or does one plan offer a lower co-payment for it than another? Pick the plan that best covers the brand of prescription medicine you prefer to take.
Apply for coverage.
Once you decide on a plan, you can apply for coverage a number of different ways, depending on who’s helping you get health insurance: through your employer’s HR department, a professional organization, a union, a government program or a website like eHealthInsurance.com. To apply, you’ll provide information about yourself—your age, location, your health history—as well as your family members. It can take anywhere from a few days to a few weeks before the insurance company notifies you of its decision.