How to Score Affordable Health Insurance

Bust out the party hats—it's officially open enrollment for health insurance!

If you're not one of the 55.7 percent of Americans covered by an employer plan, you may be feeling the sticker shock of next year's health insurance premiums.

Unfortunately, skipping coverage really isn't an option for two reasons:

1) You'll pay a hefty fee—currently 2.5% of your adjusted gross income or $2,085 per family, whichever is greater.

2) Paying for medical expenses out-of-pocket adds up more quickly than you may think. Not as quickly as the media wants us to believe, but still very expensive, nonetheless.

It may not be your favorite way to spend an afternoon, but doing some research now may potentially save you from headaches—plus thousands of dollars worth of expenses—later.

Start with Obamacare

Everyone is worried about double-digit increases in monthly premiums next year, but the truth is Obamacare may be more affordable than you think.

The Department of Health and Human Services released a report last week showing 80 percent of people buying insurance through Healthcare.gov may find a plan for $75 or less per month.

Even if you didn't qualify last year, it's certainly worth a second try.

Wait, didn't Trump cut cost-sharing reductions for insurance companies?

This may be having the opposite impact of what you would expect.

As premiums go up, you may actually see more affordable options because subsidies will also increase. And the Kaiser Family Foundation has found many of the increases are happening only with the silver plans.

To avoid these premium hikes, you may just try shopping for a non-silver plan. The increased subsidies may be used for the other plans too.

Basically, what I'm saying is ignore all the noise, and do the research for yourself before writing off Obamacare as “too expensive.”

screenshot of Google search with headlines

Do I Qualify for Obamacare Subsidies?

Not sure if you're eligible for an Obamacare subsidy?

Consider these three rules:

  • No access to affordable coverage through work. This includes your spouse's plan.
  • Your income can't be too high. Your modified adjusted gross income (MAGI) must be between 100 – 400 percent of the federal poverty level. This is your adjusted gross income with certain deductions added back in.
  • You're not eligible for government healthcare programs. This includes Medicaid, Medicare, and the Children's Health Insurance Program (CHIP).

You can play around with the tools on Healthcare.gov. It can give you a better idea if you qualify based on your state and household size.

If you're looking for a guide to Obamacare, MagnifyMoney has the most comprehensive one I have seen.

I don't qualify for Obamacare subsidies. Now what?

It may be frustrating not to qualify for Obamacare subsidies—especially after seeing the premium increases—and next year's expenses may be more than your family can comfortably afford. If this is your situation, here are some other options worth exploring.

1. Shop for health insurance plan online.

If you're feeling overwhelmed, doing some online research may help put your mind at ease. eHealthInsurance.com is a great place to start, and their tools can give you an idea of what to expect.

Screenshot of eHealthInsurance.com

2. Work with a local Assister, Agent, or Broker.

If you strike out online, it may be worth speaking with a professional.

Start by typing in your zip code to see if someone nearby can assist.

These folks can help you compare the nuances of the different plans available in your area. If they have been dealing with health insurance for a while, chances are they are intimately familiar with the landscape.

Not sure who you can trust? Start by checking your state's Department of Insurance. Looking for someone with a clean record and a valid license is good starting point. Then you can ask your friends for referrals.

Screenshot of search tool for health insurance agents

 

3. Consider a high-deductible health insurance plan.

If you have enough emergency cash to cover the deductible, a high-deductible health plan (HDHP) shouldn't necessarily scare you away.

If you are young, healthy, and don't spent a lot on healthcare, a high-deductible plan could save you thousands of dollars in premiums.

Keep in mind, you are going to see much higher expenses for non-preventative appointments. For example, I just got a bill for $300 for my annual dermatologist visit.

If this induces feelings of panic, don't pick a high-deductible plan!

4. Open a health savings account.

While it shouldn't be your primary motivation, access to a health savings account is certainly a nice perk that comes with a high-deductible plan.

Most plans will offer a debit card, allowing you to pay for qualified health expenses directly from the account. But you know what's even cooler?

HSAs offer triple tax advantages:

  1. Your contributions are both pre-tax* and tax-deductible.
  2. Your earnings grow tax-free.
  3. Your withdrawals for qualified medical expenses are tax-free. At 65, withdrawals for non-medical expenses are taxed at your current rate, like an IRA.

*Contributions are only pre-tax if they are made by an employer through a payroll deduction.

Personally, I've been maxing mine out every year, paying for my healthcare expenses out-of-pocket, and treating it like another retirement account.

5. Considering a health sharing ministry? Proceed with caution.

Although these plans are seemingly less expensive and legally satisfy the Affordable Care Act's individual mandate, these plans may end up costing you more than you expect.

Pamela Capalad of Brunch & Budget shared an in-depth Buzzfeed expose on these plans that has completely shifted my perspective.

What scares me are the reports of health sharing ministries not covering pre-existing conditions, lifetime caps, avoiding certain women's health services, or refusing to pay for healthcare for adopted children.

With health sharing ministries, you are agreeing to cover your own medical expenses with the hope of reimbursement from the organization. That's not a risk I am personally willing to take, or one that I can recommend to others.

Finding Affordable Health Insurance is Possible

Finding affordable health insurance may not be easy, but it is possible. It's a challenge that will take extra legwork to get resolved, but your physical and financial health are worth the investment.

Readers: What are your strategies for landing affordable health insurance?

Related Post

Share:

Discussions — 2 Responses

  • Chonce November 13, 2017 on 11:02 am

    Thanks for this! We only have a limited window for health care coverage, so it’s nice to know how you can make it more affordable. Health insurance can be SO expensive, especially if you have kids, are self-employed, or make a decent income.

    Reply
  • Sarah Li Cain November 13, 2017 on 4:00 pm

    Dang, had no idea about the healthcare ministries. I was this close to signing up but may just latch onto my spouse’s plan for the next year.

    Reply