25 Questions to Ask When Buying Health Insurance
Fall is Open Enrollment season. Even if you want to continue with the same health insurance plan you had last year, you'll need to renew. Now's the time most people are checking rates, comparing health insurance companies and finding the best deals. We have some frequently asked questions that will help you as you comparison shop health insurance rates online. Whether you’re looking for a low-cost health insurance quote or if you’re applying for Medicare Advantage or Medicare Supplements we’re here to help.
1. How does health insurance work?
Everyone needs health insurance, even when they are young and healthy. One small injury that requires surgery can cost tens of thousands of dollars if you’re not insured. No one anticipates a sudden illness either, and getting sick can be financially catastrophic without health insurance. A health insurance policy is a legal contract between a policy owner and the health insurance company. It states the terms of the contract, which includes payment by the policy owner, on a regularly scheduled basis, for the contract to remain valid and active. A health insurance policy lists all the responsibilities the insurance company holds in paying for medical care of the policyholder and, possibly, his/her family members if a family plan is in place.
During the underwriting process of an insurance policy, you are evaluated for specific risk categories that are based on age, gender, medical history and other such factors. The amount you pay is called a premium and it is usually paid monthly and is based on your risk factors, which project medical costs for the year.
A deductible is the amount you need to pay before your health insurance begins to pay for any medical claims. In cases where you have a PPO, you pay out of pocket until you hit the limit. For instance, if your deductible is $2500, you will pay for $2500 worth of medical costs and anything over that amount will be covered by your health insurance.
In addition to a deductible, there is usually a co-payment (copay). This is a small portion of the cost you’re responsible to pay for each medical treatment. Co-insurance is the portion the policyholder is responsible to pay as well, but it’s a higher amount than a copay. For example, let’s say Ann had to have surgery that cost $3000. Let’s say her copay is $50, and her co-insurance is 20% (a typical amount). Her share of the cost for the surgery would be 20% of $2950. The insurance would pay the remaining 80%.
There are exclusions to health insurance policies, meaning that there are things you will not be covered for, including elective cosmetic surgery. Some medical providers will also not be covered by your insurance policy. Some policies only accept providers in their own network of physicians.
There are coverage limits on an insurance policy too. Usually, the limits are high enough that the majority of people on a plan do not come close (think half a million to $1 million). Once you reach the limit, the insurer will stop paying for treatment. You will be left with out-of-pocket expenses. To increase limits, additional underwriting and higher premiums would be necessary to keep the policy active. There is also a maximum for your out-of-pocket expenses, for example $3,000 annually. When you reach that limit, your insurer will pay 100% of your expenses.
2. How much is health insurance?
The cost of health insurance varies greatly from one person to another and rates also vary from state to state. Before the Affordable Care Act, insurance providers used any factors they saw fit to determine the price of health insurance premiums. Often people with pre-existing conditions were quoted especially high rates. Now, insurance companies are limited to set factors to determine pricing. These factors include: age, tobacco use, location and plan category.
In 2019, the national average health insurance premium was $477, according to the Kaiser Family Foundation. The average was a high $865 in Wyoming and a low $332 in Massachusetts, often for the same health plan.
Medicare Part A is called “premium-free Part A” because if you’ve worked at least 10 years and paid Medicare taxes, you don’t pay a premium. Otherwise, you’ll have to pay a monthly premium to be covered. For Medicare Part B, beneficiaries are responsible for about 20% of the bill when you see a Medicare provider but lab tests and services requested by that provider will be paid by Medicare.
Medicare Part D is optional prescription drug coverage sold through private insurance companies and monthly fees vary amongst members. Find out more to get several free health insurance quotes.
3. What is a Medicare Advantage plan?
Medicare Advantage or Medicare Part C includes each type of Medicare coverage in one health plan, offered by private insurance companies. Medicare Advantage is an alternative Original Medicare but to buy it you must have Original Medicare Part A and B and may need to continue paying for Part B with a Medicare Advantage plan. With Medicare Advantage, you’ll have additional benefits and coverage, like eye exams, hearing aids, dental care or health while traveling out of the country.
4. Can you show me how to get health insurance?
If you think you may qualify for health insurance for low-income people and families, or if you’re elderly or have disabilities, you may be eligible for Medicaid or the Children’s Health Insurance Program (CHIP). You can apply for Medicaid based on your income if you visit here. Your information will then be sent to the appropriate state agency.
If you’re interested in an individual or family health insurance plan from a private insurer, you can get free health insurance quotes in your area by visiting here. It’s always a good idea to shop as many insurers as possible before buying a health insurance plan.
5. Are health insurance premiums tax deductible?
Yes, under some circumstances, health insurance premiums are tax deductible. There are two rules set by the IRS about who qualifies: You must itemize deductions on Form 1040 Schedule A rather than take a standard deduction. Also, taxpayers can only deduct medical expenses that exceed 10 percent of “adjusted gross income.” In most cases, you won’t save much money filing unless you have overwhelming medical expenses that consume a large portion of your income.
6. How can I get the most affordable health insurance?
If you’re young and healthy you’re probably asking yourself, “How do I get cheap health insurance?” This makes sense. While people with pre-existing conditions may want a more comprehensive plan,
7. How do health insurance deductibles work?
A health insurance deductible is the amount you pay towards medical bills (not counting prescription drugs, usually) before your health insurer begins to pay your medical expenses. In cases where you have a PPO, you pay out of pocket until you hit the limit. For instance, if your deductible is $3,000, you will pay for $3,000 worth of medical costs and anything over that amount will be covered by the insurer.
8. What is the penalty for having no health insurance?
In 2018 and forward there is no penalty for having no health insurance. The individual mandate once imposed a tax penalty for having no health insurance in prior years.
9. What is the best health insurance company?
It’s important to look at what you need and how often you see the doctor and how often you see a specialist before selecting a health insurance company. It’s important to pay a fair price as well but you need to educate yourself about health insurance first so that you’re not comparing apples and oranges when looking at pricing. There are different tiers of protection, often signified by silver, gold and platinum levels with platinum being the most comprehensive and therefore expensive.
10. When is Open Enrollment for health insurance?
The open enrollment period begins November 1 and ends on December 15. In California, the open enrollment period begins October 15 and ends on January 15th. Always check your local deadlines!
11. Does health insurance cover therapy or counseling?
Most health insurance plans cover some mental health care costs. It all depends on each insurer and the plan your company or you choose. For example, one policy may cover psychotherapy or counseling sessions while another only covers psychiatry. If your health plan is a marketplace policy, it is required to cover mental health and substance use disorder services. Under “Behavioral health” is where counseling and psychotherapy would fall. Also, according to the marketplace laws, you cannot be denied coverage due to a pre-existing mental health issue. You also can’t have a yearly or lifetime limit placed on your coverage. Make sure to tell your health insurance agent if you need a plan that has comprehensive mental health and behavioral health benefits coverage if this is something you’d need from your new health insurance policy.
12. How long can a child stay on a parent’s health insurance plan?
According to current law, you can add or keep your children on your health insurance plan until they turn 26 years old. They can even be on the plan if they are not living with you and/or married.
13. What is a deductible in health insurance?
A deductible is an amount you need to pay before your health insurance begins to pay for any medical claims. In cases where you have a PPO, you pay out of pocket until you hit the limit. For instance, if your deductible is $2500, you will pay for $2500 worth of medical costs and anything over that amount will be covered by your health insurance.
14. What is a copay in health insurance?
A copay is a small portion of the cost you’re responsible to pay for each medical treatment. Copays can range from $25 to $100 depending on the coverage you buy. The smaller the copay, the more expensive the premiums will be. The larger the copay, the less expensive the premiums will be.
15. What is the health insurance marketplace?
Every state has a health insurance marketplace that offers competitively priced health insurance plans. You can find your state at www.healthcare.gov.
16. Can you cancel health insurance at any time?
You can cancel health insurance any time but you can’t buy a new plan at any time. For instance, let’s say you have a very expensive private health insurance plan that you pay for 100% and you get a new job with a great plan that your employer will pay for partially. You may drop your individual health insurance plan and sign up for the group health plan at work. However, let’s say you don’t like your insurance and you’d like to switch insurers: You’d have to wait for open enrollment (November 1 and ends December 15) or wait until you have a qualifying event.
17. What is coinsurance in health insurance?
Co-insurance is the amount the policyholder is responsible to pay, which is a higher amount than a copay. For example, let’s say Ann had to have surgery that cost $4,000. Let’s say her copay is $50, and her co-insurance is 20% (a typical amount). Her share of the cost for the surgery would be 20% of $3,950. The insurance would pay the remaining 80%.
18. Does health insurance cover dental?
Even though you need a dental insurance policy to cover most dental expenses, there are some dental procedures that medical insurance may pay for, including exams for some services, some x-rays, oral infections, cysts, oral inflammation, sleep apnea appliances, headache treatment, accidents affecting the teeth, mucositis and stomatitis from chemotherapy or other medical treatments, dental implants and bone grafts, wisdom teeth extraction, biopsies, botox injections for jaw pain and more.
19. What is Medicare?
Medicare is a national health insurance program that began with the Social Security Administration (SSA) and is administered now by the Centers for Medicare and Medicaid Services (CMS). It mainly insures Americans aged 65 and older as well as persons with a disability status as determined by SSA and people with end-stage renal disease and amyotrophic lateral sclerosis (ALS or Lou Gehrig’s disease).
20. What is Medigap and what does Medigap cover?
Medigap is extra health insurance you can buy to help with Original Medicare’s co-payments, deductibles and health care when traveling outside of the U.S. You cannot buy Medicare Advantage and Medigap. Medigap used to pay for prescription drugs but that is now only covered by Medicare Part D.
21. How do I sign up for Medicare?
You can sign up for Medicare online at www.socialsecurity.gov or by calling 1-800-772-1213. You can also make an in-person visit to your local Social Security office.
22. What is Medicare Part D?
Medicare Part D is also called the Medicare prescription drug benefit. It helps Medicare beneficiaries pay for prescription drugs through prescription drug insurance premiums.
23. Does Medicare cover hearing aids?
Medicare doesn’t cover hearing aids or exams for fitting hearing aids. Some Medicare Advantage Plans (Part C) pay for hearing aids. Medicare Part C is a private insurance plan you can buy from a health insurance agent by visiting here.
24. When do I apply for Medicare?
You can apply for Medicare as soon as you are 64.5 years old. Most people apply when they turn 65. To be exact, open enrollment for Medicare starts 3 months before you turn 65 and extends 3 months after you turn 65. You have 7 months to enroll or else you may be fined and a penalty may continue to be charged for the duration of your coverage.
25. Is it better to have Medicare Advantage or Medigap?
You cannot buy Medicare Advantage and Medigap. Medicare Advantage is the Medicare Part C, a private insurance that is an alternative to Original Medicare. Most people should ask themselves, What is the average cost of supplemental insurance for medicare? And compare that with what their annual costs are for coinsurance. Medicare Supplement Plan F is the most comprehensive plan out of the 10 Medicare Supplement (Medigap) policies available. Premiums are often more expensive. Because Plan F covers most remaining hospital and doctor costs after Original Medicare (Part A and Part B) has paid its share, it’s possible for beneficiaries with this plan to not have any or minimal other hospital and medical expenses.
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We try to clarify some points so you can shop for health insurance quotes in a way that works for you and your family.
According to a 2015 study, called Medical Spending of the U.S. Elderly, on average, people aged 65 and up spend over $18,000 a year on medical expenses. Yes, your parents may qualify for Medicare, but did you know that there are many areas they won’t have coverage?
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A 65-year-old retiring in 2019 will spend about $135,000 to $150,000 in out-of-pocket medical costs during their retirement. This astronomical figure has gone up about $2500 since last year. Of course, these costs would be higher if you have an existing condition or if you live longer than the average American.
Like auto and homeowners insurance healthcare insurance also has a deductible which needs to be paid before insurance begins to cover expenses. However, healthcare deductibles work a little differently. For instance, your healthcare insurance will pay for some services even before you meet your deductible.
You may be shopping for health insurance because you got a new job, which doesn’t offer health insurance. Some people even prefer to have a health plan separate from their jobs. It’s usually a more expensive option to buy an individual health insurance policy when an employer offers to pay a portion of your premiums each month. However, some people prefer to choose their own insurance company and a plan that fits their needs.