Open Enrollment is just around the corner. The Marketplace opens up for new plan selection on Sunday, November 1st, and will remain open through December 15th. Plans chosen within this period will take effect with coverage on January 1st, 2021. Before you begin browsing those available plans, you’ll want to sit down with your finances and carve out a budget of what you can afford. And when affordability matters almost as much as the health insurance coverage itself, there are a few key health insurance costs you’ll need to consider.
Budgeting for Monthly Premiums
One of the first health insurance costs you’ll want to calculate are the monthly premiums. You can examine your income and current expenses to come up with a cost range you consider affordable. And when you begin shopping for plans, you’ll want to pay special attention to outlined premium pricing before making your selection.
How Insurance Premiums Are Determined
The impacts of COVID-19 may cause some insurance companies to raise their premium rates for 2021. Under the law, insurance providers can only evaluate five categories to help them determine their monthly costs. Premiums can be increased based on the individual’s age and tobacco use, for example. Other factors include an individual’s location, as the cost of living and state laws may impact premium prices. Premiums are set according to the subscriber’s choice of individual versus family coverage, as well as the chosen plan level. The two primary categories that insurance companies cannot use to adjust premiums include previous medical history (regardless of pre-existing conditions) and sex of the insured. Men and women will pay the same prices for their selected plans.
Understanding the Plan Categories
When you begin browsing the Marketplace for new health insurance plans, you can associate the levels of costs with the five specific categories. First, there are four “metal-based” segments: Bronze, Silver, Gold, and Platinum. A fifth category is considered a Catastrophic level plan and may be available to specific cases and individuals. These pillars only apply to price and coverage options, not the quality of care. As you might expect, the Bronze level plans will cost less up front in premiums but may have stipulations that cost more in out-of-pocket costs. The Gold and Platinum plans will cover more of your total health insurance costs, but with a higher monthly premium to do so.
How to Choose the Category Right for You
It may be hard to predict if you or your family will need increased medical services in the coming year. But you can try to choose a plan based on what you do know. If you don’t expect to have regular prescriptions or ongoing doctor visits next year, a Bronze plan might be the most cost-effective fit. Silver plans offer cost-sharing reductions (CSRs) that can translate to lower deductibles for qualified subscribers. If you do anticipate a need for scans, doctor visits, or routine prescriptions, a Gold or Platinum level plan might make the most sense in terms of health insurance cost savings.
Understanding the Various Out-of-Pocket Health Insurance Costs
In addition to calculating your budget and premium costs, you’ll need to take into consideration any out-of-pocket expenses you might incur. Each available plan will layout terms for deductibles, copayments, and out-of-pocket maximum amounts.
Calculating Your Deductibles
Some plans may offer 100% coverage for certain preventative care services. But all plans will have a platform of deductibles. Be sure to review how much you’ll have to spend first, before the health insurance kicks in and begins covering costs. Deductibles will vary with each level of plan, so you might expect to pay more upfront with a Bronze category option versus a Gold plan. Those costs may be translated into annual totals but will need to be considered to help you budget accordingly.
Understanding Copayments & Coinsurance
Another out-of-pocket expense you’ll want to review is the cost of copayment or coinsurance. Many providers will outline specific per-visit prices for certain services, like specialist visits. Those costs may be as low as $20.00 per occurrence and up to $100 per visit. If you have annual or routine appointments to schedule throughout the year, you’ll need to budget for those costs.
Exploring the Out-of-Pocket Costs
When calculating each plan’s out-of-pocket costs, you can also explore any out-of-pocket maximum amounts. Each level will cap out at a certain dollar amount, usually based on a cumulative total of your direct health service-related costs. Beyond that spending amount, the insurance provider will pay for 100% of those qualifying and covered services. Be mindful, too, of differentials between in-network and out-of-network coverage stipulations. Find a plan that considers your chosen providers as in-network for the most cost-effective benefits.
Calculating Your Discounts & Premium Tax Credits
Health insurance costs and bottom-line expenses can be affected if you qualify for discounts and premium tax credits. As you calculate your budget for healthcare next year, you can look to identify any of these benefits that may help provide savings.
Identifying the Plan Types
It can help to know the different types of plans and understand how they work. Each plan in the Marketplace will dictate if the provider offers HMO, PPO, POS, or EPO coverage. These plans will vary in terms of in-network and out-of-network providers. Have your roster of medical professionals and chosen facilities on-hand to ensure that a plan you choose considers your preferences as network providers.
Subsidized Coverage & Premium Tax Credits
You might qualify for premium tax credits that apply directly to your bottom-line health insurance costs. Those households that fall below certain income levels can reap a variety of additional benefits. Anyone living in states that offer expanded Medicaid coverage, income levels must fall below the federal poverty level by 138% to qualify. But all states generally provide tax credits for those with household incomes between 100% and 400% of the federally dictated poverty level. Other subsidized coverage examples include the Children’s Health Insurance Program (CHIP) and Medicaid. You can apply for some or all of these available cost-savings and pay less each month in premiums as a result.
Planning for Income Level Changes
No one has that magic crystal ball to precisely predict income levels, but you might be able to estimate what your household income will be for 2021. Use the numbers you have now to apply, but be mindful throughout the year if your income changes. If you lose or add members to your household, or experience job changes that result in salary changes, any premium tax credits you qualify for now may shift. Reporting these changes immediately to the Marketplace can ensure you don’t owe a reimbursement for tax credits you didn’t qualify for anymore.
Budgeting and predicting health insurance costs can be tricky. As you plan for Open Enrollment, you may need help navigating your options. Browse with W3ll for free and leverage all the available tools and resources to help you ensure the plan you choose is ideal for your budget and healthcare needs. Our platform allows you to instantly see your monthly qualifying savings upon answering a few simple questions. Our professionals can help guide you through enrollment and in understanding all the costs and benefits that apply to you.