Choosing Health Insurance: why turning 26 can be terrifying

Happy 26th birthday! In the middle of learning to cope with being closer to 30, be sure to not go too overboard- because you may not have insurance anymore. Never fear, you have a lot of options… maybe too many options.

Let’s talk about what are different types of insurance and what factors to consider, so you can go about getting the best care you can. This is by no means an exhaustive review of the American healthcare system, so make sure to talk to your employer or call 1-800-318-2596 to discuss government/marketplace options.

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Private, marketplace, Medicaid, oh my!

Where should you get your insurance from? This decision may be largely decided by your personal situation. Private insurance (like United Health Insurance) is usually offered through your job. The upside is, your employer covers part of the cost. Bad news is, you usually can’t pick the company, and maybe not even the plan. Legally, your job-based insurance must be “affordable” (meaning you pay 40% or less of the costs) and meet at least minimal coverage standards (cover 10 essential health benefits, like mental health and preventative services). If it doesn’t, you may qualify for a tax credit to buy marketplace insurance. To find that out, have your employer fill this form out. What if you lost your job, but love your insurance? Thanks to COBRA, you can keep that insurance for up to 18 months, but you will have to pay all of the premiums, including what your employer used to pay (which is usually more than you expect). You have 45 days past your last day to elect for COBRA, so check the marketplace options first.

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Marketplace insurance is fairly new, and was started by the Affordable Care Act in 2010. This is what you can enroll in as an individual (some small businesses also use this option). There are two times you can enroll in this- open enrollment is a period where anybody can apply (the next one is November 1-December 15, 2017). You can apply any time of year if you qualify for a “special enrollment period”, which is within 60 days of losing your insurance (for example, because you switched jobs or turned 26). You’ll be able to choose between different plans based on the amount of coverage, and these vary by state, but they all fulfill the affordable and minimal coverage standards. HealthCare.gov is a great resource for all issues marketplace-related.

Medicaid is a US federal and state program that provides health insurance for low-income people (different from Medicare, which covers people over 65 and those with disabilities). How to qualify depends on your state, so you can see where you stand here. If you do have Medicaid, be sure to double check who’s in network for you and if they accept Medicaid.

Networking: more than awkward small talk

Finding out someone or something you want for your medical treatment is not available to you is really annoying. Why do insurance networks even exist? Because it allows insurers to bargain with providers and drug companies to get better deals, meaning they pay less than a person who doesn’t have insurance would for the same thing. If a hospital charges too much, insurers will drop them for somewhere else, meaning they’ll lose patients, so it encourages them to keep their rates low.

First things first- let’s try to keep as much constant as you can. If you have a doctor that you would like to continue seeing, check which insurances they accept (you can call their office and ask). If there is a medication that you take regularly, check to see if it’s covered, or “on formulary”. All insurance companies should have a database of which doctors are in network, as well as the covered meds. Check and make sure there are enough primary care providers, Ob/Gyns, pharmacies, and whatever type of specialists you anticipate needing, that are in your area.

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Currently, the Affordable Care Act has some minimal requirements for insurance companies. This includes an out-of-pocket maximum for the year (in 2016, this was $6,850 for individuals and $13,700 for families). They also must include preventative services, like vaccinations and annual physicals. However, these are only applicable if you’re in-network; if you spent $700 at an out-of-network appointment, that does not apply to your yearly maximum. So don’t screw this part up.

The nitty gritty

There are going to be three terms that are very important to you in comparing coverage. The premium is the amount paid either monthly or quarterly to just have coverage. Sometimes, your employer pays either part or all of this. This has nothing to do with how much care you receive; it is a flat rate.

A deductible is the amount of out-of-pocket expenses you have to pay annually until your insurance kicks in. If you’ve already met your deductible for the year, your insurance will cover the services normally. When the deductible goes up, the premium goes down. If you rarely, if ever, see a doctor, you may want a high deductible plan (this has been described as “catastrophic” or “emergency” insurance). They tend to have the lowest premiums, meaning they’ll cost you less on a regular basis. But if you encounter a serious medical issue, you could be out $3,000 very quickly.

Co-pays are how much you pay out of pocket whenever you access care, either by going to the doctor or getting a medication. This may be a pre-decided amount, like $25, or a percentage. If you plan on seeing the doctor a lot or have a lot of medications you need, you will want this to be low (which means your premium will probably be higher); but if not, this will be less important.

A bunch of letters that are really important

I’m about to say a lot of phrases that you may not be familiar with, so bear with me. The two big things to keep in mind are: do you want to have a primary care physician (you probably should, by the way) and do you have any providers you want to see that are out of network?

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Source: Cystic Fibrosis Foundation If there’s no referral needed, you are probably responsible to call and get pre-authorization for any major treatment or procedure BEFORE it starts.

A PPO (preferred provider organization) is the most popular type of plan. What’s unique about this plan is that you have the option to see out-of-network providers, just with less coverage than in-network. It will still be expensive, just slightly less expensive. They also tend to have higher premiums, copays, and/or deductibles.

HMOs (health maintenance organizations) are the most restrictive plans. They only cover treatment if it’s in network, and you need to have a PCP so they can authorize treatment. But they also tend to be the cheapest option, as they are able to bargain a lot with their contractors. EPOs (exclusive provider organizations) are similar to HMOs, except you don’t need a PCP. How they pay doctors is also slightly different, but that’s a topic for another time.

POS (point of service) insurance is a hybrid between HMO and PPO; you need a PCP but you can see providers out of network.

None of this matters in a medical emergency- in that case, go wherever is closest. Some insurance companies only offer one of these, some of them offer multiple options, so check with your employer and/or insurance company.

Healthcare piggy bank

Your mom was right, you should always have a savings account. And that’s true in health care too. There are two types, a Health Savings Account (HSA) and Flexible Savings Account (FSA). These are tax-deductible savings accounts that you and/or your employer can put money in to cover out-of-pocket expenses, like deductibles, co-pays, and prescription costs. These have a lot of freedom to them (no worrying about the network here), but it requires a lot of your own contributions. There are some important differences between the two.

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Say you choose a high deductible plan, where you pay at least $1300 as an individual, or $2600 for a family. You may qualify for a HSA. If you have a HSA, you usually can’t have a FSA. FSAs are offered through your employer, so check with them to see if you’re eligible.

You still haven’t told me which insurance I should get

This will really depend on your health. One of the best ways to determine what insurance plan you need is to actually calculate how much you spend on your health care a year. This includes doctor’s visits, prescription medications, and procedures. Don’t know how much you spend on your health care? Try figuring out your out-of-pocket costs if you were to spend, say, $2,000 or $5,000 or $10,000. What if you saw the doctor once, versus six times in a year? Then decide what is more realistic for you. If you are a healthy young person who just needs an annual check up and the occasional antibiotic, you’d probably be okay with a high-deductible, low-premium plan. But if you have a lot of medical needs, or are maybe too much of a hypochondriac, you may want to spring for a higher premium, lower deductible/co-pay plan (see if you qualify for a premium tax credit here).

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I get it, this is overwhelming. I’ve spent four years in medicine, and I still don’t understand it. The bottom line is, health insurance is also for the healthy. Maybe you take no medications, you haven’t seen a doctor since you left your pediatrician, and the closest you get to the hospital is by seeing it from the highway. You STILL need health insurance. It takes one major illness or accident to financially destroy someone. Say you get a bad bout of pneumonia- the average cost of a hospitalization is over $9,000. What if you’re in a bad car crash? One DAY in the Intensive Care Unit is around $10,000.  As if you needed another incentive, the government will fine you at least $695 every year that you don’t have health insurance.

This is a big decision, as it should be- this is a big commitment. But you can do it. Now go buy yourself a great 26th birthday present!

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