In October of 2009, I decided that I would no longer run the 9-5 gauntlet. And with that decision came a few immediate changes in my life. Working from home and for myself meant that I could set my own schedule, make my own decisions, and only have myself to blame when something I implemented did not work out.
For me, the upside to this decision was infinite because I had been slowly getting beaten down by “the man” and couldn’t take it anymore. Unfortunately, though, there were downsides to my decision, two of which I still deal with.
The first of these downers is the amount of taxes I now pay as an independent contractor. When I became a business owner, I didn't know about the portion of taxes my employer used to pick up. They paid half my Social Security and Medicare taxes for me. But now, I foot 100 percent of that bill.
The second, and more important, change was that I no longer had employer-provided health or dental insurance.
In fact, it took me several months after my original decision to even visit a doctor's office because I still didn't have insurance. I was relatively healthy and very rarely even left the house. But eventually, I decided I'd tempted fate long enough and needed to find my own health insurance plan.
As with any important decision, this one took time and research before I found the right plan for my needs. Before I spent thousands of dollars a year, I educated myself on the coverage I needed. That meant following this step-by-step process.
Why I NEED Health Insurance
Something I learned at the age of five when biting through an electrical cord is that I'm not invincible. Even though I keep myself in relatively good health with exercise and home-cooked meals, routine check-ups and emergency care are still necessary sometimes. So I need to be sure that if I need these things, I can afford them.
My finances still aren't where I ultimately want them to be. So it's tempting to forego that hefty insurance premium payment each month. But I would be taking a risk by saving a few bucks now for a potential financial catastrophe later. All my current payments and bills would have to take a backseat to make sure I'm alive long enough to pay them. In fact, a single unexpected surgery without insurance would derail all of my financial progress from the past few years.
Understanding the Medical Mumbo Jumbo
When you carry health insurance through your employer, you usually have limited choices. Many employers only offer one type of insurance. And others offer two or maybe three different choices. That's the downside. The upside is that you save money because you only pay a fraction of the cost of insurance premiums.
But when you're choosing your own insurance plan, it's the opposite. You'll pay more. But you have a whole menu of health insurance options available to you. So be sure you understand the ins and outs of any potential plan you choose.
Before you dive into any plans, understand these common terms you'll likely see:
- PPO: PPO stands for "Preferred Provider Organization" which means that my coverage will only extend to a certain list of hospitals and doctors. Should I want to visit a doctor that is not on my PPO list, I will probably be responsible for all the costs. PPO's are the most common of health care plans for individuals like myself because they're more affordable. As long as I can find a doctor and hospital I like, this is a good option.
- HMO: HMO stands for "Health Maintenance Organization." Those three letters continue to make consumers cringe. HMO's are usually employer-provided plans because they cater to group insurance rates. These are generally the cheapest of all health insurance policies. But you have to follow very strict rules and regulations in order to get coverage. Your HMO has to clear procedures and appointments with anyone outside your HMO group first. This can mean a lengthy, frustrating process of referrals. It's important to know exactly what is and is not covered because going in blind to a visit can result in a hefty bill later.
- HSA-Eligible Plans: HSA plans are similar to PPO’s in the sense that you can choose which doctor and hospital you want to visit. The added benefit to this plan is that pre-taxed income can be put aside in an interest-bearing account, known as a Health Savings Account (HSA). So when you file your taxes at the end of the year, less of your income is taxed. Unfortunately, to qualify for an HSA, a health plan must have very high deductibles. This is why consumers don’t always choose these plans over a PPO.
- Indemnity Plans: If you’re more of a free bird who likes to take care of things on your own, then the indemnity plan is perfect for you. Indemnity plans are much more expensive than their above brethren. But they give you the freedom to choose any doctor or hospital you want, and usually any coverage or treatment you want. An indemnity provider will pay a certain percentage of every visit, medication, or procedure. You take care of all reimbursement paperwork, rather than the insurance company. Freedom comes with a heavy price in the medical insurance world!
In addition to the plan types, there are a few health insurance terms you will need to know in order to get the best coverage possible.
- Premium: The premium is the monthly fee you pay to maintain the health insurance coverage. This will normally be due on the same day each month. You’ll have to pay this fee whether you use the insurance or not in any given month.
- Deductible: This is how much you’ll have to pay for your medical expenses annually before your insurance takes full effect. So if you have a $1,000 deductible, you’ll have to pay that much in health care costs before your insurance company pays. You could have lots of doctor’s appointments that add up to this amount. Or you could have one $5,000 procedure where you’ll pay $1,000 and the insurance coverage will kick in for the rest. Deductibles count for the entire year. So once you meet the deductible for the year, you’re in the clear until the next calendar year. Note that your premiums do not count as part of your deductible.
- Out-of-Pocket Maximum: With modern insurance plans, you often have something due for procedures and appointments even after you meet your annual deductible. But once you hit your plan’s out-of-pocket maximum, you will no longer have to pay for your health care. So this is basically the absolute limit of what you’ll pay for health care in a year, outside of your premiums.
- Copayment: The copayment is the amount of money you will owe before a medical practitioner provides service. If your copayment is $20, you'll likely have to pay the doctor's office $20 before you are even seen. Depending on your insurance plan, you may still owe a copayment after you meet your deductible. But you may not.
- Coinsurance: This right here is the reason that plans need both a deductible and an out-of-pocket maximum. Once you meet your deductible, you may still be responsible for coinsurance. You’ll have to pay for a percentage of your medical care costs after you meet your deductible. So if you have a 20 percent coinsurance rate, you’ll have to pay 20 percent of all of your medical costs after you meet your deductible. This applies right up until you hit your out-of-pocket maximum.
Deciding Just How Much Coverage I Need to Carry
Back when I first shopped for my own health insurance, I was on a tight budget. I wasn't able to get all the coverage I wanted. But I was able to get what I needed. Luckily, I was young with no pre-existing medical conditions, and only had myself to care for. So the plans were all relatively inexpensive.
Still, I wanted to be sure I was getting the most value for my money. So I asked myself these five questions to find the best coverage for my needs:
- How many times do I plan to visit the doctor for routine check-ups this year?
- How much money did I spend on health care last year?
- Do I have any pre-existing medical conditions?
- Am I looking for a specific benefit in my coverages, or is this a general plan?
- What is my budget for health insurance?
The last one is the most important one because you should never let money get in the way of your health. If you find that the coverage you feel most comfortable with is a little out of your budget, do your best to cut the fat from other areas before deciding against a lesser health insurance plan. You're no good to anyone if you're not healthy.
Finding the Right Health Insurance Online
Find the Cheapest Insurance Quotes in Your Area
eHealthInsurance continues to be the best site for comparing health insurance plans. In fact, it was voted by Kiplinger to be the best health insurance website around. The process is very simple and will only take a few minutes of your time. After filling out my zip code, gender, age, and whether or not I’m a student or use tobacco, all of the available coverage in my area are displayed.
In addition to the coverage prices and options, you will also find links under each plan. These links help with choosing a doctor within the plan, the full details of what the plan provides, and any reviews consumers have written. You can use the left sidebar to narrow plans by provider or cost. Taking a brief look right now at what’s available to me, I’m extremely confident that I won’t need to go any further than eHealthInsurance to find the best plan.
Medishare A friend of mine decided to move his family health insurance to a platform called Medishare. Medishare is a healthcare sharing ministry where a group of people share medical expenses together.
Each family or individual pays into the program their portion. When someone needs treatment, that money pays their medical bills.
Depending on how much you want to pay into the pool each month, you'll usually have to cover annual expenses out of pocket. But you can adjust your monthly amount due by changing the annual household portion (AHP) that you pay. If you want to cover your first $1,000 in medical expenses before dipping into the pool, you'll have a higher monthly payment. If you want to increase your AHP, you'll have a lower payment. The scale goes from $500 AHP to $10,000 AHP.
All the bills that your money goes to pay are posted in the Medishare network. So you know who you're helping. It's a unique concept that has grown in recent years. There are now several medical sharing programs available to consider.
Government Exchange This is where my health insurance has been “stuck” for a few years now. Initially, when I signed up through AccessHealthCT.com, my deductible and plan costs were reasonable. In 2015 when I first signed up for ObamaCare, my deductible was $6,500 for a family of three with a monthly premium of $490. Everyone healthy, and ages 31, 30, and 2.
In 2016, my deductible went to $9,000, and my monthly cost to $575. In November of 2016, my son Max was born, which meant our plan went from three to four people. Apparently, that's the point when a bomb exploded in my health care coverage.
This year, my deductible on the lowest level bronze package is $12,500, and my premium is $797 a month. As a lovely bonus, I received a letter from my insurance company, ConnectiCare, that my premium is going up in 2018! My deductible stays the same, but my monthly premium goes to $1,188. For four healthy people (two young adults and two toddlers), I'll be asked to pay $14,000 annually with a $12,500 deductible. This is the CHEAPEST plan available to me and the ONLY provider available. Uhhh .... no.
Medishare, here I come!
Making the Leap and Applying for Health Care Coverage
It should be noted that the quotes you see above may not apply to you. Every quote assumes the same information. My quotes are for a healthy individual with no pre-existing medical conditions. Yours will vary depending on age, health status, location, family size, and more.
After you have decided on the coverage that works best for you, go through the entire process of entering your personal information on the insurance company's secure website, and find out what your actual monthly cost is.
While I have you on the topic of insurance, it’s worth mentioning that you might want to look into life insurance too. We’ve got a ton of information on the site about life insurance, but basically, it protects your loved ones if you die or have a debilitating accident. It’s something I recommend and you can use an aggregating website like Sproutt to easily search for life insurance plans where you live. Sproutt rewards healthy living, so the better you take care of yourself (remember to go to your annual appointments and keep your health insurance current), the better deal you can get. You can shop for both term and whole life policies.
Health insurance has been a hotly debated topic for decades. It became hotter after Congress passed Obamacare. It’s become its hottest now with Congress trying to repeal Obamacare. YEA, GOVERNMENT! Freedom to choose your own doctors and coverage amounts is a little limited right now, but the country is unsure of the alternative. While you have options, make sure you find a health care plan that works best for you and yours.