Which Health Insurance Plan is Best for Your Family
Today, we are thrilled to have guest blogger, Allison Kraus, a health insurance guru and owner of Shoreline Insurance Group, talking about some of the critical steps young professional couples can take when looking to determine the best health insurance options for their family.
In today’s day and age it’s not uncommon to have two young professionals earning income within the household. When both are offered health insurance benefits through their employers, how do you decide which option to take? If there are dependents to include, which plan do you add them to? When it comes to making decisions surrounding health insurance coverage for young professionals and young families there are a number of considerations to maximize coverage and minimize cost.
Employer Benefits vs. Private Health Coverage
Many young professionals often assume that the health insurance benefits offered through their employer must be more affordable than what one can find on the individual market. This is not always the case. In fact, group health insurance premiums are often higher to begin with versus a comparable plan on the private market. By law, the employer must contribute a minimum of 50% towards an eligible employee’s premium on a group health plan, however, they don’t have to contribute anything towards a spouse or dependent’s premium. Depending on the employer contribution, you may find lower cost options for you and/or family members on a private health plan.
Comparing Plans for Households of Two Young Professionals
For households without any dependents, you might be better off selecting individual policies versus sharing a family plan. Reason being, there isn’t a “family discount” in the health insurance world. The premium is based on the age and number of people you are insuring. Furthermore, the deductible for a family is typically 2x the individual deductible amount, so the out-of-pocket exposure is the same; however if only one person has a major illness or accident, that person would have to meet the shared family deductible before insurance would start to pay. If you have separate policies, the deductible would be capped at the individual amount, therefore reducing your out-of-pocket costs.
Keep in mind, there are some policies with ‘embedded’ deductibles which achieves the same outcome whether you have a combined family plan or separate individual policies, but the majority of plans have ‘non-embedded deductibles’ so the logic of having separate policies for two young professionals in the household could potentially reduce your out-of-pocket costs substantially.
It Pays to Shop Around
Just as you wouldn’t buy a car without shopping around, the same goes for your health plan. Health insurance is not a one-size-fits-all policy, however due to the Affordable Care Act (ACA) you may not have the option of going outside of your employer sponsored plan depending on your circumstances and time of year.
Let me explain.
One great thing about the ACA is that now all private health plans are guaranteed issue regardless of health history or pre-existing conditions. However, as a result of this new regulation, there are only certain times during the year when a person can enroll. In some cases, the open enrollment period for the private marketplace doesn’t coincide with your employer’s open enrollment period, which means you may not be able to ‘shop’ your options on the private market, even if it would be more affordable to do so. When outside of the ACA open enrollment period, a person would have to have a qualifying life event within the past 60 days in order to enroll in a private health plan. Most common triggering special enrollment reasons are: loss of employer sponsored coverage due to job change; retirement, or divorce; loss of eligibility for state health care programs such as Medical Assistance or MNCare; newly married; addition of child through birth or adoption; or moving to a new service area (for example, WI to MN or Duluth to Minneapolis).
Gaining new employment is often confused as a qualifying special enrollment period, however a new job in and of itself does not make one eligible to enroll in a private health plan. So depending on your circumstances, you may not be able to ‘shop’ or change your health plan until the following ACA open enrollment period, which typically runs from November 1 through January 31.
Consider the Total Cost
When comparing plans as a young professional, the three top things to consider are your deductible, maximum out-of-pocket costs, and monthly premiums. There are other factors however that really can’t be ignored and could ultimately save you a bundle so it’s important to look at the bigger picture when evaluating your benefits. Think about when your policy will renew, anticipated medical needs during that timeframe, tax benefits (related to premiums if you have an employer plan available and medical expenses via a health savings account).
Don’t Be Afraid to Ask an Expert
Choosing a health insurance plan can be very stressful and overwhelming. The good news is, unlike most other services, bringing in the help of a health insurance broker doesn’t cost you anything. So why make such a huge decision alone when you can use the expertise of someone who understands the ins and outs of the ACA and various plans available to you?
Bottom line: 99% of people feel they are paying too much for health insurance, but without shopping you won’t have the peace of mind knowing that you are on the right plan and maximizing your dollars when it comes to healthcare costs.
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Providing the perfect blend of powerful technology and human guidance, Lifewise is geared toward young professionals searching for a better way to make wise choices and sound financial decisions. Backed by BerganKDV Wealth Management, Lifewise is supported by a team of CPAs, CFPs and CFAs who stand ready to guide you through every financial challenge and windfall.
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