ACA’s annual open enrollment has started, and if you don’t have health insurance through an employer, you’ll need to take coverage matters into your own hands. But what if you already have a marketplace plan? Should you stick with the coverage you know, or explore alternatives? In some cases, it could pay to retain your existing coverage, but here are a few signs that you’re better off finding a new health insurance plan.
1. You’re paying a hefty premium for coverage you rarely use
Many people opt for health insurance plans with higher premiums to keep their deductibles low, since the two tend to have an inverse relationship. But if you don’t have any known medical conditions, get sick infrequently, and generally don’t use your health insurance all that much, then paying a high premium for your policy might not make a lot of sense.
You may be better off switching to a plan with lower premiums coupled with a higher deductible. Chances are, you won’t end up having to meet that deductible in full, which means you’ll save money all-in.
When you buy a plan with a high deductible, you may also be able to pair it with a health savings account (note that you need to have a specific type of plan in order to make contributions to a health savings account; not all plans with high deductibles are HSA-qualified).
2. You’re grappling with high deductibles and out-of-pocket costs
If you don’t use your health insurance often, then a high-deductible-low-premium combination often makes sense. But if you do tend to require a lot of medical care, you may be better off with a higher-premium plan that comes with a lower deductible.
Of course, whether this makes sense will ultimately boil down to math. But as a basic example, if you’re currently paying $400 a month for a plan with a $6,000 deductible – and you’ve been having to pay that entire deductible – then it could make sense to start paying $700 a month for a plan with a $1,000 deductible. In the first scenario, you’re paying $4,800 in premium costs plus another $6,000 for a total of $10,800 (not including additional costs, like copays). In the latter scenario, you’re paying $8,400 in premiums plus another $1,000 for a total of $9,400. All told, that’s $1,400 in savings.
If you’re experiencing significant medical expenses, you’ll also want to pay close attention to each plan’s cap on total out-of-pocket costs — some plans have lower deductibles but higher maximum out-of-pocket exposure. (There are upper limits imposed by the government, but plans can have lower limits). If it looks like you’ll hit the maximum out-of-pocket no matter which plan you choose, a plan with a lower total cap on your out-of-pocket costs might make the most sense, even if it has a higher deductible than some of the other plans you’re considering.
Keep in mind that if you opt for a plan that isn’t an HSA-qualified high-deductible health plan (HDHP), you’ll lose out on the option to contribute to a health savings account (HSA). The minimum deductibles on HDHPs aren’t really “high” anymore, relative to the deductibles of non-HDHPs. (For 2020, HDHPs must have a minimum deductible of $1,400 at the individual coverage level, or a minimum deductible of $2,800 at the family level; these thresholds will be unchanged in 2021.) But HDHPs have other rules that they must follow, and you can only contribute to an HSA if your plan is officially an HDHP. Most plans with high deductibles aren’t HDHPs, so pay attention to the details.
3. You often find yourself seeing out-of-network providers
Staying in-network can cost significantly less than seeking healthcare services from an out-of-network provider. But if your insurance plan’s network is somewhat limited, or you regularly find yourself going out-of-network because you require specialized services, or because there’s no convenient in-network alternative where you live, then it certainly pays to look into a different health plan. A more extensive network of providers could mean lower out-of-pocket costs for you in the coming year.
4. You’re still paying for preventive care
The ACA mandates that insurance plans pick up the tab for certain preventive care without imposing a deductible, copays, or coinsurance. This means you’re entitled to certain services – like immunizations and screening tests – at no cost. But that assumes you don’t have a grandfathered health plan. If your plan existed prior to the passing of the ACA in 2010, then it’s not required to adhere to the same preventive care coverage standards as newer plans. But if you’re paying for those services as a result, you should see if a newer plan makes sense for you.
And if you’re already considering switching from a grandfathered (or grandmothered) health plan to an ACA-compliant plan, it’s also worth checking to see if you might be eligible for premium subsidies (and possibly cost-sharing reductions) if you switch to a plan in the exchange. A family of four can qualify for premium subsidies for 2021 with a household income as high as $104,800, and the rules for determining income are fairly generous. (You get to subtract HSA contributions and pre-tax retirement account contributions.)
5. Your healthcare needs have changed
Maybe you’ve always been a relatively healthy person with little need to see the doctor. But if your health has recently taken a turn for the worse, or you’ve been diagnosed with a number of conditions that require more care and treatment, then it pays to see if there’s a better health insurance plan out there for you. And the same holds true if your health has improved over the past year – you may not need the same level of coverage you once did.
Even if you’re reasonably happy with your health insurance at present, it never hurts to explore your options and see what choices are available to you. In most states, open enrollment runs from November 1 to December 15, although some state-run exchanges are offering extended enrollment windows. The same enrollment window applies for plans sold outside the exchange, and those are an option everywhere except DC. But if you think that you might be eligible for subsidies — most enrollees are — you’ll definitely want to do your shopping in the exchange in your state, as that’s the only place the subsidies are available.