Turns out, your physical well-being isn’t the only thing at stake when you go to the hospital. So too is your financial well-being. That’s because no debt is more common than medical debt.
The numbers are staggering in their scope. According to the Consumer Financial Protection Bureau, more than half of all collection notices on consumer credit reports stem from outstanding medical debt, and roughly 43 million consumers – nearly 20% of all those in the nationwide credit reporting system – have at least one medical collection on their credit report.
Now, you might be inclined to think that because you’re young or have both a job and health insurance, medical debt poses you no risk. Think again. According to a recent report from the Kaiser Family Foundation, roughly one-third of non-elderly adults report difficulty paying medical bills. Moreover, roughly 70% of people with medical debt are insured, mostly through employer-sponsored plans.
Not concerned yet? Consider that a medical collection notice on your credit report, even for a small bill, can lower your credit score 100 points or more. You can’t pay your way out of the mess after the fact, either. Medical debt notifications stay on your credit report for seven years after you’ve paid off the bill.
The good news (yes, there is good news here) is you can often prevent medical debt from ruining your credit simply by being attentive and proactive.
Pay close attention to your bills
Certainly, a considerable portion of unpaid medical debt exists on account of bills so large and overwhelming that patients don’t have the financial wherewithal to cover them. But many unpaid medical debts catch patients completely by surprise, according to Deanna Hathaway, a consumer and small business bankruptcy lawyer in Richmond, Va.
“In my experience, it’s often a surprise to people,” says Hathaway. “Most people don’t routinely check their credit reports, assume everything is fine, and then a mark on their credit shows up when they go to buy a car or home.”
The confusion often traces back to one of two common occurrences, according to Ron Sykstus, a consumer bankruptcy attorney in Birmingham, Ala.
“People usually get caught off guard either because they thought their insurance was supposed to pick something up and it didn’t, or because they paid the bill, but it got miscoded and applied to the wrong account,” says Sykstus. “It’s a hassle, but track your payments and make sure they get where they are supposed to get. I can’t stress that enough.”
Stay in your network
One of the major ways insured patients wind up with unmanageable medical bills is through services rendered – often unbeknown to the patient – by out-of-network providers, according to Kevin Haney, president of A.S.K. Benefit Solutions.
“You check into an in-network hospital and think you’re covered, but while you’re there, you’re treated by an out-of-network specialist such as an anesthesiologist, and then your coverage isn’t nearly as good,” Haney says. “The medical industry does a poor job of explaining this, and it’s where many people get hurt.”
According to Haney, if you were unknowingly treated by an out-of-network provider, it’s not unreasonable to contact the provider and ask them to bill you at their in-network rate.
“You can push back on lack of disclosure and negotiate,” Haney says. “They’re accepting much lower amounts for the same service with their in-network patients. They may do the same for you.”
Work it out with your provider BEFORE your bills are sent to collections
Even if you’re insured and are diligent about staying in-network, medical bills can still become untenable. Whether on account of a high deductible or an even higher out-of-pocket maximum, patients both insured and uninsured encounter medical bills they simply can’t afford to pay.
If you find yourself in this situation, it’s critical to understand that health care providers themselves usually do not report unpaid bills to the credit bureaus – collection agencies do. After a certain period of time, most health care providers turn unpaid debt over to a collection agency, and it’s the agency that in turn reports the debt to the credit bureaus should it remain unpaid.
“If you can keep it out of the hands of the collectors, you can usually keep it off your credit report,” says Hathaway.
The key then is to be proactive about working out an arrangement with your health care provider before the debt is ever sent to a collection agency. And make no mistake – most providers are more than happy to work with you, according to Howard Dvorkin, CPA and chairman of Debt.com.
“Trust me, no one involved with medical debt wants it to go nuclear,” says Dvorkin. “The health care providers you owe know very well how crushing medical debt is. They want to work with you, but they also need to get paid.”
If you receive a bill you can’t afford to pay in its entirety, you should immediately call your provider and negotiate, says Haney.
“Most providers, if the bill is large, will recognize there’s a good chance you don’t have the money to pay it off all at once, and most of the time, they’ll work with you,” he says. “But you have to be proactive about it. Don’t just hope it will go away. Call them immediately, explain your situation, and ask for a payment plan.”
If the bill you’re struggling with is from a hospital, you may also have the option to apply for financial aid, according to Thomas Nitzsche, a financial educator with Clearpoint Credit Counseling Solutions, a personal finance counseling firm.
“Most hospitals are required to offer financial aid,” says Nitzsche. “They’ll look at your financials to determine your need, and even if you’re denied, just the act of applying usually extends the window within which you have to pay that bill.”
If all else fails, negotiate with the collection agency
In the event that your debt is passed along to a collection agency, all is not immediately lost, says Sykstus.
“You can usually negotiate with the collection agency the same as you would with the provider,” he says. “Tell them you’ll work out a payment plan and that in return you’re asking them to not report it.”
Most collection agencies, according to Haney, actually have little interest in reporting debt to the credit bureaus.
“Think about it,” Haney says. “The best leverage they have to get you to pay is to threaten to report the bill to the credit agencies. That means as soon as they report it, they’ve lost their leverage. So, they’re going to want to talk to you long before they ever report it to the bureau. Don’t duck their calls. Talk to them and offer to work something out. They’ll usually take what they can get.”
At the end of the day, according to Haney, most people can keep medical debt from ruining their credit by following one simple rule.
The majority of healthy Americans can use term life insurance policies to get sufficient coverage in place for anywhere from $15 to $100 a month. Most (85%) American consumers believe that most people need life insurance, but just over 60% carry a policy. Even among those who carry a life insurance policy, the amount covered is frequently not enough.
Term life insurance is a low-cost way for individuals with financial dependents to meet those people’s needs even after death. But it can be confusing to understand what it is and what it covers.
Anyone who has a financial dependent should consider buying life insurance if they don’t have the assets available to cover their dependent’s financial needs in the event of their death.
There are five major events that create financial dependence and may justify the purchase of life insurance. These events include:
Taking on unsecured debt with a co-signer
Taking on secured debt with a co-signer
Having a child
Moving to a single income
How Much Life Insurance Do I Need?
Term life insurance is the cheapest form of life insurance, but carrying too much life insurance is a waste of money. The exact amount you decide to carry will depend on your risk tolerance and the size of your financial obligations. In this article we offer rules of thumb that can help you calculate the financial loss associated with your death.
Most life insurance companies and brokers also offer life insurance calculators, but these calculators rely on averages. Since each person’s situation is different, it can be valuable to create an estimate on your own.
Unsecured debt with a co-signer
If you’ve taken on unsecured debt (like student loans) with a co-signer and you don’t have sufficient cash or investments to cover the debt, then consider purchasing life insurance in the amount that is co-signed. The beneficiary of this policy should be the person who co-signed the loan with you.
For example, if your parents have taken out $50,000 in loans via a Parent PLUS Loan or private loans, then you should take out a $50,000 policy with your parents as the beneficiaries. In most cases involving unsecured debt with a co-signer, a short term (such as 10-15 years) will be the most cost-effective option for covering this debt.
Secured debt with a co-signer
Secured debts (like a mortgage or a car loan) have some form of capital that could be sold to pay off most or all of the loans, but you still might want to consider taking out life insurance for these types of debts.
While your co-signer can sell the asset, pay off the debt, and become financially whole, that may not be the right choice for your situation (especially if the co-signer is your spouse).
For example, a couple that takes out $200,000 for a 30-year mortgage may decide to each take out a $200,000, 30-year term life insurance policy. This policy will allow either spouse to continue to live in the house in the event of the other’s death.
Marriage isn’t a financial transaction, but it brings about financial interdependence. In the event of your death, the last thing you want your spouse to be concerned about is their finances.
Couples without children who both work aren’t financially dependent on each other, but many people would still like to provide their spouse 1-3 years’ worth of income in life insurance to cover time off from work, final expenses, and expenses associated with transitioning houses or apartments.
A couple who each earn $40,000 per year, and who have $20,000 outside of their retirement accounts, can consider purchasing life insurance policies between $20,000-$100,000 in life insurance to provide for the other’s financial needs in the event of their death.
Having a child
Because children are financially dependent on their parents, parents should carry life insurance to cover the costs of raising their children in the event of a parent’s death.
The estimated cost of raising a child from birth to 18 is $245,000, so it is reasonable for each parent to carry a policy of $100,000-$250,000 per child. It is especially important to note that stay-at-home parents should not neglect life insurance since their death may represent a big financial loss to their family (manifested in increased child care costs).
The beneficiary of this life insurance policy should be the person who would care for your child in the event of your death. Sometimes this will be your spouse, but sometimes it will be your child’s other parent, or a trust set up in your child’s name.
If a couple has two children under age 5, and $50,000 in accounts outside of retirement, then each parent should have between $150,000 and $450,000 in life insurance. Parents of older children may choose to take out smaller policies or forego the policy altogether.
If your spouse is dependent upon your income to meet their financial needs, then it is important to purchase enough life insurance to care for their immediate and ongoing financial needs in the event of your death. If you are the exclusive income earner in your house or if you co-own a business with your spouse that requires each of you to play a role that the other cannot play, then your death would yield a tremendous financial loss for several years or more.
In order to estimate the size of policy needed in this situation, there are a few guidelines to consider. According to the well-respected Trinity Study, if you invest 25 times your family’s annual expenditures in a well-diversified portfolio, then your portfolio has a high likelihood of providing for their needs (accounting for inflation) for at least 30 years. A policy worth 25 times your annual income, less the assets you have invested outside of retirement accounts, is the maximum policy size you should consider.
Many people choose to take out even less than this because their spouse will eventually choose to return to work. A second rule of thumb is that the total amount of life insurance for which your spouse is the beneficiary should be worth 10-12 times your annual income. A policy of this size would reasonably provide money to pay for living and education expenses (if your spouse needs to re-train to enter the workforce) for many years without damaging your spouse’s prospects of retirement.
Based on these rules of thumb, if you earn $100,000 and your family’s expenses are $70,000 per year, and your spouse is a stay-at-home parent, then you should have enough life insurance to pay out between $1 million and $1.75 million (remember to subtract the values of any other policies or non-retirement assets above when calculating this amount).
How to Shop for Life Insurance
After deciding on the amount of insurance you need, and the terms you need, you can start shopping for the best policy for you. Although it’s possible to shop around for the best insurance, MagnifyMoney recommends that most people connect with a life insurance broker. For this report, every quote received from a broker was within a few cents of the quote received directly from the insurance company.
If you tell a broker exactly what you want, they can pull up quotes from a dozen or more reputable companies to get you the most cost-effective insurance given your health history. This is especially important if you have some health restrictions.
People with standard health (usually driven by high blood pressure or obesity, or many family health problems) may find some difficulty finding low rates, but brokers can help connect them with the right companies.
People with “substandard health” because of obesity, high blood pressure, or elevated cholesterol, those suffering from current health issues, or people recently in remission from major illnesses will not qualify for term life insurance.
Top Three Life Insurance Brokers
PolicyGenius – PolicyGenius is an online-only broker with an easy-to-use process and helpful policy information. Users give no contact information until they are ready to purchase a policy. PolicyGenius’s system saves data, so users don’t have to re-enter time and again. It is very easy to compare prices and policies before applying.
Quotacy – Quotacy is an online-only life insurance broker with connections to more term life insurance companies than most other life insurance companies. Quotacy offers quick and easy forms to fill out, and they do not require that you give contact information until you are ready to purchase a policy. Unfortunately, they do not fully vet out the policies, so you may need to ask an agent questions before completing a purchase.
AccuQuote – AccuQuote is an online-based brokerage company that specializes in life insurance products. Unlike the online-only brokerage systems, their quotes are completed through a brokerage agent via a phone call. People who prefer some human interaction will find that AccuQuote emphasizes customer service and offers the same price points as online-only competitors.
Top Life Insurance Companies
For those who prefer to shop for life insurance without the aid of a broker, these are the top five companies to consider before purchasing a policy. Each of these companies allow you to begin an application online though you may need to connect with an agent for more details (including a rate quote).
To be a top life insurance issuer, companies had to offer the lowest rates on 30-year term insurance for preferred plus or preferred health levels, and be A+ rated through the Better Business Bureau.
Allianz – Allianz offers the lowest rates for both Preferred and Preferred Plus customers, but they do require you to contact an agent or a broker for a quote.
Thrivent Financial – Thrivent Financial offers the lowest rates for Preferred Plus customers, but they require you to contact an agent before they will confirm your rate.
American National – American National offers among the lowest rates with Preferred and Preferred Plus customers, and they work closely with all major online brokers. You must contact an agent to get a quote directly from them.
Banner Life Insurance (a subsidiary of Legal & General America) – Banner Life Insurance offers an online quote portal and very low rates for Preferred Plus customers. They also seem to be a bit more lenient on the line than other customers for considering Preferred Plus (not considering family history).
Prudential – Prudential offers an online quote portal and the lowest rates for Preferred customers.
What to Expect Next
After you’ve decided to purchase an insurance policy, the policy will need to undergo an underwriting process. This will include a quick medical examination (height, weight, blood pressure, urine sample, and drawing blood) that usually takes place in your home. After that, the insurance companies will need to collect and review your medical records before issuing a policy for you.
Underwriting typically takes 3-8 weeks depending on how complete your medical records are. The company will then issue you a policy, and as long as you continue to pay, your policy will remain in effect (until the expiration of the term). Once your policy is in effect, you can rest easy knowing that your financial dependents will be taken care of in the event of your death.
In 2013, Melanie and Matthew Moore were facing a bit of a health care cost crisis. After the birth of their first child, the Wake Forest, N.C., couple decided that it made sense for Melanie, 33, to leave her job and become the primary caregiver at home. Not only did that mean losing an additional income source, but it also meant giving up the family’s affordable health benefits.
The monthly premium for a family plan through Matthew’s employer far exceeded the reach of their newly reduced budget. Melanie began researching health insurance options online, and eventually landed on the home page for Samaritan Ministries. East-Peoria, Ill.-based Samaritan is one of the six major faith-based health care sharing ministries in the U.S.. Members of these ministries pay monthly contributions to a pool of funding that is dispersed among members as they show need.
Samaritan coverage for Melanie and her son cost just $300 per month — less than half what they would have paid for a family health plan through Matthew’s job. Melanie quickly signed them up. To keep costs as low as possible, they decided Matthew, 31, would continue to receive individual coverage through his employer, which was free.
Even more than the price tag, Melanie says she appreciated the ministry’s faith-based approach to health care. “Health sharing promotes the Biblical ideals of sharing,” she told MagnifyMoney. “It takes a whole different mindset than insurance.”
The Moore family is not alone. As health care expenses have ballooned over the last decade, health care sharing ministries have gained in popularity as a lower cost alternative to traditional insurance. Their numbers still pale in comparison to people who receive insurance through employers or the federal marketplace. But health care sharing ministries have experienced an explosion in interest in recent years.
Membership among the top four health care sharing ministries nearly tripled in just the last two years — from a reported 274,000 members in 2014 to more than 803,000 Americans in 2016, according to a MagnifyMoney analysis of membership rates at the top six ministries. Even the smallest ministry in the bunch, Altrua, saw an eight-fold surge in membership in the last year alone — from 1,000 in early 2016 to 8,000 as of November 2016.
But what exactly are health care sharing ministries, and can they really replace primary health insurance?
At a glance, health care sharing seems like a perfect solution to families facing rising premium costs. However, a deeper look shows that participants take a leap of faith when they eschew traditional insurance protections in favor of health care sharing ministries. MagnifyMoney took a deeper look at how they work.
How Health Care Sharing Ministries Work
Ministry members pay a monthly share to the health care sharing ministry. Monthly share costs can be as low as $21 for an individual, but they can be as much as $780 per month for a family. Share costs vary from ministry to ministry and can also change unexpectedly, much like traditional insurance premiums.
In terms of actual functions, most health care sharing ministries collect monthly shares online, and they disburse funds electronically or through checks. Not all the share money goes directly to helping people in need. Some of the money goes to cover administrative costs, and some money goes to an escrow account. The escrow accounts allow ministry participants to share costs even during periods of high expenses.
When members incur medical expenses, they submit their bills to the ministry board for approval. Some health care sharing ministries allow medical providers to send bills directly to the ministry. The board then approves or denies sharing. When cost sharing is approved, the member is paid in one of two primary ways: Either the ministry disburses funds to those in need directly, or the ministry directs other members to send their monthly premium payments to the member in need instead.
Health care sharing ministries encourage members to pray for sick members and to send encouraging letters or emails to those in need. Health care sharing ministries specifically publish medical needs to members of the community for the purpose of prayer and encouragement.
“You almost can’t compare sharing to health insurance,” says Dale Bellis, executive director of Liberty HealthShare. “Sharing is about giving not receiving. Your goal is to be available for others in need. Participating is motivated by faith in God and faith in one another.”
The “individual responsibility”
Before covering a cost, some health care sharing ministries require that members meet an “individual responsibility requirement.” Basically, this is their form of a deductible. The individual responsibility can cost from $35 per incident all the way to $5,000 per incident. For example, Samaritan Ministries requires members to cover up to $300 per incident. Medi-Share requires members to pay a non-reimbursable fee of $35 per medical visit or $135 for an emergency room visit (much like a co-pay).
One of the benefits of participating in a health care sharing ministry is that many ministries emphasize the importance of negotiating medical expenses. It’s in the ministry’s interest to encourage members to negotiate fees, which leaves all the more money in the pool for everyone else. Some ministries hire third-party firms to negotiate bills, but it’s up to members to take advantage of those services.
Altrua Healthshare directly negotiates on behalf of its members, according toRon Bruno, VP of Business Development.
To incentivize members to negotiate their bills, some ministries offer to waive the member’s individual responsibility portion.
For example, Melanie negotiated a discount at the birth center when she had her second child in 2016. The discount she received more than covered her individual sharing responsibility of $300. That meant 100% of her expenses were covered by Samaritan.
Who can benefit the most from health care sharing ministries
At their heart, health care sharing ministries are meant to help members who are facing unusually high or unexpected health care costs. To that end, most ministries do not cover the kinds of routine preventative care — like annual physicals and immunizations — that private insurers are required to cover. Commonly “shared” expenses among ministry members are things like sudden illness or surgeries, says Michael Gardner, a spokesperson for Medi-Share.
In a way, health care sharing ministries have replaced catastrophic health plans that were phased out under the Affordable Care Act. People who may not require regular doctor’s visits but who want a health plan for emergency health care needs might benefit from a health care sharing ministry.
Finding a doctor
For the most part, ministry members are free to choose primary care doctors of their choice. This is because health care sharing ministries don’t usually share the cost of preventive care. The exception, Altrua HealthShare, has a network of affiliate providers including primary care physicians.
The trouble with choosing “any” doctor is finding a primary care physician who will accept patients who pay in cash. Samaritan Ministries directs their members to use a “cash and direct pay” resource from the Association of American Physicians and Surgeons.
Outside of primary care physicians, each health care sharing ministry allows members to request sharing pre-approval for planned surgeries and other expensive procedures. Most ministries have established processes or arrangements that help their members find the most cost-effective surgeons and specialists in their area.
Even with these resources, members are free to find their own doctors, and they will still be eligible for sharing (as long as they follow the standard procedures set forth by the ministry).
When it comes to emergency care, ministry members use the best available option and submit their bills for sharing afterward. The health care sharing ministries will seek to honor requests to share even expensive emergency care (provided the emergency care meets their standards).
Health Care Sharing Ministries vs. Insurance Companies
It’s crucial to understand that health care sharing ministries are not insurance companies. They operate more like nonprofit organizations. And because they are not technically insurance companies, they have no contractual obligation to cover certain medical expenses. That means they can mostly write their own rulebook for what they will cover and what they won’t.
Each health care sharing ministry has full discretion over which treatments it will cover, and ministries will not cover many treatments or conditions that do not align with their religious ideals. For example, many ministries won’t cover treatment for drug or alcohol addictions. Medi-Share, for example, will typically not cover prenatal care for an unmarried woman or health care for children born to unwed mothers. These are costs that traditional insurers would cover without hesitation.
There are also limits to how much health care sharing ministries are willing to cover. The majority of ministries have a maximum sharing amount of $125,000-$1 million per incident. In contrast, government-approved health insurance plans do not have annual or lifetime maximums for insurance coverage. That’s not to say that these ministries can’t absorb large costs. Samaritan Ministries participants share $18 million per month in medical costs. Currently, Liberty HealthShare has a sharing capacity of $6 million per month among 30,000 households. Medi-Share and Christian Healthcare Ministries have shared more than $1 billion each.
Health care sharing ministries do not cover preventive care, which is largely required of most traditional insurers. Members pay out of pocket for annual physicals, birth control, routine immunizations, and even preventive cancer screenings. In contrast, preventive care benefits are covered without cost sharing in approved health insurance plans.
When Health Care Sharing Ministries Don’t Make Financial Sense
Because these ministries don’t cover routine health costs, health care sharing ministries make sense for people with low routine health care costs. In general, this includes many healthy people who don’t struggle with chronic conditions.
One surprising group that needs to look out for high routine costs are new parents.
In early 2016, Matthew and Melanie Moore gave birth to their second child. After the birth, the Moores chose to enroll the children on Matthew’s insurance plan instead of keeping them on the Samaritan plan, which wouldn’t cover any of their newborn well visits.
Infants visit the doctor 9-10 times in their first 18 months, and they receive dozens of immunizations during that time. For the Moores, the out-of-pocket costs for preventive care would have overwhelmed their budget again.
Faith (Almost Always) Required
Health care sharing ministries have been around since the 1980s, led by Christian Healthcare Ministries. Like Melanie and her family, most health care sharing ministry participants are drawn to the organizations’ emphasis on faith.
The organizations model their sharing plan after resource sharing ideals practiced by the early Christian church nearly 2,000 years ago.
All the health care sharing ministries require that their members affirm some set of beliefs. Most specifically, they require participants to adhere to the Christian faith. Liberty HealthShare is an exception, according to Bellis. “We are unabashedly a Christian organization, but we don’t intrude on the faith choices of participants,” he says.
Bruno, of Altrua Healthshare, explained that members of Altrua adhere to a statement of standards instead of a statement of beliefs. The standards are based on the Bible, but the ministry is non-denominational.
One reason Melanie Moore loves health care sharing ministries is the sense of community and encouragement she receives from other members. She received notes of congratulations and prayers for recovery when she received checks to pay for her child’s delivery. Likewise, she sends notes of encouragement along with her monthly share check.
All the health care sharing ministries encourage participants to pray and give words of encouragement to sick participants. The ministries exist to foster community and to promote sharing. Anyone looking for an impersonal experience will need to look elsewhere.
Each of the ministries is faithful to its heritage. These ministries are faith-centered, and they want to promote religious faith among their members. It is clear that these ministries want members to share more than medical bills. They want to promote a community of care among their members.
Health Care Sharing Ministries in the Obamacare Era
Under the guidelines of the Affordable Care Act, health care sharing ministries would never pass muster. But five of the six large health care sharing ministries were granted exemptions under the ACA — meaning their members will not have to pay tax penalties for not having qualified health coverage.
Please note: Members of Medical Cost Sharing (MCS), another ministry, will not receive qualified exemptions from Affordable Care Act penalties. Their website uses language that may lead you to believe otherwise.
The Bottom Line
Walking the line between faith and finances hasn’t been easy for the Moore family. Melanie is still a member of Samaritan, but the rest of the family is on Matthew’s traditional insurance plan.
Like the Moores, anyone considering a health care sharing ministry should think about their mindset, their faith, and their finances. Don’t join a ministry because of the low monthly costs; the organizations want members who live out the belief statements. Be sure that the rewards of joining a ministry (both financial and otherwise) outweigh the associated risks.
*This post has been updated to reflect the following correction: Due to a reporting error, the name of the ministry used by the Moore family was incorrectly noted. It is Samaritan Ministries, not Medi-Share.
Since the passage of the Affordable Care Act, most insurers must now provide preventive benefits without any form of cost sharing. And yet, millions of Americans are still missing out on free (and potentially life-saving) preventative health care services, like flu shots and cancer screenings.
If pocketbook concerns are keeping you from taking care of your health, take a second look. You may find that the preventive services you want are covered without cost to you.
Free benefits — Really?
Of course, it’s misleading to call preventive benefits completely free. You pay for them in the cost of your health insurance premiums. But you may as well use these benefits because, after all, you’re already paying for them. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.
Furthermore, the ACA doesn’t guarantee free preventative treatments for 100% of insured people. Some insurance plans were given a pass on providing preventative services if they were implemented before March 2010. In 2016, 23% of workers who receive benefits through their employer are enrolled in a grandfathered plan and may not receive full free preventive benefits.
There is also the risk that medical providers may bill patients for services that should be free. Those types of errors are caused when medical billing offices unwittingly bundle covered and uncovered services, when your bill contains an error, or when your insurer errantly denies a claim.
Office visits and preventive services are often billed separately. This means you may receive a legitimate bill even when you thought you were going to receive free care. The only way to avoid this conundrum is to ask for costs in advance. You may also be billed if you use an out-of-network provider.
Below, we cover the preventive benefits you can expect to receive for free, and the times that they may lead to unexpected medical bills.
Benefits for adults
Preventive benefits for all adults fall into six categories. Some benefits are limited to at-risk groups or women only. Before you use a preventive benefit, ask your doctor if you qualify for free screenings. If you don’t, you will have to pay a bill.
Some preventive services will be built into an annual physical, but you can request the services as you need them.
Remember, the preventive service is free, but you may need to pay for ongoing treatment if you uncover a health problem.
Insurers (except grandfathered insurers) cannot impose an extra charge for polyps removed during a colonoscopy. They also cannot charge for medically necessary anesthesia.
Treatment for Chronic Conditions:
Screening for the following diseases: abdominal aortic aneurysm, diabetes (blood glucose), hypertension (blood pressure), hepatitis B, hepatitis C, latent TB infection, liquid disorders, osteoporosis
Low-dose aspirin (adults with cardiovascular or colorectal disease risk factors)
Except obesity management and prescribed aspirin, you must pay for chronic condition treatments through your insurer. This means treating chronic conditions will include cost sharing.
Many chronic condition tests require a blood or urine sample. If your doctor is worried about your health, they may test for multiple uncovered diseases. In that case, you can expect to pay a fee for lab work.
You may also see a charge if a medical biller uses the wrong medical billing codes. If you end up with an unexpected bill, request an itemized bill and an explanation of benefits. You will see on the bill if any you have fees associated with the covered screening. When you see fees for covered screenings, call your doctor to have them adjust the bill. You can also ask your insurer to adjust the claim for you.
Free Health Promotion Treatment
Obesity screening and management
Diet and activity counseling for cardiovascular disease prevention
Falls prevention (adults 65+)
Intimate partner violence screening and counseling
Initial counseling and tobacco cessation pharmaceuticals are covered at 100%, but your doctor may recommend therapies and counseling not covered by insurance. Be sure to ask if counseling will be billed as a preventive benefit.
Obstetricians commonly ask for tests outside of those listed above. You should expect to pay lab fees for those tests. Most obstetricians can provide clients with a list of routine pregnancy tests and associated costs. In addition to lab fees, you should expect to pay for ultrasounds, labor and delivery fees, and facility fees during your pregnancy and birth experience.
Benefits for Children
Preventive benefits for children are more robust than preventive services for adults. Nearly all procedures provided during scheduled well-child visits will be covered as preventive services. This includes regular checkups, screenings for childhood diseases and disorders, and immunizations.
If your child provides a blood or urine sample you may want to ask about lab fees, but all other services will be free.
Children at risk and sexually active adolescents can receive all the preventive benefits that adults receive in addition to those specific to children.
Regular well-child visits will make it easy for you and your child to take advantage of any preventive benefits available to you.
Final word: Don’t neglect preventive benefits
Preventive coverage can help you catch and cure otherwise deadly diseases. Curing early-stage diseases often costs less than later-stage treatments, and early treatments may save your life. Recent studies show that preventive benefits may save 2 million lives and $4 billion dollars annually.
These services come with no additional cost sharing to you. Take advantage of preventive coverage; you can’t afford to neglect your health.
Health insurance protects millions of Americans from paying full price for their medical expenses. But buying the right insurance isn’t an easy task for people looking to sign up for an Obamacare plan through the federal health insurance marketplace (Healthcare.gov). This year, the average consumer will have to wade through 30 unique plans from several different insurers to make their choice.
In this guide, we will cover the facts that you need to know when selecting an insurance plan through the federal health care exchange.
Understanding basic health insurance terminology can help you make a more informed decision about your options. These are the common terms you should know.
Health care costs
Monthly premiums. The amount you pay each month for your health insurance.
Deductible. The amount you pay for covered health services before your insurer begins to cover part of your costs.
Out-of-pocket maximum/limit. The highest amount you will pay for covered services in a year.
Co-insurance. Your share of the costs of a covered health care service. This is the percentage you must pay out of pocket after you have met your annual deductible. You pay a specific co-insurance amount until you meet your out-of-pocket maximum.
Co-payment. A fixed amount you pay for a covered medical service, typically when you receive the service or prescription.
How these costs work together. Consider a scenario where you purchase an individual insurance policy with a $368 monthly premium, a $2,000 deductible, 20% co-insurance, and a $5,000 out-of-pocket maximum.
You will pay $4,416 in monthly premiums ($368 every month).
If you receive a $20,000 medical bill, you will pay:
$2,000 to cover your annual deductible (100% of costs up to $2,000)
$3,000 in co-insurance (20% of costs over $2,000 deductible until you hit your out-of-pocket maximum of $5,000)
$0 in medical costs after you hit your out-of-pocket maximum (in this case the additional $15,000 is covered by your insurance)
Total annual cost:
$5,000 to cover medical bills + $4,416 in monthly premiums = $9,416
Metal Levels. The health care exchanges — both federal and state-run exchanges — classify health insurance plans into four metal categories. The levels are bronze, silver, gold, and platinum. Metal categories are based on how you and your plan split the costs of your health care.
Bronze. Bronze plans offer the least amount of estimated coverage. Insurers expect to cover 60% of health care costs of the typical population. These plans feature the lowest monthly premiums, the highest deductibles, and high out-of-pocket maximum expenses.
Silver. Silver plans offer moderate estimated coverage. Insurers expect to cover 70% of health care costs, and plan members cover the remaining 30%. If you qualify for cost-reduction subsidies, you must purchase a silver plan to access this extra savings. In 2014, 67% of people who were eligible for a subsidy chose a silver plan.
Gold. Gold plans offer high levels of estimated coverage. Insurers expect to cover 80% of health care costs, while plan members cover the remaining 20%. These plans feature high monthly premiums, but lower deductibles and out-of-pocket maximums.
Platinum. Platinum plans offer the highest level of protection against unexpected medical costs. Insurers expect to cover 90% of medical costs, and plan members cover the remaining 10%. These plans have the highest monthly premiums and the lowest deductibles and out-of-pocket maximums.
EPO: Exclusive Provider Organization. Medical services are only covered if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).
PPO: Preferred Provider Organization. You pay less for medical services if you use the providers in your plan’s network. You may use out-of-network doctors, specialists, or hospitals without a referral. However, there is an additional cost.
POS: Point of Service. You pay less for medical services if you use providers in the health plan’s network. You need a referral from your primary care doctor to see a specialist.
HMO: Health Maintenance Organization. These plans focus on integrated care and focus on prevention. Usually coverage is limited to care from doctors who work for or contract with the HMO. Generally, out-of-network care isn’t covered unless there is an emergency.
Provider Network. Most insurance plans have preferred pricing with a group of health care providers with whom they have contracted to provide services to their members.
PTC: Premium Tax Credit. The federal subsidy for health insurance that helps eligible individuals or families with low or moderate income afford health insurance purchased through a health insurance marketplace.
APTC: Advance Premium Tax Credit. This credit can be taken in advance to offset your monthly premium costs. The subsidy is based on your estimated income and can be taken directly from your insurer when you apply for coverage. You must repay credits if you qualify for a smaller subsidy once taxes have been filed. You can learn more about repayment limitations here.
Cost Reduction Subsidies. If you earn between 100% and 250% of federal poverty line, you may qualify for additional savings. This extra savings reduces your out-of-pocket maximum, and it offers assistance with co-pays and co-insurance.
Individual Mandate (Tax Penalty). If you can afford to purchase health insurance and choose not to, you will be charged an individual shared responsibility payment, in the form of a tax penalty. There are a few qualified exemptions, but if you don’t meet those, you will be fined.
For the 2016 tax year, the individual mandate will be calculated two ways:
2.5% of household income (up to the total annual premium for the national average price of the marketplace’s bronze plan)or
$695 per adult and $347.50 per child (up to $2,085)
You are responsible for the greater of the two.
Catastrophic Plans. People under age 30 or with hardship exemptions may purchase catastrophic health insurance plans. These plans offer very high deductibles (over $6,850) and high out-of-pocket maximums. Catastrophic plans may offer savings above the metal grade plans, but you can’t use a premium tax credit to reduce your monthly cost.
Preventative Care. All health insurance plans purchased through the health care exchange cover some preventative care benefits without additional costs to you. These benefits include wellness visits, vaccines, contraception, and more.
Government Health Plans
Medicaid. A joint federal and state program that provides health coverage to low-income households, some pregnant women, some elderly, and people with disabilities. Medicaid provides a broad level of coverage including preventative care, hospital visits, and more. Some states provide additional benefits as well.
Medicaid Expansion. The Affordable Care Act (ACA) gives each state the choice to expand Medicaid coverage to people earning less than 138% of the federal poverty line. The primary goal of the ACA is reducing the number of uninsured people through both Medicaid and the health insurance marketplace. The Kaiser Family Foundation keeps track of expanded Medicaid coverage by state.
CHIP: Children’s Health Insurance Program. This program was designed to provide coverage to uninsured children who are low income, but above the cutoff for Medicaid eligibility. The federal government has established basic guidelines, but eligibility and the scope of care and services are determined at the state level. Your children may qualify for CHIP even if you purchase an insurance policy through the health care exchange. You can learn about CHIP eligibility through the marketplace or by viewing this table at Medicaid.gov.
Who can buy insurance through a health care exchange?
Since the introduction of the Affordable Care Act (ACA), most Americans can purchase health insurance through a health care exchange. However, incarcerated people and those living outside the United States cannot purchase insurance through the marketplace.
Just because you’re eligible to purchase insurance through the health care exchange doesn’t mean it’s the most cost-effective. That’s why it’s important to weigh all available health insurance options.
Will I qualify for a health care subsidy?
One major factor to consider when weighing the options is your expected subsidy. 85% of people who purchased insurance through a health care exchange qualified for a health insurance subsidy. The subsidy, or premium tax credit, brought average monthly premiums down from $396 to $106.
To qualify for a subsidy, you must meet three standards:
You must not have access to affordable insurance through an employer (including a spouse’s employer).
Affordable insurance for 2017 is defined as individual coverage through an employer that costs less than 9.69% of your household’s income.
You can check that your insurance offers minimum value coverage by having your human resources representative fill out this form.
You must have a household Modified Adjusted Gross Income between 100% and 400% of the federal poverty line.
You can calculate Modified Adjusted Gross Income using this formula:
Adjusted Gross Income (Form 1040 Line 37) +
Nontaxable Social Security benefits (Form 1040 Line 20a minus Line 20b) +
Tax-exempt interest (Form 1040 Line 8b) +
Foreign earned income and housing expenses for Americans living abroad (Form 2555)
You’re not eligible for coverage through Medicaid, Medicare, the Children’s Health Insurance Program (CHIP), or other types of public assistance. Some states have expanded Medicaid to anyone who earns up to 138% of the federal poverty line.
How can I calculate my subsidy?
The easiest way to calculate the subsidy you will receive is to use a subsidy estimator from Healthcare.gov or the Kaiser Family Foundation. Both calculators estimate your subsidy based on the information you provide. They also help you understand what factors affect your subsidy estimations.
Your income, household size, and the cost of premiums in your state factor into your subsidy. Premium tax credits can help reduce the amount that you will spend on monthly premiums to a set percentage of your income. This subsidy can bring the marketplace’s silver plan into the affordable range set by the Affordable Care Act.
The price of your silver plan determines the subsidy you receive, but you can use this same subsidy for other plans as well. For example, if you purchase a gold plan, you will spend no more than 9.56% of your income on premiums.
Below you can see the maximum amount you will spend on insurance premiums based on your income.
For an Individual
% of Poverty Line (2016)
Income (Based on 2016 Federal Poverty Line)
Max Silver Premiums as a Percent of Income
Max Monthly Silver Plan Premium Cost after Subsidies
What circumstances might affect my eligibility for a subsidy?
Your subsidy can change if your circumstances change. It’s important to plan ahead if any of these special circumstances apply to you.
Families with kids. In most states, if you earn less than 200% of the poverty line, your kids will qualify for the Children’s Health Insurance Policy (CHIP). If your children qualify for CHIP, you cannot purchase subsidized insurance for them, but your individual coverage may still be subsidized.
Families where one spouse has work coverage. Some employers only offer health insurance to their employees. Spouses and children cannot get coverage through work. In that case, you can purchase insurance with a subsidy through the marketplace exchange.
Families with expensive employer coverage. If you can purchase family coverage through your or your spouse’s employer, then you will not qualify for subsidies. The tax code states that if an employee can gain individual coverage for himself or herself for less than 9.69% of total household income, then the insurance is considered affordable. Coverage for the family isn’t factored into the affordability calculation.
The so-called “family glitch” traps 2-4 million people and requires them to pay high prices for premiums. If you are caught in this situation, your children may qualify for CHIP. However, uncovered spouses and children must purchase insurance or pay the individual mandate penalty.
Minnesota Senator Al Franken has proposed a Family Coverage Act that may rectify the tax code, but it has not been passed.
Getting married in 2017. If you’re getting married in 2017, your subsidy depends on your combined income. In the months preceding your marriage, your income is one-half of your and your spouse’s combined income. Once you get married, your subsidy is based on your joint income and your qualifying family.
You need to report a marriage to be eligible for a special enrollment period on Healthcare.gov or your state’s insurance exchange.
Getting divorced in 2017. If you get divorced or legally separated in 2017, you must sign up for a new health insurance plan after you separate. Your subsidy will be based on your income and household size at the end of the year. However, you will need to count subsidies received during your marriage differently than subsidies received when you’re legally separated.
For the months you are married, each spouse divides advanced subsidies received to each new household. If spouses cannot agree on a percentage, the default is 50%. If the plan only covered one taxpayer and his or her dependents, then the advanced tax credits apply 100% to that spouse.
Divorce reduces your income, but it also reduces your household size. These factors change your estimated subsidy in opposite directions. Your subsidy changes will depend on the magnitude of each change.
Reporting a divorce makes you eligible for a special enrollment period. When you enroll in a new plan, the exchange website will help you estimate your new subsidy for the remainder of the year.
Giving birth or adopting a child. You have 60 days from the birth or adoption of your child to enroll them in a health care plan. If you miss this window, your child will not have health coverage, and you will pay a penalty. However, if you enroll your child in a timely manner, you can expect your subsidy to increase.
Turning 26. If you’re on your parents’ insurance, generally you can stay until you have turned 26, but you should check your plan to be sure. You will have a 60-day special enrollment period to get your own plan from the health care exchange when you turn 26.
You may also be eligible for a special enrollment period from an employer-sponsored health plan. If you fail to have health insurance for more than three months, you will pay a penalty.
Losing employer coverage. If you lose employer-based health coverage, you can either enroll in COBRA or purchase a plan through the health care exchange. Once you enroll in COBRA, you become ineligible to purchase subsidized coverage through the exchange.
You need to report job status changes to be eligible for a special enrollment period on Healthcare.gov or your state’s insurance exchange.
Changes in income. Premium tax credits are based on your annual income. If you increase your income, you will be expected to pay back some or all of the advanced premium you received. If you earn more than 401% of the federal poverty line, all premiums need to be repaid. If you earn less than 400% of the federal poverty line, you may have to pay back $2,500 of advanced premiums per family or $1,250 for individuals.
Moving. Most insurance plans that you purchase through the marketplace are state and county specific. If you move, you need to report the move through the insurance exchange.
Moving may affect your subsidy (if you move to or from Alaska or Hawaii), but it does affect the plans available to you.
How do I apply for insurance?
Applying for insurance takes 30-60 minutes if you have all the necessary information ahead of time. This is what you should gather before you apply:
Names, birthdates, and Social Security numbers for all members of the household
Document numbers for anyone with legal immigration status
Information about employer-sponsored health plans
Tax return from previous year (to help predict income)
Student loan documents
Retirement plan documents
Health Savings Account documents
The website interface for the federal exchange is simple, but answering the questions may be confusing. It’s important to fill out the application as accurately as possible so you can enroll in the best health insurance plan for you.
We’ve done our best to clarify the confusing portions in our step-by-step process below.
The state-run exchanges perform the same functions as the federally run exchange. They allow you to estimate your tax credit and to purchase insurance. As a consumer, you must provide the same information to your state as you would on the federal exchange.
While the online user experience will vary when states adopt their own online marketplace, the Affordable Care Act is a federal law and a federal program. This means that the requirements and benefits do not change from state to state even if the exchange platform changes. If you have trouble navigating either the state or federally run health care exchange, you can get free help from knowledgeable experts.
Family and Household Info
Start the application by filling out contact information and basic information about members of your household. Even if a member of your family will not need coverage, include them in your application.
The website will help you determine if a member of your household has insurance options outside of the health care exchange. It will also help you determine if a person is a dependent. For the purpose of the health care exchange, your family includes all the people included on your income tax filing.
You need to know Social Security numbers, birthdates, immigration status, disability status, and whether each household member can purchase health insurance through an employer plan.
Income and Deductions
Next, you’ll estimate your income for the upcoming year. Include all the following forms of income:
Self-employment income (net)
Social Security benefits
Farming and fishing income
Afterward, you’ll enter deductions. The application calls out student loan interest and alimony paid, but you should estimate all “above the line deductions” that should be included. These include:
Retirement plan contributions: 401(k), 403(b), 457, TSP, SEP-IRA, simple IRA, traditional IRA
Contributions to a Health Savings Account
Self-employed health insurance premiums
Tuition and fees paid
Educator expenses (up to $250 per teacher)
Half self-employment tax
Early withdrawal penalties from a 1099-INT
Do not double-count income or deductions since you’ll fill out these forms for each person. If you make a mistake, you can edit it when you review your household summary.
Finally, you’ll fill out a few other miscellaneous details that will allow the application to confirm that you are eligible for subsidies or marketplace insurance.
It’s especially important that you have accurate information about job-related coverage for you and your family. This information will determine your eligibility for subsidies and other government programs.
After you complete the application, you can review and submit it. At this point, the system will suggest which members of your household should complete CHIP or Medicaid applications. The remaining family members can enroll in a health insurance plan.
How do I decide what plan type is best for me?
Before you choose a plan, you’ll decide whether to receive advanced or deferred subsidies. Most people with predictable income and household size should take most or all of the subsidy upfront. However, if you expect to undergo a major life change (such as an increase in income, a marriage, or a divorce), consider taking less of your subsidy in advance.
Then you can look for a plan. For people shopping for 2017 coverage, the average number of plans available is 30. Rather than comparing every plan, we recommend creating criteria around the following variables:
Monthly cost. Consider how the monthly premium will affect your budget. This does not mean you should choose the plan with the lowest premiums, but you should consider the price. People without chronic conditions who have adequate emergency savings may consider opting for low monthly premiums.
Deductible and co-insurance. Do you have the emergency fund or income you need to cover a small medical emergency? A broken arm, stitches, or an unexpected infection can lead to hundreds of dollars in medical costs. If you have a high-deductible plan, you’ll need to cover these costs without help from the insurance company. If possible, choose a plan with a deductible that you could comfortably cover out of your savings or income.
Maximum yearly cost. Add the annual cost of your premiums plus your out-of-pocket maximum to determine your maximum yearly cost. In a worst-case scenario, this is the amount you will pay out of pocket. People with chronic conditions that require heavy out-of-pocket fees should try to limit their maximum yearly cost. A plan with a higher maximum yearly cost may represent a higher risk.
Services and amenities. All insurance plans from the marketplace cover the same essential health benefits, but some plans will offer unique services such as medical management programs, vision, or dental coverage. High-deductible health plans allow you to contribute to a tax-advantaged Health Savings Account.
Network of providers. It’s important to be sure that your preferred medical providers contract with the plan you choose. Not every doctor is “in network” with every insurance plan. You can check each plan’s provider directory before you choose the plan.
Once you determine your criteria, look for plans that fit your needs and ignore the rest.
Using the exchange website, you can filter and sort plans based on these factors. Most people need to balance cost and coverage to find a plan that works for them.
Where do I get help for free?
Due to the complex nature of the marketplace exchange, the exchange provides marketplace navigators. Marketplace navigators are professionals who provide free, unbiased help to consumers who want help filling out eligibility forms and choosing plans. You can find local marketplace navigators through the health care exchange website. Most of the time you can find someone who speaks your language to meet you in person.
Outside of the exchange, nonprofit organizations are working to help people gain coverage by teaching them about their insurance options. Enroll America offers free expert assistance to anyone who makes an appointment with in-person application assistance. You can use the connector below to make an appointment with one of their experts.
Insurance brokers can offer another form of help. Brokers aim to make it easier for consumers to apply for and compare insurance plans. Insurance brokers have relationships with some or all of the insurance companies on the marketplace. Using a broker will not increase the price you pay for a plan, and it will not affect your subsidies. However, online brokers may not have 100% accuracy regarding a plan’s details. It’s important to visit a plan’s website before you enroll in a plan.
If you want to work with a broker, consider some of these top online brokers. PolicyGenius compares all the plans that meet criteria that you establish, and they serve up the top two plans that meet those criteria. HealthInsurance.com makes applications quick and easy, and the site specializes in special enrollment help.
What happens if I don’t apply for insurance?
In most cases, you must enroll in health insurance or you’ll have to pay a penalty.
The penalty for 2017 hasn’t yet been released, but the 2016 penalty was calculated as the greater of 2.5% of your income (up to the national average cost of a bronze plan) or $695 per adult and $347.50 per child (up to $2,085). This steep penalty means that most people will be better off purchasing some health insurance.
However, under certain circumstances you can avoid buying insurance and dodge paying the penalty. These are a few of the most common exemptions:
Member of a qualifying health care cost-sharing ministry (501(c)(3) whose members share a common set of ethical or religious beliefs and have shared medical expenses in accordance with those beliefs continuously since at least December 31, 1999.
Low income, no filing requirement: If you do not earn enough income to file taxes, then you are automatically exempt from paying a noncoverage penalty.
Coverage is unaffordable. For 2017, if you cannot obtain individual employer coverage or a bronze plan for less than 9.69% of your income (after applicable subsidies), you may opt out of coverage.
Joint individual coverage is unaffordable. For 2017, if you and your spouse combined cannot obtain individual employer coverage or a bronze plan for less than 9.69% of your income (after applicable subsidies), you may opt out of coverage.
Short coverage gap (you went without insurance for less than three months).
Lived abroad for at least 330 days.
General hardships such as homelessness, eviction, foreclosure, unpaid medical bills, domestic violence, and more (exemption must be granted through a marketplace exemption).
Unable to obtain Medicaid because your state didn’t expand Medicaid (exemption must be granted through the marketplace).
Received AmeriCorps coverage (exemption must be granted through the marketplace).
Members of qualified religious sects who do not obtain government benefits (exemption must be granted through the marketplace).
Although you will not pay a penalty, you may still want to seek out catastrophe insurance or some other insurance to help you deal with high potential health costs.
What happens if my plan was canceled?
Recently, some insurers dropped their insurance plans from the health care exchange. As a consumer, you cannot assume that the plan you chose in the past will be around next year. Unlike previous years, you will not qualify for an exemption if your plan dropped in 2017. This means that you may need to purchase new insurance or pay a penalty.
Even if your plan remains in place, important variables like the deductible, the premiums, or the coverage may have changed.
Whether you’re shopping for a new plan, or reviewing an old plan, take these steps before open enrollment ends.
Update your personal information on your application. Your income, household size, where you live, and more will affect plan and subsidy eligibility. It’s important to keep your application up to date. The plan that fit you last year may no longer be appropriate, but you won’t know unless you keep the information current.
Review your plan before you re-enroll. You should receive a notification in the mail if your plan has been changed or canceled. Take the time to understand if the changes affect you.
Compare plans that fit your needs. Consider enlisting free help from a health care navigator, a nonprofit, or a broker to help you decide.
Choose the plan that best fits your needs and your budget.
Work to make the most informed decision possible
Choosing a health plan seems like a daunting task, but you can get all the help and information you need to make an informed decision. Your health and your pocketbook matter, and we want to help you protect both.
As widely expected, millions of Americans who rely on Obamacare for health insurance will face higher premium costs going into 2017. Premiums will rise 25% on average, according to a new report released by the U.S. Dept. of Health and Human Services (HHS). That’s one of the largest year over year spikes premiums have seen since the marketplace opened in 2013.
A 27-year-old woman who paid $242 for a benchmark silver plan in 2016 will now face a premium of $302 before tax credits. The silver lining here is those three words: before tax credits. Roughly 85% of Obamacare customers currently qualify for tax credits that can offset the cost of their premiums. The average subsidy in 2016 was $290/month. Tax credits can help offset rising premium costs, but they depend largely on household size and income. Beginning in November, consumers can calculate their tax credit for 2017 here.
How much premiums will rise depends largely on the state where consumers are shopping. In states where major insurers have exited the federal marketplace, premiums will see much higher gains. Further contributing to rising premiums, insurers are now raising prices in order to recoup losses they’ve incurred since entering the Marketplace in 2013. For example, BlueCross BlueShield reversed its decision to exit the marketplace in parts of Arizona in September. But as a condition of its decision to stay in the marketplace, the company said it would raise premiums by more than 50%. The company will have very little competition this year. Arizona lost a total of six major insurers this year, bringing the total number of insurers offering plans on the marketplace from eight to only two.
Arizona customers will feel those price hikes now. A 27-year-old in Arizona will pay a whopping 116% more for a benchmark silver plan in 2017, according to HHS.
Minnesota consumers relying on Blue Cross Blue Shield for coverage were also unlucky this year. Citing losses of $500 million over its three year run on the state’s exchange, BCBS decided in June to pull all but one plan from Minnesota’s state-run healthcare marketplace, leaving more than 100,000 Minnesotans without plans. The benchmark silver plan will rise an average of 59% for a 27-year-old in Minnesota going into 2017.
The silver lining
The government report focused largely on positive news for Obamacare consumers going into 2017.
Three-quarters of Marketplace customers in states using the federal health care exchange (Healthcare.gov) will be able to find plans with a monthly premium under $100 after factoring in tax credits. On average, these consumers will have 30 different insurance plans to choose from.
But the number of individual insurers offering plans in states has decreased in many states. Pennsylvania and Ohio each lost five insurers. Arizona lost six, the largest loss of any state. In several states, including Alaska, Arkansas, Wyoming, and South Carolina, only one major insurer offers plans on the marketplace. When there are fewer insurers operating in a given state, there is less competition and, as a result, potentially higher rates for consumers.
The Bottom Line:
This all means one thing for Obamacare consumers facing open enrollment Nov. 1: It is more important than ever to shop around and compare plans. If customers don’t shop around, they will simply be re-enrolled in their 2016 coverage. And if their 2016 plan is no longer available, the marketplace will stick them in a similar plan that could cost much more.
“In 2017, more than 7 in 10 (76 percent) current Marketplace enrollees can find a lower premium plan in the same level by returning to the Marketplace to shop for coverage rather than re-enrolling in their current plan,” according to the report.
MagnifyMoney has several tips for people who found out that their Obamacare plan has been dropped.
The open enrollment period of marketplace health plans is a crucial time to save and select the right coverage for your family’s needs. Open enrollment for Obamacare consumers begins November 1 and ends January 31. You can shop for plans in advance right now by visiting Healthcare.gov or your state insurance marketplace.
It’s that time of the year again — health care open enrollment. Open enrollment season is the time of the year when you enroll, re-enroll, or change your 2017 health insurance plan. These fall months are pretty crucial. Unless you have a qualifying life event (getting married, starting a new job, etc.), you won’t get another chance to change your benefits for another year.
Most Americans get their health care through three main options — Medicare, their employer, or the federal health care exchange.
Open enrollment for Medicare is between Oct. 15 and Dec. 7 each year. You can get a jump start on the enrollment period by reading up on the plans and options ahead of time in Medicare & You, which is updated each year.
Enrollment for employer-provided health care plans varies since these plans are set by the employer. Enrollment is typically in the fall, and any changes will go into effect on Jan. 1 of the following year. Ask your employer’s human resources department when your deadline is to enroll.
Here are some tips to keep in mind as you review your health coverage this year:
Don’t get complacent
You might love the benefits you have at the moment, but that doesn’t mean you should blindly sign up for the same plan next year. Insurers are constantly tweaking existing coverage areas and creating new plans. Check to see if your existing plan has changed and see if there are new plans. With the rapid increase in pharmaceutical and health care prices, it’s important to look beyond the premium alone. Lower-cost plans may have higher out-of-pocket costs like deductibles, co-pays, and co-insurance. Certain covered drugs and treatments or the qualifying doctors or hospitals in your network could have changed as well.
Lower your out-of-pocket expenses with a Flexible Spending Account
Americans are paying the highest out-of-pocket health care expenses in history, due to a shift toward high-deductible plans. You can lower your out-of-pocket expenses by setting aside pretax dollars in a Flexible Spending Account. FSAs are only available to workers whose employer provides them.
FSAs can be used only for certain medical expenses, such as co-pays, prescriptions, and some over-the-counter medications. The maximum contribution is $2,550 for 2016. You can only sign up for one during the open enrollment period. When you do, you’ll decide how much of your pretax salary you want to contribute to cover qualified health care expenses throughout the year. Be careful not to contribute too much, however. The downside of an FSA is that you have to use the money in the account by December 31, or it is returned to your employer. However, some employers offer grace periods.
Take advantage of a Health Savings Account if you have a high-deductible health plan
Health Savings Accounts (HSAs) go with high-deductible plans like salmon and white wine. Like an FSA, you contribute pretax dollars to an HSA to cover your medical expenses. However, since HSAs are not tied to any one employer, they are portable. Your money will come with you from one job to the next, and you won’t be limited on where you can use it. You also don’t have a certain time period to make or change your contribution amount, so you can make changes anytime throughout the year. In order to qualify for an HSA in 2017, your health plan deductible must be higher than $1,300 for an individual and $2,600 for a family.
Learn from last year’s mistakes
This is your chance to find a plan that fits your budget and your needs. Insurance companies change coverage rates and options frequently, so take the opportunity to do your research and flesh out all of your options this enrollment season. If you went for a low-premium, high-deductible plan this year, you might have realized you don’t really like paying higher out-of-pocket expenses all that much. Similarly, if you’ve paid for a high-premium, low-deductible plan but don’t use your health insurance that much, you may join the ranks of the growing number of Americans who have switched over to high-deductible health care plans over the past few years.
Check to see if you qualify for a tax credit
Like 80% of Obamacare applicants, you might be eligible for a tax credit that would lower your monthly premium. The average subsidy granted in 2016 was $3480 ($290/month), according to the U.S. Department of Health and Human Services. If your estimated household income is up to four times the federal poverty level, then you’d qualify for the credit. You can check here to see if you qualify for a subsidy.
If you decide to forego insurance, know what to expect
Under the Affordable Care Act, every American has to have qualifying health insurance coverage, or pay a tax penalty. For 2016, the penalty is $695 for each uninsured adult in the household. However, there are a few exceptions. You might qualify for an exemption from the penalties under certain circumstances. For example, you won’t face a penalty if you suddenly lose a job or you are in between jobs for 1 or 2 months and have a gap in coverage. You should check to see if any exemptions apply to you before skipping out on signing up this enrollment season.
In 2015, 27-year-old blogger Michelle Schroeder-Gardner and her husband, Wesley, sold their Kansas City, Mo., home and packed what they could fit into an RV. For the next few years, the couple plans on traveling across the U.S. while Michelle runs her business, the personal finance blog Making Sense of Cents, from the road.
“We love traveling,” Michelle says. “I couldn’t imagine living in a ‘normal’ home again.”
Some aspects of transitioning to a mobile lifestyle have been easier to adjust to than others. When it came time to figure out how they would take care of their health on the road, the couple began researching statewide insurance plans. They soon realized finding a plan that would cover them in any state at any time was easier said than done. Without a permanent address, they were denied again and again.
“We came across many problems and even used an RV health insurance broker,” Michelle says. “There was not a single health insurance plan that we qualified for.”
If you’re planning on spending extensive time on the road, either within the U.S. or overseas, managing health care can be a tricky — and oftentimes frustrating — undertaking. As it stands, just 36 states offer multistate health plans (although that will change in 2017, when all 50 states will be required to offer at least two multistate plans).
Finding plans that cover travelers across the nation, no matter where they are traveling, is an even tougher task. While some multistate plans include nationwide coverage, many only offer coverage in a handful of states. If you are traveling outside the bounds of your health plan’s coverage, there’s a good chance that you’ll need to look at other options.
To help you navigate your health care options while traveling in the U.S. or abroad, we’ve come up with a few tips:
Take a good look at your existing coverage.
If you already have a health care plan, look closely to see what is covered. Many major insurance plans offer regional coverage, which means you could be covered in a handful of states. If your current plan does not offer out-of-state coverage, you run the risk of having to pay for medical bills completely out of pocket, except in an emergency. In fact, in 2016 45% of silver-level PPO plans that were new to the health marketplace had no cap on out-of-network costs.
Research multistate plans.
As we mentioned, many multistate plans don’t offer nationwide coverage. The costs, limitations, and options may vary, so be sure to review the details of a plan carefully. Most important, read plan benefits closely to find out which providers are considered in-network versus out-of-network. Other out-of-pocket expenses like deductibles, co-pays, and the cost of services such as lab work and prescriptions can vary by state as well.
Consider traveler’s insurance.
If you’re traveling abroad, one thing you can consider is traveler’s insurance. Traveler’s insurance can cover trips to a clinic or hospital in the case of an illness or injury, plus trips to the emergency room. If your travels take you outside of the U.S., many U.S-based health plans won’t cover the cost of sending you back to the States in the case of a medical emergency.
An added perk is that most traveler’s insurance will cover theft or accidental loss of your belongings, whether that be your luggage, computer, or other valuable personal belongings. A few companies that offer traveler’s insurance include World Nomads and Travel Guard. Some credit cards even come with travel insurance benefits, so you can look into coverage your credit cards may offer. The cost of a policy depends on where you’re traveling to, the duration of the trip, and how many people will be covered, but typically starts at around $100 per month for international travel.
Think outside the box.
Because they were denied health insurance through traditional health care providers, Michelle and her husband decided to go an unconventional route: they signed up for a health plan through a health sharing ministry. Health sharing ministries are faith-based health organizations that offer health coverage. Members contribute a monthly share and agree to help others in the pool with their medical expenses. Health sharing ministries such as Liberty HealthShare and Samaritan Ministries offer different programs with varying levels of coverage, and the cost is based on your household size. Michelle and her husband pay $449 per month for their plan.
Only a handful of health care sharing ministries are exempt from rules under the Affordable Care Act. Without that exemption, people who rely on these organizations for health care will face a tax penalty.
Go for a hybrid approach.
If you plan to spend time traveling within the U.S. and overseas, you may have to piecemeal together some options. Livingston, Tex., couple Kate Gilbert, 47, and her husband, Iain, 51, travel in their Airstream travel trailer across the U.S. and take trips abroad for several months at a time.
“Our main issue when choosing a plan is the out-of-network costs we might be exposed to,” says Kate. “The risk of running up a large bill in an emergency is scary with the lack of nationwide plans.”
In 2015, Iain, who is retired, and Kate, who works part-time as a self-employed consultant, purchased a PPO through Blue Cross Blue Shield that cost $662.55 per month and offered sufficient out-of-state coverage.
However, in 2016 that plan no longer became available. As a result, the couple purchases short-term care insurance when they’re in the U.S., and traveler’s insurance when they’re traveling internationally. Short-term care is an option that can provide coverage up to one year. It usually comes with lower premiums and less strict requirements for eligibility. The downside is that it provides less comprehensive coverage.
But short-term insurance plans do not meet the minimum requirements under the Affordable Care Act, meaning they can’t be used as primary insurance. The Gilberts will be required to pay an Obamacare tax penalty when tax season rolls around. In 2016, the penalty is $695 per adult per household.
Refill prescriptions well ahead of time.
Having your prescriptions refilled in advance is a smart way to avoid headaches on the road. If you’ll be staying in another state for a set amount of time, transfer your prescriptions to a local pharmacy. Let your doctor know you’ll be traveling, and keep his or her number on speed dial. In case you run into any trouble, your doctor may be able to offer advice on the go.
If you have an HMO, you are most likely more limited as to where you can have your prescriptions refilled. On the other hand, a PPO will offer you more choices. You can use your insurance carrier’s pharmacy locator to map out where you can refill your prescriptions.
Have a game plan for dealing with medical emergencies.
Check where the in-network urgent care and ER centers are where you’ll be traveling. If you’re traveling overseas, find out what the 911 equivalent is for emergency phone numbers. You’ll also want to make sure you read up on the health care system of the places you’ll be visiting and the potential costs involved. Great Britain may have free health care for UK residents and some visa holders, but international travelers will have to pay 150% of whatever their treatment costs abroad. Ouch.
For smooth sailing before you hit the road, make sure your records are up to date and have been transferred to a new primary care physician. Make sure you have any documents you’ll need during your travels, and create copies as backup.
Save extra for unexpected costs.
As it goes for traveling in general, make sure you have a buffer fund in case an illness or injury happens.
If you have a Health Savings Account (HSA), see what the limitations and rules are with your account. Across the board, the maximum amount you can contribute annually for 2016 is $3,350 for individuals, and $6,750 for families. To open an account, you need to have a high-deductible health plan, with a deductible of at least $1,300 for self-coverage, and $2,600 for families. If you pay for a medical expense that isn’t qualified under your account, you’ll have to pay a 20% tax penalty.
While handling health care on the road is a challenging endeavor, don’t despair. Doing your homework ahead of time will ensure you have sufficient coverage that works with your needs and budget.
More Americans are switching to high-deductible health plans to lower their monthly premium costs. But the lower sticker price can eventually come back to bite you. The average annual deductible for an employer-provided individual health plan is $1,478 and even higher for families.
To help deal with increasing out-of-pocket costs, more Americans may turn to “gap insurance” plans (also known as supplemental health plans). According to a report released this year by insurance company Aflac, 79% of workers said they saw a growing need for supplemental insurance plans to help cover expenses their primary insurance does not cover compared to 64% a year ago, and 60% of those said it was because of rising medical costs.
There has been buzz around gap plans for more than a decade, says Rhett Bray, president of BeaconPath, a Mission Viejo, Calif.-based employee benefit consulting firm. But interest really boomed around 2013, with the rollout of the federal health care marketplace and growing popularity of high-deductible plans.
In 2016, more than 90% of people who purchased health plans on the health care exchange chose plans with deductibles of $3,000 or higher. Plans with high out-of-pocket costs have grown increasingly popular with workers who receive benefits through their employer. Of those who receive employer-provided coverage, 29% chose a high-deductible health plan in 2016, a 5-point rise from a year earlier.
“It’s hard to cover an individual’s complete medical needs in an affordable way if you’re just bringing them through a major medical plan,” said Bray. He says that as costs increase, supplemental insurance policies will be “a big tool in the toolbox that most of us as brokers will continue to bring to the table.”
What Is Gap Insurance?
Medical gap insurance is a supplemental health plan that acts as a cushion for people and businesses who carry high-deductible health care plans. Simply put, it’s like insurance for your insurance.
Gap insurance policies are not major medical insurance, and they come with very limited benefits. In most cases, that means that no matter the severity of your situation, your gap insurer plan will only pay you a set amount. And because the plans do not meet the standards set by the Affordable Care Act, consumers can’t use gap insurance policies as a stand-alone insurance without facing a tax penalty.
The main purpose of medical gap insurance is to lower your overall out-of-pocket costs by providing funds to pay for a large deductible and other out-of pocket costs until your main insurance policy kicks in.
What Gap Insurance Costs
Premiums range from $30 to $40 per month for a gap insurance policy for an individual, according to Bray. Costs will vary because each company has its own formula for how much you’ll pay and which benefits are provided, Bray adds. Insurers will consider your age, gender, location, etc. You can get an accurate estimate of a premium by contacting insurers or an insurance broker directly.
Gap plans are provided by many large insurers such as AIG, Aetna, Transamerica, and others, and most can be used to supplement your employer-provided, government-provided, or individual health care plan. But first, try your employer. Ask your benefits department if they offer a limited benefit or supplemental medical insurance plan for individuals.
The big catch: because gap plans aren’t regulated by the health care law like major medical insurance plans, providers can deny consumers coverage based on pre-existing conditions.
The policy level that you choose will also factor greatly into the cost of your monthly premium. The more coverage you need, the higher the monthly premium will be.
Is Gap Insurance Worth It?
Now you might be wondering: “Is getting gap insurance worth it if I’m on a high-deductible health plan?” The answer is maybe.
Carolyn Taylor, director of compliance at benefits consulting firm D&S Agency, recommends referencing the benefits you get through your main medical plan before you shop around for gap insurance to ensure that you aren’t paying for something you don’t need. It will require a little math.
She also said to “do the math” before purchasing. Add up all of the payments you’d make in a year toward your gap insurance policy to see if it would cost less than paying the total annual deductible for your major medical plan. That way you’ll know if the policy is really saving you anything in the first place.
Gap insurance could be worth it if …
You are expecting to be in the hospital for a few days this year.
If you are planning on having a baby or expecting to get surgery sometime this year, “you may want to have a gap if it will help with your inpatient day costs,” says Taylor.
That’s because your gap policy could cover the costs of your deductible and other out-of-pocket expenses for frequent doctor’s visits and hospitalization.
You have an expensive prescription.
Prescription drug prices have never been higher. If you have a policy with a deductible, you may have to shell out more money for a prescription. Selecting a gap insurance policy that includes prescriptions may help you cover the cost. Just do the math to be sure what you are saving on prescription costs is worth the additional cost of a gap insurance premium.
You are older than 65.
Taylor said those 65 and older should absolutely get gap medical insurance because that segment is more likely to frequent the doctor. Many medical gap policies are restricted to those 64 years old and younger; however, those on Medicare can get Medigap insurance. It’s a supplemental insurance plan that acts similarly to gap insurance but is more regulated and broken into government-specified benefit tiers. Read up on the plan specifics here.
The Bottom Line
Ultimately, adding gap insurance to your coverage is a decision you will have to make based on your perceived risk of illness and financial status. Make sure to do your research when considering a gap plan as the benefits and costs vary widely.
The unexpected death of a parent brings up many challenges. Near the top of the list is sorting through the financial to-dos, both because it’s a demanding task with a variety of potential points of confusion and because it’s the last thing anyone wants to be dealing with at a time like this.
This can be especially difficult for your surviving parent to handle if he or she was not the primary financial decision maker. It can be confusing and overwhelming to take over these new responsibilities, especially when the grief is still fresh.
You may be called upon to help, but what if you’re not sure how to handle it either? What should you do?
I asked several financial planners how they would guide a client through this process. Here’s what they said.
1. Don’t Make Any Big Decisions Right Away
There are certain things that need to be handled quickly after the death of a parent, and we’ll get into those below. But there are some big financial decisions that may be best left until later, when you are likely to be less emotional. There’s usually no need to rush decisions like whether to sell a house or what to do with life insurance proceeds.
“The death of a loved one is always traumatic and it may take a while to grieve,” says Shane Larson, CFP® of Splarson Financial Planning. “Slowing things down will help people make better decisions.”
2. Get Multiple Copies of the Death Certificate
You’ll need the death certificate to do a number of important things, like making a life insurance claim and receiving money from a 401(k).
Pam Horack, CFP® of Pathfinder Planning suggests getting as many as 20 copies of the death certificate.
“Get more than what you think you need,” Horack says. “It’s the number one thing you want to make sure you have easy access to.”
How to actually order the death certificate does vary by state, but many of which do require you to go through the Department of Health. You may also be able to find information about how to order death certificates in your state from VitalCheck. The cost of ordering a death certificate also varies by state. New York, for example, charges $15 for an in-person death certificate order for each copy plus a one-time $2.75 fee for identity verification. While North Carolina charges $24 for the first copy and $15 for subsequent copies as a base price. You’ll pay more to order online through the third-party service like VitalCheck, which charges a vendor fee, but it may be faster than going in person or sending a request via snail mail.
3. Call Their Financial Planner for Back-up
If your parent was already working with one or more financial professionals, such as a financial planner, CPA, or estate attorney, contact them and enlist their help.
A qualified professional who is already familiar with your parents’ situation will make the process much easier and can give advice on how to make some of the bigger, more complicated decisions you’ll be facing.
If there isn’t already a financial professional on board, you may want to consider seeking one out. As Dennis Crowley of Vitruvius Wealth points out: “A professional can look at a bank statement and say, ‘Your deceased spouse wrote checks to ABC life insurance every quarter. Where is that policy?’ Or ‘You had income checks coming from both XYZ mutual fund and Third National Bank. Where are those statements and accounts?”
A good professional can also help you avoid mistakes and make the most of the opportunities available to you. For example, Daniel Frankel, CFP® of WealthCollab in Seattle points out that distributing money from an IRA could lead to a big tax hit, while transferring it to an inherited IRA allows you to continue deferring taxes. That kind of guidance can be invaluable.
Ask friends and family for referrals and don’t be afraid to take your time interviewing people. Ask them about their experience with situations like yours, how they get paid, what they will do for you, and make sure you feel comfortable with them before moving forward.
4. Find Their Will
When it comes time to make the real financial decisions, your parent’s will is the place to start, assuming one exists.
First, a will appoints the executor of the estate, who is the person in charge of locating and gathering the estate’s assets, paying any debts and taxes owed, and distributing the property to the right people. If there is no will or no executor is named, the state will appoint one for you.
Second, a will lays out your parent’s plans for how their property should be distributed. This both ensures that his or her wishes are carried out and makes your life easier by taking certain decisions off your plate.
5. Gather All Their Financial Account Information
Locating and organizing all of your parent’s financial accounts can be one of the most difficult and time-consuming parts of this process, especially if things were not well organized to begin with. It’s also a crucial step, primarily to make sure that your surviving parent has all the financial resources he or she needs, but also to ensure that other assets are passed on appropriately.
Here are a few ideas for how to gather all of this information:
Ask your surviving parent if he or she knows where bank accounts, retirement accounts, insurance policies and investments are held.
If your surviving parent has no idea where any of the financial holdings are, then there may be bank and investment statements, insurance policies, credit card statements and the like somewhere in the house to help you start tracking them down.
A CPA or financial planner your parents have been working with may have much of this information.
Track email and regular mail for statements and other notifications from financial institutions.
Torian Pizzola of Friar Wealth Management suggests contacting your parent’s employer to ask about any benefits or pay they may be entitled to. Sometimes there can be significant retirement accounts and life insurance proceeds to collect.
No matter how diligent you are, be prepared for this process to take some time and for there to be some frustrations along the way.
“Even when everything is organized, it can take more than a year to feel like you’ve reviewed and consolidated paperwork and files,” says Mindy Crary, MBA, CFP® of Creative Money. “So just keep at it methodically. It’s a marathon to get through all of this, not a sprint.”
6. Make Sure the Bills Are Paid on Time
One of the most immediate financial concerns is ensuring that your surviving parent knows how to pay the bills and handle other basic needs for the foreseeable future. All of the work you did to gather account information will help with this. As you piece together where your parents’ money is currently held and which bills are due to which companies, you can start to create a plan to make sure that basics like the mortgage, electricity, and groceries are handled.
Creating this financial guidebook can be complicated, so Leslie Ransom, CFP® of Indie Financial Planning suggests starting with a 30-day spending plan and building it out from there. That way the immediate needs are handled without overwhelming anyone.
7. Other To-Dos
In addition to those major items, there are a number of other things to keep in mind during this process. Scott Smith, Principal and Senior Adviser at Olympia Ridge – PFA, has been through this process before and provided a good checklist that includes that following:
Find and open safe deposit boxes.
Contact the Social Security Administration, and possibly the Veterans Administration, about possible benefits.
Close credit cards, turn off automatic payments, and ask if there is any credit life insurance available to pay off any remaining balances.
Secure your parents’ home and other property if it will be left vacant or unattended.
The real key during this whole process is to keep the lines of communication open between all affected parties to make sure everyone’s voice is heard and everyone knows what’s going on. This includes your surviving parent, your siblings and their spouses and children, other close friends and family members, professionals, legal counsel, and everyone else involved in the process. Open communication will help ensure that everything is handled as smoothly and with as few disagreements as possible.
Eventually, you can use also this experience as an opportunity to talk to your surviving parent about their wishes and how they would like things handled after their death. The more communication there is ahead of time, the easier this process will be on everyone involved.