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Health insurance is among the more complicated types of insurance coverage, and an unexpected medical bill can easily cut through any savings you've stashed away. To protect your health and finances, learn about how health insurance works and available policies and plans when comparing your options.
If you don’t have access to employer-sponsored plans, follow these steps to make sure you’re getting the best possible policy and premium on your own:
You can sign up for health insurance through employers, state-sponsored marketplaces, private providers and the government.
With health insurance, you typically buy, cancel or adjust your coverage during an “open enrollment” period. The timeframe varies between plans, but the dates remain the same from year to year.
Type of health insurance | Open enrollment period |
---|---|
Employer-sponsored health insurance | It depends on your employer, but generally between October and December |
Marketplace and individual policies | November 1st to December 15th Six states and DC offer longer open enrollment periods:
|
Medicare | October 15th to December 7th |
Medicaid | No open enrollment period applies |
Under the Affordable Care Act, businesses with 50 or more employees must provide health insurance. If your company has fewer than 50 employees, it may still offer health insurance as part of your employee benefits.
Coverage might be more limited than that of an individual policy, but premiums are subsidized. While open enrollment period is generally in the fall, exact timing comes down to your employer.
Thanks to the Affordable Care Act, you can apply for a subsidized policy through HealthCare.gov. The site guides you to a state or federal marketplace, where you can browse for a policy that suits your budget and needs.
Depending on your income and household size, you might be eligible for a low-cost private plan with tax credits or cheap coverage through your state’s Medicaid program.
Open enrollment for marketplace policies lasts 45 days: November 1st to December 15th. Outside of this period, you can sign up for coverage if you have a qualifying life event.
For customized coverage, consider signing up for an individual policy through a private provider. You can shop directly with providers, or enlist an agent or broker to help you get quotes and apply for a policy.
Like marketplace plans, the open enrollment period stretches from November 1 to December 15. When the 45 days are up, you can’t apply for an individual health insurance policy unless you have a qualifying life event.
Medicare and Medicaid are two low-cost government programs that apply to different types of people.
Medicare is primarily for those aged 65 and older, though people aged 18 to 64 with a qualifying disability or end-stage renal disease might also be eligible.
There are a few Medicare plans on offer:
The open enrollment for Medicare lasts from October 15th to December 17th annually.
Medicaid is open to low-income Americans. Eligibility varies by state, but you’ll typically qualify for coverage if your income is at or below 138% of the federal poverty level. The limit might increase if you’re pregnant or disabled, or have children, disabled dependents or a serious illness.
There’s no set open enrollment for Medicaid. You can enroll in the program at any time.
If you’re an active or retired military service member, you might be eligible for coverage through:
For more information on these policies, contact the relevant government department.
It comes down to the policy. Private and marketplace plans tend to be the most expensive options, while employer-sponsored plans, Medicare and Medicaid can come with low or no premiums.
Employers often pay the bulk of the premiums — usually 70% or 80%. To put this into context, in 2018, the average annual premium for employer-sponsored health insurance was $6,715, according to the Kaiser Family Foundation. On average, employees contributed $1,427 toward the premium, and employers paid $5,288.
This is a breakdown of the average costs and contributions by state.
State | Employee contribution | Employer contribution | Annual premium |
---|---|---|---|
Alabama | $1,453 | $4,636 | $6,089 |
Alaska | $1,154 | $7,728 | $8,432 |
Arizona | $1,554 | $4,675 | $6,229 |
Arkansas | $1,375 | $4,599 | $5,974 |
California | $1,202 | $5,340 | $6,542 |
Colorado | $1,289 | $4,966 | $6,255 |
Connecticut | $1,672 | $5,592 | $7,264 |
Delaware | $1,340 | $5,508 | $6,848 |
District of Columbia | $1,369 | $5,861 | $7,230 |
Florida | $1,472 | $5,202 | $6,674 |
Georgia | $1,476 | $5,323 | $6,799 |
Hawaii | $755 | $5,720 | $6,475 |
Idaho | $1,199 | $4,976 | $6,175 |
Illinois | $1,548 | $5,575 | $7,123 |
Indiana | $1,383 | $5,395 | $6,778 |
Iowa | $1,592 | $5,204 | $6,796 |
Kansas | $1,255 | $5,007 | $6,262 |
Kentucky | $1,633 | $5,057 | $6,690 |
Louisiana | $1,584 | $4,953 | $6,537 |
Maine | $1,461 | $5,405 | $6,866 |
Maryland | $1,588 | $5,107 | $6,695 |
Massachusetts | $1,903 | $5,540 | $7,443 |
Michigan | $1,433 | $4,889 | $6,322 |
Minnesota | $1,575 | $5,206 | $6,781 |
Mississippi | $1,365 | $4,628 | $5,993 |
Missouri | $1,403 | $5,261 | $6,664 |
Montana | $1,115 | $5,747 | $6,862 |
Nebraska | $1,388 | $5,463 | $6,851 |
Nevada | $1,355 | $4,677 | $6,032 |
New Hampshire | $1,618 | $5,787 | $7,405 |
New Jersey | $1,598 | $5,909 | $7,507 |
New Mexico | $1,558 | $5,066 | $6,624 |
New York | $1,578 | $6,163 | $7,741 |
North Carolina | $1,295 | $5,044 | $6,339 |
North Dakota | $1,246 | $5,397 | $6,643 |
Ohio | $1,632 | $5,172 | $6,804 |
Oklahoma | $1,293 | $5,337 | $6,630 |
Oregon | $1,601 | $5,380 | $6,441 |
Pennsylvania | $1,351 | $5,418 | $6,769 |
Rhode Island | $1,807 | $5,211 | $7,018 |
South Carolina | $1,427 | $5,281 | $6,708 |
South Dakota | $1,541 | $5,390 | $6,931 |
Tennessee | $1,410 | $4,561 | $5,971 |
Texas | $1,413 | $5,176 | $6,859 |
Utah | $1,183 | $4,942 | $6,125 |
Vermont | $1,456 | $5,463 | $6,919 |
Virginia | $1,746 | $4,889 | $6,635 |
Washington | $955 | $5,691 | $6,646 |
West Virginia | $1,353 | $5,545 | $6,898 |
Wisconsin | $1,596 | $5,220 | $6,816 |
Wyoming | $1,385 | $5,394 | $6,779 |
Source: Kaiser Family Foundation
When you shop on the marketplace, you might be eligible to lower your premiums with the help of tax credits. The subsidies vary based on state, income, household size and whether you or your spouse have health insurance through work. But typically, your household income must be between 100% and 400% of the federal poverty level to qualify for a premium tax credit.
In 2019, the average annual premium for marketplace plans was $5,736, according to the Kaiser Family Foundation. This is the state-by-state breakdown:
State | Average annual premium |
---|---|
Alabama | $6,552 |
Alaska | $8,424 |
Arizona | $5,652 |
Arkansas | $4,536 |
California | $5,268 |
Colorado | $5,856 |
Connecticut | $5,700 |
Delaware | $7,776 |
District of Columbia | $4,716 |
Florida | $5,724 |
Georgia | $5,844 |
Hawaii | $5,916 |
Idaho | $5,976 |
Illinois | $5,736 |
Indiana | $4,068 |
Iowa | $9,144 |
Kansas | $6,624 |
Kentucky | $5,520 |
Louisiana | $5,448 |
Maine | $6,528 |
Maryland | $5,028 |
Massachusetts | $3,984 |
Michigan | $4,596 |
Minnesota | $3,912 |
Mississippi | $6,252 |
Missouri | $5,988 |
Montana | $6,732 |
Nebraska | $10,056 |
Nevada | $4,920 |
New Hampshire | $4,824 |
New Jersey | $4,224 |
New Mexico | $4,380 |
New York | $6,828 |
North Carolina | $7,416 |
North Dakota | $5,484 |
Ohio | $4,560 |
Oklahoma | $8,352 |
Oregon | $5,316 |
Pennsylvania | $5,808 |
Rhode Island | $4,032 |
South Carolina | $6,624 |
South Dakota | $6,684 |
Tennessee | $6,576 |
Texas | $5,328 |
Utah | $6,504 |
Vermont | $7,464 |
Virginia | $6,660 |
Washington | $4,872 |
West Virginia | $7,152 |
Wisconsin | $6,444 |
Wyoming | $10,380 |
Source: Kaiser Family Foundation
With Medicare, costs depend on the type of plan you choose and how much coverage you want. For the most popular plan — Part A: Original Medicare — your payroll taxes might pay for your policy in full. If you were in the workforce for fewer than 10 years, you might be charged a premium.
If you’re eligible for Medicaid, your coverage is likely free. But if you’re a “high earner” with an income at or above 150% of the poverty level, you may pay a small premium monthly.
Policies aside, a few types of plans determine how much control you have over your coverage. With HMO and POS plans, your primary doctor takes charge of your treatment, while you have more freedom to choose your own specialists with PPO and EPO plans.
Type of plan | Do you need to see an in-network doctor? | Are referrals required for procedures and specialists? | Best for |
---|---|---|---|
Health maintenance organization (HMO) | Yes, unless it’s an emergency | Yes | Your primary doctor handles your care and specialists |
Preferred provider organization (PPO) | No | No | More provider options and but with higher out-of-pocket costs |
Exclusive provider organization (EPO) | Yes, unless it’s an emergency | No | Lower out-of-pocket costs |
Point of service (POS) | No | Yes | Your primary doctor coordinates their care you have more provider options |
Unlike other insurance, you may pay deductibles, copays, and out-of-pocket costs in addition to the monthly premium for your health insurance.
Whenever you visit the doctor or go to the hospital, you may pay a copay as specified in your policy. When the total cost of services and treatments you’ve received under your plan — minus copays — hits your annual deductible, your coinsurance kicks in. In that situation, your insurer starts paying a larger portion of your bills, usually 60% to 80%.
You’ll keep paying copays or coinsurance until you reach your plan’s out-of-pocket limit. At that stage, your insurer pays 100% of your medical bills for the remainder of the year your policy is in effect.
The cost structure of health insurance policies can vary wildly. Your policy may have low premiums and high deductibles and out-of-pocket limits, or vice versa. Carefully read the details of your health insurance plan to avoid unexpected costs.
Learn these key terms when comparing health insurance plans or analyzing your own:
A qualifying life event is a major life change — like getting married or having a baby — that allows you to buy or adjust your health insurance policy outside of the open enrollment period.
Qualifying life events include:
Sometimes called Obamacare, the Affordable Care Act (ACA) is a healthcare law that dates back to 2010. It aims to expand access to health care at lower costs to improve quality of care for all Americans.
It’s a complicated law, but one that introduced six main takeaways:
The catch? Your former employer no longer pays for coverage. Rather, you’re responsible for 100% of your premium — plus an additional 2% admin fee.
A health savings account (HSA) is a tax-advantaged account that helps you pay for healthcare costs. If you’re enrolled in a high-deductible health insurance plan (HDHP), you can apply for an HSA.
In 2019, the IRS defines an HDHP as any policy with a deductible of at least $1,350 for an individual or $2,700 for a family and out-of-pocket expenses totaling no more than $6,750 for an individual or $13,500 for a family.
You decide how much money you want to contribute to your HSA account (up to government maximums) each year. These contributions are tax-deductible. You typically receive a debit card, and you can use the funds in your HSA account to pay for eligible medical expenses. This includes copays and coinsurance, but not premiums.
Katia Iervasi is a staff writer who hails from Australia and now calls New York home. Her writing and analysis has been featured on sites like Forbes, Best Company and Financial Advisor around the world. Armed with a BA in Communication and a journalistic eye for detail, she navigates insurance and finance topics for Finder, so you can splash your cash smartly (and be a pro when the subject pops up at dinner parties).
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