Take the time to understand what premiums, deductibles and coverage you need before buying into a new employer's policy.
You know how it is: you’re interviewing for jobs, discussing details like starting salaries and job benefits, and you find out a potential employer offers health insurance—but then what?
You know you need a job, and you know you need insurance now that your student health plan is running out, but how do you know if the policy being offered is a good one? Will it meet your needs or not be worth its costs? Which options should you pick? How do you evaluate the specifics?
Whether you’re in the midst of the interview process or about to be, here’s what you need to know to determine if a company’s health insurance plan will work for you:
1. Weigh It Against Alternatives
Should you take a given job with a company and opt out of its qualified health plan (QHP), you may be able to buy your own plan somewhere else, but you will not be able to get a subsidy, even if you qualify based on income. What’s more, if you buy your own policy, it may be more expensive than the one offered by your employer.
If you’re still under 26, however, you may choose to go on a parent’s policy and find it’s cheaper. If you go without insurance, according to the Affordable Care Act, you face a penalty of up to two percent of your yearly income—and those fees are only expected to increase.
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2. Shop Around
Don’t assume you know how much paying for your own policy would cost; take the time to shop and see what’s available. Opting out of your new employer’s plan in favor of a different policy on an exchange may be a possibility, but it may not necessarily be cheaper and/or offer better coverage. Carefully research so you understand your options and can determine what might make the most sense for your needs.
Also, it’s important that you understand the concepts of “affordable” coverage and minimum value standards when it comes to assessing your health insurance options. Basically, if your employer’s plan meets the minimum value standard—that is, if it is set up to pay at least 60 percent of the total cost of medical services for a standard population—and the premiums covering you cost less than 9.56 percent of your family’s income, it’s considered affordable.
In this situation, if you choose to buy a plan on the marketplace instead of through your employer, you may not be eligible for tax credits and other marketplace savings. If you’re confused, talking through your options with a qualified insurance agent may be your best bet.
3. Take Your [Figurative] Health Pulse
Nobody knows your body like you do—so ask yourself:
- Do you have certain conditions that require prescription medication?
- Do you see your doctor regularly?
- Are you undergoing any sort of rehabilitative services?
- Are you or could you become pregnant?
Knowing what expenses are already on the table for you, health-wise, helps you see how much of an asset a health insurance policy could or couldn’t be.
4. Understand the Options
If your potential employer is like most, it will probably offer various options for health coverage. Generally speaking, as long as you’re in good health, if your priority is saving money, look for the policy with the highest deductible and lowest premium. If you know you need more financial coverage for medical expenses, look for the plan with higher premiums but a lower deductible and coinsurance (i.e., lower out-of-pocket costs to you).
Also, find out if your employer offers a health savings account (HSA), which allows you to put away pre-tax dollars toward medical costs.
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5. Consider Short-Term and/or Catastrophic Plans with Caution
Other insurance options are short-term or catastrophic plans. Short-term plans are for a fixed duration and require that you re-apply when that period ends, whether that’s at the end of a month or the end of the summer.
They can be good for transitional periods like the gap between the end of school and the beginning of a new job. Catastrophic plans, on the other hand, are plans—whether for a short amount of time, or a long one—that are built to cover only minimal health needs.
If you’re under age 30 or meet particular qualifications such as a hardship exemption (i.e. based on life situations like being homeless, facing foreclosure, experiencing a death in the family, etc. that otherwise keep you from getting insurance), you may be able to get one of these minimal catastrophic health plans with super-high deductibles and super-high out-of-pocket costs with coverage in case of a dire need.
They include three primary care visits a year as well as some additional health benefits, and they do protect you from receiving a health insurance tax penalty. While this all sounds well and good when you’re trying to cut costs and not planning to go to the doctor often, think carefully before signing up. It’s hard to plan for every life change or emergency, and you don’t want to regret lacking coverage for normal medical expenses like birth control, primary care or something else.
6. Understand Special Enrollment Periods
Open enrollment for marketplace plans typically takes place from November through January. What happens if you find yourself needing health insurance outside of that three-month period? You may qualify for a special enrollment period (SEP).
If you have a qualifying event—for example, if you lose your student health coverage because you graduated from college, you aged out of your parent’s plan, or you moved to a new residence—you would likely be eligible for an SEP. SEPs allow you to obtain health insurance any time of year, but it’s important that you do so within 60 days of the qualifying event. If you wait longer, you may not be able to get coverage and may face a tax penalty.
How do you know if a company’s health insurance policy is right for you? Only you can answer that. Take the time to understand its premiums, deductibles and coverage, and weigh those against your needs and alternative options.
Then, make the choice that makes the most sense for you—whether that means taking the job but avoiding the coverage, taking the job and paying hefty premiums or passing on a job offer in lieu of finding something with better options.