Are you one of the 27 million Americans without health insurance? Maybe you’ve lost your employer-sponsored coverage and need to find a new plan. Maybe you started your own business and you’re feeling overwhelmed by your options.
No matter what your situation is, health insurance doesn’t need to be confusing. In this guide, you’ll find the basics of health insurance explained in plain English. With the right information, getting the insurance you need is a lot simpler!
1. Who Needs to Buy Health Insurance?
You might be wondering if you even need health insurance. Depending on where you live, there may be tax penalties for not having insurance, but you can opt not to carry it.
Generally speaking, though, it’s a good idea to have health insurance. It can protect you and your loved ones.
People who should consider getting health insurance include those who are:
- Senior citizens
- Active military members and veterans
- Pregnant or planning to have a child
- Students over the age of 26, living out of state, or no longer covered by their parents
- Married couples without children
Each group will have their own unique concerns when it comes to how to choose health insurance.
2. Understanding Health Insurance Marketplaces
Now that you’ve decided to go ahead and buy a plan, you’re wondering, “How does health insurance work?”
The first thing to understand is that there are three major categories of plan providers:
- Private health insurance providers
- Employer-sponsored providers
- Medicare and Medicaid
Each of these offers you access to an insurance plan that will help you cover the costs of medical care.
Medicare and Medicaid are available through the federal government. Medicare is for senior citizens. Medicaid may be available for some low-income Americans.
Most other people will look to either private insurers or employer-sponsored programs. An employer-sponsored program is a group plan offered by the company you work for. If you’re self-employed, retired, or unemployed, you won’t have access to this type of insurance.
Private health insurance comes in two major forms: on-exchange and off-exchange. On-exchange plans are sold by private providers on the government-managed exchange networks. Off-exchange plans are sold directly to you by the provider.
What’s the Difference?
On-exchange plans must meet certain standards. Any plan listed on a government-run exchange must cover the 10 essential benefits. If your state lists any extra benefits, those also have to be covered.
Off-exchange plans also have to cover these benefits. You don’t need to worry about getting inadequate coverage here. The major difference is that insurers have more flexibility, because they don’t need to offer a plan at every metal tier.
You also won’t be able to apply any subsidies or tax credits to private insurance.
3. Types of Health Insurance Explained
Insurers provide coverage by teaming up with networks of providers. There are several different types, which change how any health insurance plan works.
These types include:
- Health Maintenance Organizations (HMOs)
- Preferred Provider Organizations (PPOs)
- Exclusive Provider Organizations (EPOs)
- Point of Service (POS)
You’ll need to compare the benefits and drawbacks of each of these provider network types. HMOs, for example, are usually the most affordable plans. They’re also the most restrictive.
You have no choice of provider with an HMO. You’ll need to see a primary care physician to get a referral to any specialists. Any provider you see must be in the network, or your insurance won’t cover the costs.
By contrast, a PPO allows you to travel out of network to receive care. You also don’t need a referral from a primary care physician to see a specialist. This means you’ll be able to choose all your own providers.
What’s the cost of this flexibility? Higher premiums. PPOs tend to be the most expensive option, but they do offer the most freedom.
EPOs and POS options are hybrids between the HMO and the PPO.
4. You Can Buy Coverage Outside Open Enrollment
The open enrollment period happens once a year, usually in November and December. This is your chance to buy on-exchange health insurance for the upcoming year.
What should you do if you need health insurance now? There are a couple methods for how to get health insurance outside of the open enrollment period.
First, you can always go to a private insurer and buy directly. You may also work through a third-party broker or a private exchange network. This is the best answer for how to get health insurance quickly.
If you had a significant life event, you may qualify for a Special Enrollment Period. This may mean you had a change in household status, such as getting married.
Other qualifying circumstances include moving to a new ZIP code and losing your current health insurance.
5. Health Insurance Impacts Taxes
No review of health insurance basics is complete without looking at how it impacts taxes.
When the Affordable Care Act was introduced, individuals needed to pay a share responsibility penalty. In 2019, this fee ended.
Some states still have individual mandates. You may still need to pay a penalty if you don’t have health insurance.
For some households, health insurance can actually help manage tax obligations. People in lower income brackets will find tax credits could help them get the health insurance they need.
With that in mind, it seems like a smart move to invest in a health insurance policy. It can protect you, your loved ones, and your finances.
Find the Right Health Insurance Provider
Now that you’ve had some of the basics of health insurance explained, you’re ready to start comparing plans. Talk to providers about your options. Health insurance may be more affordable than you think.
Looking for great providers in your area? Get started with our listings and get the health insurance you need to protect you and your family.