We asked the experts how to simplify the process and make the right choice
Open enrollment for health insurance is not a fun time of year for many Soloists. Choices abound. Deductibles, co-pays, acronyms like PPO and HMO are enough to make anyone’s head spin. Should you pick a bronze plan or the silver? And what in the world is the difference?
Even though choosing a plan could seem like the worst decision a Soloist has to make every year, there are some ways to keep it simple.
Decide how much care you’ll need and the level of risk you’re comfortable with
If you’re the type of person who hardly ever needs to visit the doctor and you have some money in the bank, you might want to consider a plan with a high deductible. Plans under Obamacare cap out at $7,000 for an individual, so you’ll never be out more than 7-grand for any health emergency. That’s far less than if you didn’t have health insurance at all; a prospect that could lead to bankruptcy. A higher deductible means a lower monthly premium, and vice versa.
“What are the health needs of your family? Do you take a prescription drug that your insurance pays for? Are you managing a condition? This all means you’d have some expected care costs, so do the best job at estimating just how much care you’ll need in a year,” said Noah Lang, CEO and co-founder of Stride Health, a San Francisco-based startup that helps people weed through insurance options. “We have some members who are professional rock climbers with a high risk lifestyle, they get injured several times per year, so they price that risk and pick a plan that will lower their total cost.”
Jennifer Fitzgerald with Policygenius said for a lot of freelancers and entrepreneurs, the goal is to keep the monthly budget down. “In that case, high deductible plans are the way to go.”
A high deductible plan for a family caps out at $14,000 per year, which is the highest amount you’d pay out-of-pocket.
Sorting through the metal tiers and the acronyms
Trying to figure out the bronze, silver and platinum labels for health plans can seem daunting, but Noah said that’s just a way for the insurance exchange to sort plans.
“It’s a way of oversimplifying the different benefits in each type of plan so you can start categorizing them,” he said. “The metal tiers are simple ways of understanding the typical co-insurance rates. Bronze care will cover 60%, silver covers 70%, gold is 80% and platinum is 90%. Sometimes it’s misleading, so shouldn’t be the only thing you focus on. You should buy the right health plan that will lower your cost of care and coverage together.”
Jennifer said the acronyms are also easy to understand.
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“They refer to how restrictive the plan is. The three or four you’ll see are HMO, POS, EPO and PPO. The thing to remember is HMOs are the most restrictive and the cheapest….you can only see a doctor in-network and you need referrals from a primary physician to see a specialist. The most expensive plan with the most flexibility is the PPO, which stands for Preferred Provider Organization. That means you can see whatever doctor you want and you don’t need a referral to see a specialist. But you’ll pay for that flexibility.”
She said don’t pick a plan based on your primary care physician unless you have a really special relationship with that doctor. Networks change. One year, your doctor could be in-network and the next, out-of-network. What’s important is picking a plan and risk profile for your budget.
Make sure to see if you qualify for a government subsidy
One thing Soloists often forget about is lowering their income as much as possible with tax deductions. The lower the income, the more subsidies a freelancer will qualify for, which means cheaper monthly premiums.
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“If you’re self-employed and drive a lot, like a personal trainer who goes from home-to-home, you have a mileage expense you can deduct. You can deduct equipment, too. If you’re tracking all those things and lower your gross income, you’re more likely to get a tax credit when enrolling for healthcare.”
He said the threshold is $48,000 per year, below that you get access to tax credits, above it, you don’t. “A lot of folks make $60,000-$70,000 per year, but lower that substantially with tax write-offs,” he said. “Take time to think about it. Don’t assume you won’t qualify.”
Jennifer said you don’t have to stress about estimating your income incorrectly, either.
“Give it your best estimate,” she said. “If your actual income is higher or lower you’ll correct it on your tax return. If your income is higher than you estimated you’ll pay the subsidy back, if your income is lower, you’ll get that in the form of tax credits. It’s just your best forecast based on your previous year’s income.”
Help picking a plan
Both Stride Health and Policygenius are there to help Soloists pick a plan and support them through the process. Soloists can also look beyond Obamacare at plans offered through the private marketplace. The key is having health insurance, both to avoid the penalty and to reduce the risk of being out hundreds of thousands of dollars if something goes wrong.
“When you enroll in a healthcare plan through Stride Health, we guide you through the process,” Noah said. “We make sure you have the right paperwork completed to get a tax credit and we stick around through the following year to make sure you can use the plan you picked to access care. And if you have a dispute with your insurance company, we can negotiate with them and help. We’re also there to answer basic questions via chat or phone.”
Picking health insurance doesn’t have to be as daunting as it looks. Hopefully, with a few simple clicks, you’ll be on your way to coverage.
Be aware that open enrollment for 2018 ends December 15th, 2017.
