Reality Check: Tips on How to Buy Health Insurance during COVID-19 Job Loss
Just a couple weeks ago, life was going pretty good, wasn’t it? You were enjoying your life, while paying the bills with a nice steady job. Then suddenly, March happened, and what followed was the biggest medical pandemic most of us will see in our lifetime. Your social life? Gone. The bills? Ugh. Oh, and that nice steady job you had, which once held your life together? History. Just when you think sh*t couldn’t hit the fan any harder, any faster, in any more spectacular fashion, you lose your health insurance.
At this moment, you have one very important question to ask yourself. Do I, or does my family (if it’s a family plan) have any preexisting conditions that would potentially bankrupt me if they are not covered? This question will help determine which path you should go on. Understand that there are only a handful of healthcare plans that are required by law to cover preexisting conditions. Most being: Medicaid (low income) Medicare (elderly/disabled) Work Insurance (you lost that) Cobra (a very expensive way of keeping your current plan for 18 more months) and ACA/Obamacare (oh, that guy?). For most people, they won’t qualify for Medicare or Medicare and Cobra will be too expensive. That ultimately leaves people with 2 paths to go (notice I didn’t say plans). ACA/Obamacare/Healthcare.gov Plans or Private Market Health plans.
The biggest difference between Private market plans and Obamacare plans is that Private Market Health Plans are not required by law to cover preexisting conditions, pregnancy, or substance abuse/mental health. If you are fortunate enough to not need those benefits covered, then this might be great way to go. There are plenty of strong “short term” Polices that will still cover you if you get into a bad accident, develop a critical illness, etc. These “short-term” polices are usually dictated by state laws in terms of availability and last anywhere from 3–12 months. They are probably the closest thing to what you had before, in the respect that these short term policies have deductibles, out-of-pockets, and co-pays. Moreover, if you are healthy and Obamacare is too expensive, this might make the most sense. In more cases than not, these polices are fairly priced.
Now you might even hear about “Indemnity” plans or Fixed Benefit plans. These private market plans have no deductible no co-pays, and pay out benefits right away. On the surface that sounds pretty amazing. But beware. These policies do not have an “out of pocket max” either. Meaning the policy will only pay out fixed benefits for specific medical services outlined in the policy. In addition, if the benefit isn’t enough to cover the whole claim, guess who gets stuck with the rest of the bill? Ouch. To be fair though, these “fixed benefit” policies are still decent options for young, healthy adults who want something extremely affordable. Moreover, this might be the only thing someone can get if they can’t afford anything else.
Obamacare is quite possibly the worst thing to ever happen to America. Just kidding, but if you make decent money, or if your spouse is offered health insurance (that’s affordable for them, but a zillion dollars to add you or the family), then this is probably what you will end up thinking. Fair enough. On the other hand, if you have a low income (but not low enough to qualify for Medicaid) or if your household size and household income fall into the right parameters, there is a very good chance you will qualify for a subsidy. That is basically financial assistance, which is an upfront tax credit, to help pay for your new health insurance. Sometimes, that tax credit is even enough to pay the entire premium!
The downside risk of taking this tax credit is the potential of owning money back at tax time. If you end up making more money than you had predicted on the application, you will most likely owe money back at tax time (thanks a lot Obama). On the other hand, if you end up making less money than you had predicted on the application, you will then most likely receive a bigger tax refund (okay Obama, now I like you again). Unfortunately, this means individuals with decent incomes will pay higher premiums and higher deductibles, especially if they want their preexisting conditions covered.
No person ever once said “I want to spend more money on my new health insurance plan that actually does less than my old work plan.” That doesn’t sound like a whole lot of fun. Bottom line, this sh*t isn’t fun. But what would you rather do? Not have fun? Or go bankrupt?
That’s something to think about.
Chris Young is an Independent Insurance Broker who specializes in Health Insurance. For personal assistance with you own insurance needs, contact Chris Young directly 330–578–7707
