Open enrollment is the time period each year when you’re allowed to start, stop or change your health insurance plan. Normally, you sign up around the end of one calendar year for coverage that lasts the next full year. Many of these rules could change in the future, but the Affordable Care Act is in place for 2018 health insurance plans. Here’s what to know about your open enrollment.
Employer-sponsored health insurance Dates depend on your employer, but typically in the fall
Medicare Oct. 15 to Dec. 7, 2017
Medicaid No date restrictions — you can apply at any time
Open enrollment for federal and state marketplace plans
The open enrollment window for private, individual health plans for 2018 will last 45 days: Nov. 1, 2017, to Dec. 15, 2017. This is a change from previous years, when open enrollment lasted three months.
You can shop for individual health plans in three ways:
Copay vs. Coinsurance: The Differences and Why They Matter
If you have life insurance, you pay your premiums and your beneficiary receives the payout. With auto insurance, you pay your premiums and sometimes a deductible for repairs after an accident, then insurance pays for the rest.
But with health insurance, you pay premiums, a deductible, and then most of the time you keep paying each time you go to the doctor, pharmacist or hospital. And when it comes to your health, it’s not a matter of if you’ll need that insurance — it’s a matter of when. If you fall ill or are injured and don’t know how health insurance works, you could become one of the millions each year who are caught off guard by high medical bills.
It’s important to understand the basics of health insurance so you can make the right financial decisions for your family before you need care. That way, you can focus more on healing when the time comes. Here’s our primer on how the costs of health insurance work.
Before you understand how it all works together, let’s brush up on cost-sharing terms that apply specifically to health insurance.
Premium: A monthly payment you make to have health insurance. Like a gym membership, you pay the premium each month even if you don’t use it, or you lose coverage. If you’re fortunate enough to have employer-provided insurance, the company picks up all or part of the premium.
Copay: Your copay is a predetermined rate you pay for health care services at the time of care. For example, you may have a $25 copay every time you see your primary care physician, a $10 copay for each monthly medication and a $250 copay for an emergency room visit.
Deductible: The deductible is how much you pay before your health insurance starts to cover a larger portion of your bills. In general, if you have a $1,000 deductible, you must pay $1,000 for your own care out-of-pocket before your insurer starts covering a higher portion of costs. The deductible resets yearly.
Coinsurance: Coinsurance is a percentage of a medical charge that you pay, with the rest paid by your health insurance plan, after your deductible has been met. For example, if you have a 20% coinsurance, you pay 20% of each medical bill, and your health insurance will cover 80%.
Out-of-pocket maximum: The most you could have to pay in one year, out of pocket, for your health care before your insurance covers 100% of the bill. In Affordable Care Act plans sold on marketplaces, the 2016 limits are $6,850 for an individual and $13,700 for a family, but yours may be different if you have an employer-sponsored policy.
How it all works together
In general, it works like this: You pay a monthly premium just to have health insurance. When you go to the doctor or the hospital, you pay either full cost for the services, or copays as outlined in your policy. Once the total amount you pay for services, not including copays, adds up to your deductible amount in a year, your insurer starts paying a larger chunk of your medical bills, typically 60% to 90%. The remaining percentage that you pay is called coinsurance.
You’ll continue to pay copays or coinsurance until you’ve reached the out-of-pocket maximum for your policy. At that time, your insurer will start paying 100% of your medical bills until the policy year ends or you switch insurance plans, whichever is first.
But there’s just one caveat: That’s how it works only if you always choose the right doctors, clinics and hospitals — those within your health plan’s provider network. If you use an out-of-network doctor, you could be on the hook for the entire bill, depending on which type of policy you have. This brings us to three new, related definitions you should understand:
Network: The group of doctors and providers who agree to accept your health insurance. Health insurers negotiate and contract rates for care with certain doctors, hospitals and clinics that are generally lower than their cash-pay prices.
Out-of-network: This refers to a provider with which your insurance plan has not negotiated a discounted rate. If you get care from an out-of-network provider, you may have to pay the entire bill yourself or just a portion. Your portion of out-of-network charges should be indicated in your insurance policy summary.
In-network: A provider who has agreed to work with your insurance plan and has negotiated lower payment rates. When you go in-network, your bills will typically be cheaper than if you go out-of-network and what you pay will count toward your deductible and out-of-pocket maximum.
Calculating the costs
To illustrate with an example, let’s use a person — we’ll call her Prudence — to explain the basics of health coverage. Your costs would be different based on your policy, so you’ll want to do your own calculations each year when facing a medical cost.
The basics: Prudence is single and has an annual deductible of $1,200. Her insurance plan also has copays, which do not count toward her deductible. After she meets the deductible, her insurer pays 80% of her medical bills, leaving Prudence with coinsurance payments of 20%.
The scenario: Prudence goes in for an annual checkup and some routine blood work. Because she goes to an in-network provider, this is a free preventive care visit. However, based on her physical, her primary care physician thinks Prudence should see a neurologist, and the neurologist recommends an MRI.
Copays for an in-network specialist on her plan are $50, which she must pay, while her insurer will cover the rest of the neurologist’s fee. The least expensive MRI provider in her area is in her insurer’s network and will charge $1,000 for the MRI, including the radiologist fees for interpreting the scan.
Imaging scans like this are “subject to deductible” under Prudence’s policy, so she must pay for it herself, or out-of-pocket, because she hasn’t met her deductible yet. So her insurer won’t pay anything to the MRI facility.
Much to her relief, Prudence’s MRI scan comes back normal. Later in the year, she falls while hiking and injures her wrist. Prudence knows which emergency facilities are in her provider network, so she heads to an in-network emergency room, for which she has a $100 copay. The total bill for the emergency room after the copay comes to $3,400.
Prudence has only paid $1,000 of her $1,200 deductible so far, so she owes $200 of the ER bill now. She has to pay this in addition to the $100 copay she already paid, after which her insurer pays a portion of the total ER bill. After she pays her $200, the ER bill will be $3,200. Of this, her health plan then will pay 80%, or $2,560, leaving Prudence with the remaining 20%, or $640.
Prudence has now paid $1,990 toward her medical costs this year, not including premiums. If she’s injured again or gets sick, she still will have to pay 20% of her medical bills until she reaches the out-of-pocket maximum on her plan.
Although the math may seem daunting, understanding how your health insurance works can save you money and grief down the road — maybe at a time when you’ll need it most.