Today more Americans have health insurance compared to a decade ago, but still, millions are uninsured or underinsured. However, being uninsured is more devastating for an individual’s financial condition than being underinsured still, people should avoid being underinsured while purchasing health insurance coverage. People should avoid being underinsured because it will result in hefty out-of-pocket costs, and they will also not have enough coverage for themselves and their families.
In a recent report, it was discovered that around 30% of Americans with employer-sponsored health insurance plans were underinsured. Today more people enrolled in employer-sponsored health plans are underinsured than five years ago, as per the report. It is not just the case with the people having job-based health insurance, but even people having individual health plans through the health insurance marketplace are underinsured.
The prime reason for people being underinsured is affordability. People usually remain underinsured because they cannot afford their insurance, especially out-of-pocket costs, so their health plans do not provide enough protection. The other reason behind being underinsured is enrollment in a health plan that does not offer enough coverage such as a catastrophic health plan, or a short-term plan that does not aptly cover people like a standard health plan.
Earlier the short-term plans, as per the Affordable Care Act, were made available to young people and to individuals who could not afford any other type of health plan, but now these plans are available to all Americans. The regulation was changed by the Trump administration so that anyone can sign up for a short-term plan. Besides the duration of this plan was also expanded, so that this policy can last a year with the option to renew the plan for two more further years.
The biggest benefit of a short-term plan is its low cost, though these plans come with limited coverage and high out-of-pocket costs. Short-term plans do not have to provide coverage for the ten essential health benefits covered under the ACA plans. As per the report of the Kaiser Family Foundation on short-term plans, the following facts were discovered:
- Around 71% of short-term plans did not cover outpatient prescription drugs costs
- Around 62% of short-term plans did not cover substance abuse treatment
- Almost 43% of short-term plans did not cover mental health costs
- No short-term plans covered for maternity care
Health insurance experts fear that the limitations of short-term plans with the expansion of short-term plans have exacerbated the underinsured problem.
How can you be underinsured?
Individuals can be underinsured in either of the two ways, high out-of-pocket costs, or low coverage. Individuals who are paying a huge percent of their income on healthcare, and are facing coverage limits and high deductibles are generally underinsured. Under insurance becomes more problematic for individuals with a pre-existing condition. Thus, individuals should avoid being underinsured through the following means:
Individuals first need to estimate their health needs, and while deciding on a health plan should ensure that they are not underinsured by thinking about their health care needs and considering their previous year’s health. Some of the questions that individuals should think about while considering their health include:
- How many prescriptions do they have?
- How often did they undergo a medical procedure?
- How was their health in the past year?
- How often did they visit a doctor?
- How was their spouse’s health?
- How many children they have and do they visit a doctor more than a couple of times a year?
After thinking about their previous year’s health conditions, individuals need to think about the healthcare needs of the next year.
- Do they have a pre-existing condition for which they will require medical care?
- Do they expect that they will require more attention to their health?
- What kind of health care will be required by them and their family?
- Are they planning to start a family?
- Calculate their family income and should also check their affordability?
After taking their previous and next year’s health condition into consideration, people can decide whether they need more care or not. People who think that they will need more care should go for a plan that provides more coverage. Going with a low-cost basic plan is not a good idea for such individuals. Individuals can also choose a limited network plan like an HMO plan because this plan will also work if their doctors are considered in-networks. However, if this is not the case, and individuals live in an area having very few HMO in-network doctors, then a PPO plan may be a better fit. Thus, individuals once figuring out their healthcare needs and their budget can objectively start to figure out a plan that will be the best fit as per their needs.
Individuals should Select a Plan with Proper Protection
Individuals who prefer paying low premiums and don’t expect to visit the doctor much can look to buy a high-deductible health plan. However, individuals have to pay higher out-of-pocket costs in case if they require healthcare services. A PPO or an HMP plan in that case may be a better choice. Though, PPO plans have much higher premiums and lower out-of-pocket costs. HMOs’ plans may be an affordable option with fairly low premiums and deductibles and offer restricted networks and specialist referrals.
If individuals have a non-group marketplace plan, then they should take into consideration the different metal levels. The metal-plans offer the same coverage and the difference is in their premiums and out-of-pocket costs. Find below the difference between different metal plans:
Bronze Plan – Individuals are liable to pay 40% of the cost whereas the insurance company pays an average of 60% of the healthcare costs.
Silver Plans – Individuals pay 30% of the healthcare costs whereas the insurer pays 70 percent of the costs.
Gold Plans – Individuals pay 20% of the healthcare costs whereas the health insurance company pays 80 percent of the costs.
Platinum Plans – Individuals pay 10% of the healthcare costs whereas the health insurer pays 90% of the costs.
People should keep in mind that plans on each metal tier vary in terms of out-of-pocket costs like deductibles and co-pays. Even the healthcare provider network and benefits covered under each plan may differ. Individuals who avail more healthcare services should opt for a Gold or a Platinum plan and individuals who don’t obtain much health care services should consider buying a Bronze or Silver plan.
How Individuals can choose the Right Health Insurance?
Individuals who are getting health insurance through their employer have a very limited number of options. However, individuals have more options if they are looking to obtain an individual health plan. Regardless of the fact of how individuals are getting health insurance, find below some tips to choose the best health plan:
- While shopping for health plans individuals should consider both premiums and out-of-pocket costs of the health plan such as deductibles and coinsurance. Individuals may find a plan with low premiums but they should also consider the potential out-of-pocket costs.
- Individuals should be aware of the fact that an HMO is a cheaper alternative to a PPO plan but offers limited provider choices, so they should determine whether a restricted network is worth the reduced price or not. Besides, HMO plans require members to obtain a referral to see a specialist and may not cover any out-of-network costs.
- Individuals need to check with their health insurance company to make sure that their doctors are part of their networks, because if their doctor is not a part of their network, then they will have to pay higher out-of-network costs.
- Individuals should also make sure that their insurer covers their prescriptions.