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Health Insurance 101: Become An Expert to Save Healthcare Dollars

Medically reviewed by Leigh Ann Anderson, PharmD. Last updated on July 26, 2022.

Do I Really Need Healthcare Insurance?

Absolutely. Health insurance is one of the most important purchases you can make. Health insurance will help pay for (or fully pay for):

  • preventive and yearly well-care exams
  • vaccines
  • treatment for acute illnesses like the flu, COVID or a broken bone
  • longer-term coverage for chronic illnesses like high blood pressure or diabetes.

In addition, major medical expenses such as surgery, hospitalizations, and rehabilitation are covered, as well as prescription drugs.

However, many people in the U.S. are still burdened by costly health insurance. The Affordable Care Act (ACA) is certainly not 'affordable' for everyone, especially those who do not qualify for credits. Health insurance reform is always a hot topic in the U.S., but the ACA is still in use.

What is the Marketplace?

Millions of individuals have enrolled in health insurance through the Marketplace. Until otherwise notified, if you bought an insurance plan through the Marketplace, you can renew or change your plan each year in the fall, but don't miss the open enrollment deadlines (typically Nov 1 through Jan 31 each year). You can enroll, or re-enroll, in coverage for 2023 starting November 1, 2022.

The Medicaid and Children’s Health Insurance Programs (CHIP) remain open for enrollment year-round for individuals who are eligible for this public coverage.

To estimate the cost and any subsidies of your health insurance through the marketplace, use this calculator found here from Kaiser Family Foundation.

You can call representatives at the Marketplace Call Center at 1-800-318-2596 for questions and to double check deadlines, as they are always subject to change from year-to-year.

Does the Marketplace Offer Medicaid or Other Insurance?

Yes. Medicaid and the Children’s Health Insurance Program (CHIP) are both offered through The Marketplace. Medicaid and CHIP provide either free or low-cost insurance to millions of Americans, including:

  • low-income families and children
  • pregnant women
  • the elderly
  • people with disabilities.

CHIP also provides health coverage to children in families that earn too much to qualify for Medicaid. You can apply for and enroll in this coverage at any time. Certain factors will determine if you qualify, such as your age, disability, the size of your family, and your household income. Some states have expanded their Medicaid programs to cover all people below certain income levels.

What Do the Terms 'Deductible', 'Copay', 'Coinsurance', and 'Out-of-Pocket Limit' Mean?

These terms describe the amount of money you’ll need to spend in addition to your monthly insurance premium (fee).

  • A deductible, say $2000, is the amount of money you are obligated to pay each year before the insurance starts paying its share of costs for certain services. Preventive services, such as many childhood vaccines or mammograms, usually are not subject to a deductible.
  • A copay is a set amount you might pay for a service, for example, $25 to see the doctor each time; then your insurance pays the rest, at a contracted rate they've agreed upon with the healthcare provider. However, if you have a deductible, you may have to pay extra, say for lab work or X-rays; check with your insurance to learn specifics.
  • Coinsurance is a set percent of the cost of your care; for example, if a special X-ray costs $500, you might have to pay 20 percent, or $100, as a co-insurance. And don't forget, this might be after any deductible. Again, check with your insurance to see where coinsurance might affect you.
  • Out-of-pocket limit is the maximum amount you would pay in one year before your insurance starts to pay 100% of your bills. This can also apply to prescription costs.

What is Covered in the Marketplace Health Insurance Plans?

Currently, coverage is comprehensive, but can be costly for some enrollees. All plans must cover the essential health benefits, including:

  • Outpatient, wellness visits, chronic disease and emergency care
  • Hospitalizations and surgery
  • Maternity and newborn care
  • Prescription drugs
  • Rehabilitation and habilitative services and devices
  • Laboratory services
  • Mental health and substance use disorder services
  • Pediatric care
  • Immunizations

Pre-existing conditions, for example diabetes or cancer, can no longer prevent you from qualifying for health insurance.

Are There Penalties if I Do Not Sign Up for Health Insurance?

Health insurance is to your benefit, and that of society, to help prevent illness. But penalties for not having health insurance are no longer a federal law. Penalties for not having health insurance (the "mandate") expired on January 1, 2019. Congress eliminated the federal tax penalty for not having health insurance.

  • However, some states may have mandates and penalties on the books, so it's best to check your state individually.
  • For example, California, Rhode Island and Massachusetts are states that may still have mandates and penalties for not having insurance coverage.

While it can be a significant monthly cost, it is to your advantage -- and to your family's -- to get health insurance, either from the Marketplace or your employer. But some people choose not to obtain insurance or simply can't afford it.

What Should I Do If I Already Have Health Insurance?

You probably do not need to do anything. Many Americans have group health insurance through their employer or are covered by government-funded programs such as Medicaid, Medicare, or the Children's Health Insurance Program (CHIP).

If you have group health insurance through your employer, you can compare your monthly marketplace premium with that of your employer, but most likely your employer group plan will be a better deal.

However, situations change, and the number of adults with employer-provided insurance has been steadily decreasing in recent years. Plus, plans with high-deductibles, often many thousands of dollars per year, are increasingly becoming the norm for employer-sponsored plans.

How Does High Deductible Insurance Work?

High deductible health insurance is one option your employer may offer to lower your premium cost (the amount you spend to purchase your insurance).

Here's how it works: you pay a lower annual premium, but your insurance may not fully kick in until you've met your deductible which may be several thousands of dollars per person. Usually, well care exams and preventive procedures like mammograms or a colonoscopy will still be covered outside of the deductible.

High deductible health care plans may come with a health savings account card that allows you to save pre-tax money specifically for healthcare expenses. Be sure once you hit your deductible that all costs are covered. These plans might be good for young families with few health issues.

How Much Insurance Can I Afford?

Even with the Marketplace, health insurance may be unaffordable for many people. It’s important to think about how much health care you need, what you can afford, and what coverage makes the best sense for you.

Plans with higher benefit coverages and lower copays are going to be more expensive. If you have many chronic conditions, it might make more sense for you to have greater coverage. These might be called "PPO" plans, and often allow you to choose from a wider range of providers and may not require referrals to specialists.

If you are young with few, if any, health conditions, a less comprehensive, but less expensive plan with higher deductibles and copays might be a better option. These might be called "HMO" plans, and while less expensive, may have more restrictions, require specialist referrals from your primary care doctor, and offer a more strict subset of providers.

At certain income levels the ACA will provide tax credits to help make your insurance more affordable.

How Much Does Insurance Cost in the Marketplace?

Prices vary in the Marketplace. Plan categories are labeled as Bronze, Silver, Gold, or Platinum and the category you choose will affect the total amount you will spend for health benefits.

  • The less expensive plans, such as the Bronze plan, require more out-of-pocket costs for members but have lower monthly premiums.
  • The Silver plan fall somewhere in the middle of the Bronze and Gold. The Platinum plan is the most costly but has the most extensive coverage.

Remember, more coverage means higher monthly premiums. Less expensive plans may be a better deal for the younger generation or those with few healthcare needs. However, insurance via the Marketplace is also be very beneficial for young adults who need healthcare.

I’m Always Having to Sign Papers About Privacy. What is HIPAA?

HIPAA is the acronym for Health Insurance Portability and Accountability Act.

  • HIPAA is a federal legislation passed by Congress in 1996, and is designed to preserve health insurance coverage for you and your family if you should change or lose your jobs.
  • HIPAA also includes security and privacy standards to help protect your personal health information, such as your medical records, and avoid misuse or unauthorized reporting to others without your explicit written permission.
  • You also have the right to request your medical records from your doctor or lab test results right from the lab. In facts, most providers and lab facilities have electronic portals where you can review this information at any time. Ask how you sign up at the office.
  • It is your legal right to see your health information. No one should ever deny you access to your personal health records.

How Can I Save Money on My Prescriptions?

Prescription drugs make up a costly segment of healthcare. But lowering your drug bill can improve the likelihood of taking your medicine as prescribed, and lower your overall healthcare costs.

How to do this? Use a generic drug when you can; they are less expensive, with lower copays, but do the same job. Research your medicine copays or costs on your insurance website or give them a call.

Consider using the Drugs.com Price Guide to help you compare drug prices. If you are paying cash, most pharmacies will accept coupons (except for controlled substances). These coupons can result in less cheaper costs, sometimes less than the copay you would pay for a generic through your insurance.

Don't be afraid to talk to your doctor, pharmacist or insurance company about drug costs and what you can afford; there are usually many options from which to choose.

Do I Sign Up For Medicare on the Marketplace?

Medicare is a health insurance program funded by the U.S. government through taxpayer contributions. You are typically eligible for Medicare if you are over 65 years of age. Medicare isn’t part of the Marketplace, so you don't replace your Medicare coverage with Marketplace coverage. In fact, if you have Medicare, you don’t need to do anything with the Marketplace during Open Enrollment periods.

There are 4 parts to Medicare:

  • In general, Part A covers hospital-type expenses; Part B covers outpatient care; Part C (Medicare Advantage) is from a private insurance company that covers both Part A and Part B; and Part D covers prescription drugs.

Learn More: Review our Medicare Frequently Asked Questions (FAQs).

How Do I Know if I Qualify for Medicaid?

Medicaid is a state and government-funded health care program for low-income citizens. In 2016, over 76 million Americans were covered by Medicaid.

You qualify for Medicaid by meeting certain limits for income and assets, and by fitting into a specific category, such as blind, disabled, child, pregnant woman, or the unemployed. Limits are set based on family size and income. In general for 2022, the federal poverty level is $$27,750 for a family of four, and is adjusted up or down based on family size. Those at a certain percentage of, or below the federal poverty level, may qualify.

Some states have expanded Medicaid coverage, while others have not. You may qualify under the new rules. You can see if you qualify for Medicaid by visiting your states Medicaid website or filling out an application on the Health Insurance Marketplace.

Overview: Questions to Ask Before You Buy Health Insurance

Healthcare insurance is important, but can be expensive. Many Americans are concerned about higher costs with the ACA Marketplace. Questions to ponder before buying:

  • What coverage do you really need? Can you afford a higher deductible to save money on premiums?
  • Would it be beneficial to start a health savings account with a high deductible plan instead of paying high premiums?
  • Have you compared different plans in the Marketplace, and if you need help, have you called?
  • How much are the plan premiums and what are your out-of-pocket costs?
  • Are you sure your family is not eligible for Medicaid or CHIP if you have no ability to pay for insurance?

Finished: Health Insurance 101: Become An Expert to Save Healthcare Dollars

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Sources

  • U.S. Dept of Health and Human Services. ASPE. Accessed July 26, 2022 at https://aspe.hhs.gov/poverty-guidelines
  • Healthcare.gov Accessed July 26, 2022 at https://www.healthcare.gov/
  • Kaiser Family Foundation. For Consumers: Understanding Health Insurance. Accessed May 7, 2021 at https://www.kff.org/understanding-health-insurance/
  • Kaiser Family Foundation. Health Reform FAQs. Accessed July 26, 2022 at https://kff.org/health-reform/faq/health-reform-frequently-asked-questions/
  • Health Insurance. org. Is there still a penalty for being uninsured? Accessed July 26, 2022 at https://www.healthinsurance.org/faqs/is-there-still-a-penalty-for-being-uninsured/

Further information

Always consult your healthcare provider to ensure the information displayed on this page applies to your personal circumstances.