Health insurance.

Anyone else feel just sort of blech about health insurance?

I mean, coverage is a necessity (required by US law), but it is so. very. expensive.  And, often, even with high premiums, you can end up with large deductibles and/or spotty coverage.

When I left my job in 2013, we knew that one of the biggest perks we were walking away from was our health insurance.  Up until then, I was fortunate enough to work for a company that paid all of the premiums for our entire family’s high deductible plan.

Facing life as both self-employed, we did the best we could and signed up for health care through Steve’s construction company.  We opted for the high deductible plan with the highest possible deductible to keep the costs down as much as we could.  The cost was still quite hefty.

With Steve returning to a regular job, we were hopeful that maybe the health insurance coverage would not be too bad.  Unfortunately, it was worse than having coverage by ourselves under Steve’s company.

So, we decided to get creative and really explore all of our health insurance options.

There is a lot of information to cover, so we will break this topic into two posts.  In this post we will talk about where you can find coverage, possible alternatives to coverage and cover a basic overview of plan types.

In the interest of full disclosure, you should understand that I am not health insurance professional.  I have shopped for it personally, as well as for companies in my positions as Controller and CFO.  These are my opinions based on my own experience.

Where Can You Find Healthcare Coverage?

Check Your State’s Plan

We live in Minnesota, which has its own health insurance exchange, MNSure.  We looked for comparable plans on that site and pulled the rates for our area of the state.  If your state does not have a plan, you would be eligible for coverage on the Federal exchange, HealthCare.gov.  I am not saying that either of these are the most economical option, just that you should get rates so you can compare and evaluate which option is best for you.  In Minnesota, you can participate in the state exchange even if your employer offers coverage.

Know Your Employer’s Plan

Understand what (if any) plans your employer offers, what the costs to you are, what the coverage is, and what deductible costs you are responsible to pay.    If your employer does not offer health insurance, you may be eligible for a credit if you get coverage from your state or federal exchange.

Do You Belong to an Association?

I am a member of the Minnesota Society of CPAs, and as a member, I am eligible for a variety of health insurance coverage offered through the society.  These were actually our most reasonably priced options.  Similar coverage may be offered through other professional associations, alumni associations and organizations such as AARP.  A huge benefit to coverage with large associations is that they can offer a large number of participants to the insurance companies and possibly command better rates.

Are There Any Alternatives to Having Health Insurance?

Cost Sharing

One alternative that we found and included in our evaluation is Samaritan Ministries.  This is a health cost SHARING plan, NOT health insurance.  The general idea is that all of the members agree to a certain monthly ‘premium’ depending on your family type and size, and that amount is sent to a member(s) with a need in a given month.  As you might imagine, this takes a certain leap of faith – so it is not surprising that this is a religious organization.  This option is not for everyone, so make sure you do your research.

If you decide to pursue this option, understand the limitations and know that you will be expected to agree to certain moral behaviors and those behaviors will be vouched for by a pastor at your church as part of your application.  Cost sharing plans are exempt from Affordable Care Act laws and if you participate in a cost sharing plan, you will not have to pay the penalty for not having health insurance. In essence, it “counts” as health insurance in the eyes of the government, largely because it has traditionally worked well and its participants have been able to pay their medical bills.

Narrow Down a Plan Type

Once you have checked all of your possible sources of health insurance coverage, consider what type of plan you want to have.  Very generally speaking, there are two types of plans.

Traditional Plan

The most expensive plans typically offer what most people consider traditional coverage.  You go to the doctor, pay some sort of co-pay and are responsible for a portion of each bill until an overall deductible is met.  This tends to be a favorite option for people who have expensive, regular prescriptions, which can add up in a hurry.  Preventative visits are usually covered 100% under these plans, meaning that you do not pay any part of these types of visits.

With a traditional plan, if you go to the doctor, the insurance company is on the hook for some payment, so their risk is higher.  Because the risk is higher, the premiums are higher.  This options tends to feel the ‘safest’ for most folks, because it is what they are used to having.  Depending on how much of the cost is shared between the employee and employer, most plans are so expensive that many employers are moving exclusively to HDHP coverage.

HDHP – High Deductible Healthcare Plan

A HDHP, or high deductible healthcare plan, is what it sounds like, a healthcare plan where the participant is responsible for a high deductible up front, and then coverage kicks in (at some percentage – it could be 100% or a shared percentage like 80/20%) once that high deductible is met.  In my experience, preventative visits are often covered at 100% regardless of your deductible under these plans.

The gamble here for the insurance company is that most people just have a few things each year – sinus infection, sprained ankle, stuff like that, and it would take a more significant event to meet the deductible, so the risk to the insurance company is less.  There is a huge variety in both the deductibles offered, as well as what the percentage of coverage is beyond your initial deductible, so be sure to pay careful attention to EXACTLY what you are getting with these plans.  Ask questions until you understand the coverage.  It is too late once you have an event and are stuck with that coverage.

In Part 2, we will talk about the variables in your coverage that affect your rates and how you can compare plans side by side to make the choice that best fits your situation, including a free spreadsheet you can use to evaluate your options.