Getting Covered: Navigating Insurance Choices as a Freelancer

[Image from Disney’s The Incredibles]

Editor’s Note: You will be able to buy insurance from Benny starting with the beginning of open enrollment on November 1st, 2015.

One of the few drawbacks to working as a freelancer is that it means giving up access to an employer-sponsored healthcare plan.

While having to come in to an office and work for a dumb boss each day can be fairly unpleasant, many employers make the whole deal more appealing by offering their workers subsidized health insurance packages that give them the care they need at an extremely low price (sometimes even free!).

As a freelancer, you’re pretty much on your own, unless you happen to qualify for federal subsidies (more on those later). Monthly payments can be fairly expensive (the cheapest bare-bones plan available to me was $154 a month), and unless you’ve ponied up for a plan with a high monthly cost, you’ll likely have to pay most of your healthcare bills yourself until you’ve already spent a certain amount of your own money on health services in a given year.

Perhaps you’ve read all this and are wondering why you would even want to bother buying health insurance in the first place.

Well, under the Affordable Care Act (aka Obamacare), people who are deemed able to afford health insurance in 2015 but choose to remain uninsured for three or more consecutive months will be subject to an end-of-year tax of either $325 for every uninsured adult member of their household or 2% of their annual household income — whichever amount is greater (you can find out more about this individual mandate tax, and whether you’re subject to it, here).

The other big benefits of health insurance are that it prevents you from complete financial ruin — each plan has a ceiling on how much money you can pay for care each year — and that any plan you purchase through your state’s insurance marketplace gives you access to free checkups and screenings. Finally, if you visit a doctor in your insurance network, you will get a rate that your insurer has negotiated with the doctor that will be lower than what the doctor charges someone who has no insurance.

Finding Somewhere To Buy

Assuming you’ve decided that you want to purchase health insurance, you’ll have to think about whether you want to buy it in one of the following four places: a public health insurance marketplace, a private health exchange, an insurance company’s website, or an insurance agent or broker.

The big benefit of buying insurance through a public marketplace — either your state’s health exchange or the federal exchange set up to service the 36 states that don’t have marketplaces of their own — is that doing it this way makes you eligible to receive federal subsidies if you make less than a certain amount of money. According to HealthCare.gov, you generally will not be eligible for subsidies if you make more than $46,680 annually as an individual or if your family of four brings in more than $95,400. To get a better sense of how much government help you might be able to get, you can use this calculator from the nonprofit Kaiser Foundation. As you might expect, the less money you make, the more subsidy money might be available to you.

The public marketplaces are open for business to everyone during what is called an “open enrollment” period, a timespan where during which people are expected to purchase their health insurance for the coming year. For 2016, the open enrollment period will be between November 1, 2015 and January 31, 2016.

However, you might also be able to purchase insurance through a state or federal public exchange if you have recently had what is called a “qualifying life event” that gives you personal access to a “special enrollment period.” Qualifying life events are things that change your insurance status like having a baby, getting married, moving, losing employer-sponsored health care, or being removed from your parents’ insurance. I recently aged out of my parents’ insurance plan, and chose to purchase my insurance on the New York State exchange during my special enrollment period. To see if you qualify, you’ll have to visit your state’s health exchange (which you can find here) or the federal exchange.

In addition to purchasing healthcare on the exchange, you can also buy from a broker, who will be able to offer you a bunch of different plans from across a number of insurance companies, or from a private exchange run by an outside entity, or from any insurance company’s website. While the prices for coverage will be the same whether you a buy a plan on the public exchange or from somewhere else, buying from one of these other sources will give you access to additional plans that are unavailable on the public marketplace. You can find information about plans not available on the exchange here and you find a list of brokers in your area on your state or federal health exchange.

Choosing What’s Important To You

There are a lot of different options out there, so it’s really important to think about how much healthcare — and what kinds of healthcare — you’re going to need over the coming year.

The way insurance plans are structured is that you pay a monthly fee whether you see a doctor or not. This monthly payment is called a premium. Even though you’re paying all this money each month, you might have to pay for all of your health services — except for preventative care — out of pocket until you reach a certain threshold. This threshold is called a deductible, and generally speaking, plans with high deductibles have lower premiums and vice versa. For instance, if you have an extremely high premium, you might have a health plan that pays for a portion of your visits to your regular doctor right off the bat. However, a plan with an extremely low monthly premium will likely require you to spend a relatively large amount of money going to doctors before you reach your deductible and your insurer starts chipping in.

After you’ve hit your deductible, you will only have to pay a certain amount or percentage of the total healthcare bills you rack up. The part of the bill you’re responsible for after meeting your deductible is called the co-pay (if it’s a flat fee) or the coinsurance (if it’s a percentage), and it will vary based on what type of service you’re receiving (i.e. you might be stuck with 20% of the bill for a trip to your primary care doctor but have a $10 flat fee for every generic drug purchase you make). You will have to pay a co-pay or coinsurance for services up until you hit your out-of-pocket maximum, which is the absolute most your plan will force you pay for covered services in a given year.

If you buy your insurance on a health exchange, you will be able to choose from four tiers of health care — bronze, silver, gold, and platinum — with the bronze plans having lower premiums in exchange for higher deductibles and out-of-pocket maximums, and the platinum plans having higher premiums in exchange for lower deductibles and out-of-pocket maximums. If you’re under 30, you might also be eligible for a catastrophic level health plan, which offers the lowest monthly premiums and virtually no savings until you’ve hit a relatively high out-of-pocket maximum.

As a note, deductibles and out-of-pocket maximums will be higher if you want your insurance plan to cover people in addition to yourself, like a spouse or child (these additional covered people are called “dependents”). There are four levels of coverage: self, self + spouse, self + children, self + family.

Generally speaking, if you’re in good health, it might make sense to have a bronze or silver plan that has a monthly premium but higher deductibles, co-pays, and out-of-pocket maximums. By this logic, you’re betting that you won’t have to use the doctor enough to hit even a relatively low deductible, so it makes sense to go for a lower premium. However, you risk having to pay more money in the event that you have to go to the hospital and rack up a big bill.

Conversely, if you know that you’re going to need a lot of health care in the coming year, it might make sense to bite the bullet on the higher premiums of a gold or platinum plan in exchange for lower deductibles and co-pays, as well as the knowledge that there is a lower ceiling on what you might have to shell out for healthcare in a given year.

You’ll also want to be thinking about which doctors will be available to you. If you choose a plan that is what is called an HMO (health maintenance organization), you’ll have to stick to the doctors in your insurer’s network in order to receive coverage, and you’ll have to choose a single, in-network primary care physician, who then refers you to specialists when he or she feels is appropriate. If you choose a PPO (preferred provider organization), your insurer will sometimes cover services provided by out-of-network doctors, with the caveat that they will pay less of the bill than if you’d used an in-network doctor. There also POS (point of service) plans that are sort of a hybrid between PPOs and HMOs. In a POS plan, you have the option of seeing out-of-network doctors for a higher fee, but you still need to get a referral from your primary care doctor to see a specialist.

If you have a primary care physician that you like and want to keep going to, you can check each plan’s provider network to see whether he or she is on it. If you don’t, you can use a site like BetterDoctor or ZocDoc to see reviews for in-network doctors in your area. And you can always call your doctor’s office or potential insurance company to confirm coverage.

Another thing to consider is whether there is any medicine you take regularly. Each plan has different drugs that it covers and different coinsurance rates and co-pays for those drugs. You can check your plan’s prescription drug list to see what works for you.

And, if you’re still having trouble making up your mind after all of this, you can reach out for guidance to a health care navigator who has been trained on how the public exchanges work or a broker licensed to recommend and sell insurance plans at no cost to you (brokers are paid by the insurance companies and navigators are paid by grants funded federally or at the state level). Any of these brokers or navigators who are licensed to sell insurance are required to take your personal information into account and make recommendations that are appropriate for you. Lists of navigators and brokers in your area can be found on your state or federal public marketplace.

Since I almost never go to the doctor, am under the age of 30, and generally stay in the NY area, I knew I wanted a catastrophic level health plan that would be relatively cheap and only help me out in the event something really bad happened to me. I then chose a plan from an insurance company called Oscar after speaking with a healthcare navigator, who recommended them based on their hands-on customer service. Oscar is only available in New York and New Jersey, but if I were a frequent traveler, it would have been important for me to find an insurer that had coverage in other places.

Very few of the health plans on the New York exchange included dental insurance, and none of them included vision insurance, so I elected to pass on those options. While it might make sense for you to purchase vision or dental directly from an insurance company if you have dental or vision issues, my thinking was that I don’t use those services often and that I would be able to pay out of pocket should the need arrive. Recently, I paid $125 without insurance for a teeth cleaning, which seemed fairly reasonable.

For $180.48 a month with Oscar, I get free access to preventative care and three free visits to a primary care doctor over the course of the year. However, I receive no co-insurance assistance from my plan beyond that until I have spent $6,600 out of my own pocket, at which point Oscar will pay for the entirety of all covered services I receive — in this case, my deductible and my out-of-pocket maximum are the same. For comparison, the cheapest bronze-level plan on the exchange was $308.15 and had a $3,000 deductible and a $6,350 out-of-pocket maximum.

Basically, I am crossing my fingers that I don’t get sick or hurt. Indeed, while I like to think I’ve offered some good pointers here for choosing the best plan for you, the sad truth is that under our present system, the only real way for freelancers to minimize costs for health services is, unfortunately, to utilize them as infrequently as possible.

*Written by Aaron Taube on behalf of Benny*

Benny’s Basics: Common Insurance Terms

Agent: A person licensed to sell insurance plans from a single insurance company that can help you choose the plan that is right for you (provided that plan comes from the insurer the agent represents). These people must act in your best interest and are forbidden from trying to push unnecessarily expensive plans on you. You can find a list of them on your state or federal health exchange.

NOTE: New York is one of a number of states that differentiate between agents and brokers (who sell insurance from a number of companies), but in other states, these individuals or businesses are known simply as “producers” and they can sell insurance in either capacity.

Broker: A person licensed to sell health plans from a variety of insurance companies. You can find a list of them on your state or federal health exchange. These people must act in your best interest and are forbidden from trying to push unnecessarily expensive plans on you. You can find a list of them on your state or federal health exchange.

NOTE: New York is one of a number of states that differentiate between brokers and agents (who only sell insurance plans from a single company), but in other states, these conduits are known simply as “producers” and they can sell insurance in either capacity.

Coinsurance: A percentage that you are required to pay for certain health services, with your insurer covering the rest. Oftentimes, you will only have access to a coinsurance for services after you have reached your deductible (see “deductible”). For instance, if you have a $100 doctor visit and your insurer gives you 30% coinsurance subject to a deductible, you will be charged $30 for the visit if you have reached your deductible for the year and the full $100 if you have not.

Co-pay: A flat fee you are required to pay for certain health services, after which your insurer will cover the rest. Oftentimes, you will only have access to a co-pay for services after you have reached your deductible (see “deductible”). For instance, if you have a $125 doctor visit and your insurer gives you a $20 co-pay subject to a deductible, you will be charged $20 for the visit if you have reached your deductible for the year and the full $125 if you have not.

Deductible: An amount of money you have to spend before your insurer will start helping cover the costs of certain health services. The number of services subject to your deductible (i.e. that your insurer won’t help you with until you’ve reached this threshold) varies from plan to plan.

Dependents: Other people who will be covered under your health care plan. Usually, a spouse, child or “family.”

Federal health exchange: A healthcare marketplace created by the federal government that people can use if they live in a state that does not have its own exchange. Plans bought on this exchange can be subsidized if people make below a certain amount of money (see “healthcare subsidy”). You can find the federal health exchange here.

HMO: A health maintenance organization. These kinds of insurance plans only cover services provided by in-network doctors and hospitals. They also usually require people to choose a single primary-care physician, who then refers them to specialists when necessary.

Individual mandate tax: Under the Affordable Care Act (aka Obamacare), people who can afford healthcare but don’t purchase it must pay a tax. People are deemed by the law to be capable of buying healthcare if a) the cheapest plan available to them would cost more than 8.05% of their annual household income AND b) they make enough money that the IRS requires them to file an income tax return. In 2015, this tax is either $325 for every uninsured adult member of your household or 2% of your annual household income, whichever number is greater. You can find out more about this individual mandate tax, and whether you’re subject to it, here.

In-network: Health care providers that your insurance company has negotiated rates with. If you have an HMO (see “HMO”), your insurer will only cover services received from in-network providers. If you have a PPO (“PPO”), your insurer might cover some services received from out-of-network providers, but you’ll have to pay more than you would if you had used an in-network provider.

Navigator: Someone paid by the government to help people understand the federal and state exchanges and get a better sense of what plans might be good for them. You can find a list of them on your state or federal health exchange.

Open enrollment: The timespan during which people are expected to purchase their health insurance on the federal and state health exchanges for the coming year. For 2016, the open enrollment period will be between November 1, 2015 and January 31, 2016. In addition to the open enrollment period, you can buy insurance on the exchanges if you have recently experienced a life event that changed your insurance status like marriage, the birth of a child, or the discontinuation of your previous insurance plan (see “special enrollment period”).

Out-of-pocket maximum: The highest amount of money you can pay in a year for health care services covered by your insurer.

POS: A point of service plan, which splits the difference between a PPO (prefered provider organization and an HMO (health maintenance organization). In a POS plan, you have the option of seeing out-of-network doctors for a higher fee (similar to a PPO), but you need to get a referral from your primary care doctor to see a specialist (as would be the case if you had signed up for an HMO).

PPO: A preferred provider organization. These kinds of insurance plans sometimes cover services provided by out-of-network doctors and hospitals. However, you’ll get greater savings from in-network providers.

Premium: A flat, monthly fee that you have to pay your health insurer — regardless of whether or how often you access health care services. [There are other less common types of premiums, including annual or weekly, depending on the type of insurance and the agreement with the carrier. However, as the number of payments increases over the course of a year, the fees also increase for processing.]

Private health exchange: A health marketplace operated by a private organization. These marketplaces give people access to plans not available on the state or federal exchanges, but you will not have access to government subsidies if you use them. There are more plans available this way, as the federal and state exchanges have a limit on the number of plans offered and all plans must meet specific guidelines.

Special enrollment period: When it is not during open enrollment, you can only purchase insurance on a federal or state exchange during a special enrollment period, which is granted to people after life events like having a child or losing the insurance they were previously on. You can see if you qualify here.

State health exchange: A healthcare marketplace created by one of 16 states that residents can use to purchase plans. Plans bought on these exchanges can be subsidized if people make below a certain amount of money (see “healthcare subsidy”). You can find your state’s marketplace here.

Subsidy: The amount of money the federal government will give you in tax credits to help you pay for health care purchased on a state or federal marketplace. You’re likely to be eligible for a subsidy if you as individual make less than $46,680 annually, or if your family of four earns less than $95,400 per year. You can figure out how much you’ll likely be able to get using this calculator from the nonprofit Kaiser Foundation. Subsidies can often be taken as either a reduction in your monthly premiums or as a tax credit at the end of the year.

Did we miss a term you think should be on here? Let us know at Hi@usebenny.com!