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Navigating today’s health insurance marketplace


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    Amber Hill tries and fails to buy health insurance from the Maryland Healthcare Exchange website in her Baltimore apartment. She tried filling out the application five times and called the Maryland Health Connection help line twice.

    - Matt Roth for the New York Times

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    Amber Hill tries and fails to buy health insurance from the Maryland Healthcare Exchange website. She was denied because, according to the site, her "household income is about federal limit."

    - Matt Roth for the New York Times

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    Amber Hill tries and fails to buy health insurance from the Maryland Healthcare Exchange website in her Baltimore apartment.

    - Matt Roth for the New York Times

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    Amber Hill tries and fails to buy health insurance from the Maryland Healthcare Exchange. She was denied because, according to the site, her "household income is about federal limit." If her second attempt on Saturday fails, she was advised by the help line supervisor to go into an appeal process -- of which no time frame was given.

    - Matt Roth for the New York Times

This story appears in The New York Times 'Your Money' section on Wednesday, Nov. 20, 2013.

Essential benefits. Flexible benefits. High deductibles. Coinsurance. Bronze, silver, gold, platinum.

Welcome to what may be the most confusing year in the recent history of health care.

The Affordable Care Act is here and shaking things up. There are dashed expectations and plenty of uncertainty. But one thing is sure: Whether you’re insured at work, as most employed Americans are, or are buying a policy on the exchanges, you’re likely to be bearing more of the cost of your own care. And that means consumers need to know more and be smarter as they choose a health insurance plan.

Amber Hill, 26, knows what that feels like. She’s shopping for health insurance for the first time, joining the millions of Americans buying coverage on the health care exchanges. She spent a lot of time in front of the computer in her Baltimore apartment, searching the Maryland insurance exchange for just the right plan. It was a lot of work.

“It’s kind of a double-edged sword,” she said, sighing. “I know now that I have a lot more control over my health care, but at the same time that means I have to be proactive. I have to figure out what my needs are and I have to figure out what’s the best way for me to meet those needs.”

And Ms. Hill has a lot of health care needs. When she was 17, she was found to have hydrocephalus, or “water on the brain.” She may need surgery at some point to drain the excess fluid. She has regular doctor visits, and doesn’t want a huge co-payment. So she settled on a platinum plan with no co-payment for primary care visits, which will cost $217 a month after a monthly subsidy that is credited in advance is factored in. Ms. Hill is a student and part-time nanny, making around $22,000 a year; she had to wait until her next paycheck to afford the first premium.

But Ms. Hill’s plan wouldn’t work for everyone. The Affordable Care Act’s online marketplaces, or exchanges, offer four main categories of coverage: bronze, silver, gold and platinum. Bronze plans pay 60 percent of the cost of health services deemed essential under the health care law, excluding premiums; platinum plans pay 90 percent.

The New Math of Health Care:
The New York Times, in collaboration with American Public Media’s Marketplace, examines the soaring out-of-pocket costs of staying healthy, end-of-life care, and strategies for picking doctors and health plans. Read the whole series.

Here are some tips on choosing the right coverage at the best price, whether you’re shopping on the health care exchanges or getting coverage through your employer:

Consider a high-deductible plan. This may be the way to go if you’re young and healthy. You have a lower monthly premium, but a higher deductible (the out-of-pocket expenses you must pay before coverage begins). High-deductible plans could also work if your insurance was canceled because it didn’t meet Affordable Care Act requirements, which means it may have offered bare-bones coverage. Jon Katz, a Virginia insurance broker, tells his clients, “Don’t be afraid of the high-deductible option.” He recommends pairing high-deductible plans with a health savings account: tax-free money you can use for health expenses.

Calculate your risks. If you have accident-prone children, a high-deductible plan may not be for you. Sarah Schut of Kent County, Md., is in her mid-40s, with five children. Her husband is self-employed, and she’s about to leave her job to start a financial planning business. She’s looking for just the right amount of coverage. “I’d go for middle of the road,” she said. “I don’t think I’m going to go for the Cadillac plan.” She is leaning toward a silver plan, which covers 70 percent of expenses under the new law’s formula. Ms. Schut said she had no problems with co-pays and deductibles, as long as illnesses or accidents were covered.

Factor in the free services. The Affordable Care Act requires most plans to provide coverage without additional charge to the policyholder for preventive services like physicals and immunizations. The preventive services could save the typical family of four several hundred dollars, said Bonnie Braun,  a family economist at the University of Maryland. You may want to factor that in if you plan to put money into a flexible spending arrangement. Such accounts run by employers let you set aside pretax money for medical costs. But if you don’t spend the full amount by the end of the tax year, you lose it. “So the answer could very well be — especially this year for the first time — that you would not want to set aside as much as you had before,” Ms. Braun explained. You will have a safety valve in 2014, though. For the first time, you’ll be able to carry over up to $500 to the next year.

Work the system. Some employers give premium discounts to workers who quit smoking, exercise or answer questionnaires about their health. The Affordable Care Act increases the discount. Suzanne Cleary, 38, a paralegal in Lanham, Md., already saves $144 a year filling out a questionnaire for Kaiser. She said the questions were easy: “How many days a week do you work out? I think it asked you if you snore.”

Hope for the best, plan for the worst. Make sure you have money set aside for emergencies. If you have a deductible of $5,000 to $10,000, you’d better have that much money in your rainy day fund, ideally on top of the reserve of at least three months’ expenses recommended by financial advisers. Ms. Cleary finds it difficult to plan. She pays around $500 per month to insure her family of four. But she never knows what to expect when a family member goes to the emergency room, or needs an operation. “There’s all this mystery behind how the providers are billing,” she said, riffling through a folder of medical statements. “It’s not like you can go to the grocery store and you can look at three different types of cereal and know that one is $3.99, one is $4.99 and one is $1.99. You just don’t know how much you’re going to be paying for something, and you don’t know if you’re going to need anything.”

Brokers can help. If you’re really lost, talk to an insurance broker like Jon Katz. You don’t pay the broker, at least not directly. The insurance company you sign up with does. Mr. Katz has been working 18-hour days since Oct. 1. Phone calls to his office have doubled. He now gets 45 to 50 calls a day, most from people who buy their own insurance and are trying to figure out the most economical way to get the coverage they need. 

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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