It’s illegal for different vendors to charge different prices for the same health plans, so finding affordable health insurance is more about making sure you’ve evaluated all your options from the widest possible range of providers. It also means you should have a good idea of what your needs are before you shop.
Remember, the cheapest plans usually offer the least coverage, and only you can decide whether saving a few dollars is worth that particular pitfall.
1. Shop around
While convenient, the state exchanges set up through the ACA aren’t your only avenues for finding cheap health insurance. You have several other options, and you have nothing to lose (except money) by checking out one or all of them.
Buy Direct Through Insurance Companies
Insurers may have a greater range of policies available on their websites than they do on the state exchanges. Most will let you directly compare plan details, see more detailed information, and apply online. Of course, you won’t be able to see options from other providers, so this might not be your best bet for saving money unless you know which company you want to do business with.
Buy Through an Agent
An insurance agent can be a good option if you’re overwhelmed by your choices and feel you need expert help to make the right health insurance decision.
There are two main types of insurance agents: “Captive” agents offer products through only one company, while independent agents (also called brokers) can help you choose a plan from one of several insurers.
If savings is your bottom line, it probably makes more sense to work with an independent agent who will be able to find and compare more options. But if you’re set on working with a certain company, a captive agent may better know their products.
Buy Through an Online Insurance Finder
Online insurance finders like eHealthInsurance are kind of like independent agents, minus the personal touch. After you answer a few questions, they’ll offer plans from several companies that may include options not shown via your state marketplace.
Convenience is your major advantage with online services, as they’ll save you the time and effort that’s involved in meeting with an agent. Just be sure to read the fine print and know exactly what you’re signing up for before you choose a plan.
2. Know Whether You Qualify for Special Programs
Medicare, Medicaid, and CHIP (the Children’s Health Insurance Program) provide low-cost, federally subsidized health care for those who qualify.
Medicare, the most well-known of the bunch, is specifically for those over age 65, while Medicaid is meant for those with very low incomes. CHIP is meant for children (and, in some cases, their families) who don’t qualify for Medicaid but can’t afford to buy insurance otherwise.
The easiest way to determine eligibility is by applying for health plans through your state health insurance exchange. If you’re eligible, you can enroll in Medicaid and CHIP at any time of the year.
3. Make Sure COBRA Is Worth It
The Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, lets you stay on your employer’s insurance plan for up to 18 months when you would otherwise lose coverage, typically because you were laid off. But it’s also a very costly way to stay insured.
One study found that individual mid-level coverage on a dozen state marketplaces costs an average of $336 a month. Ouch, right? Well, compare that to the average monthly cost of individual coverage with COBRA: $490.
Of course, COBRA can still be advantageous if you need to maintain access to providers who may not be available under other plans, or if you know you have a big medical expense coming up and have already met your deductible for the year. Be sure to weigh these factors when you’re comparing costs.
4. Hit Up Your Parents
If you’re under 26, the ACA allows you to stay on your parents’ health insurance plan. Even if you pay your parents the difference between keeping you on their plan and dropping you, this may well be your cheapest option.
You can take advantage of this option even if you’re married or otherwise financially independent of your parents. Just be sure that your parents’ insurer offers in-network care providers where you live; out-of-network costs can add up quickly and cancel out your savings.
5. Consider High-Deductible or ‘Catastrophic’ Plans
If you don’t anticipate using your health plan much, high-deductible plans with lower monthly premiums might be the way to go.
Under the ACA, you’re eligible for catastrophic plans with low premiums if you’re under 30, or over 30 and qualify for a hardship exemption. (Hardship exemptions include more dire financial circumstances including homelessness, recent eviction, and bankruptcy — see a full list on healthcare.gov.
A catastrophic plan entitles you to three primary care doctor’s visits per year, prescription coverage, and other essential benefits. However, you’ll pay out of pocket for any medical care outside those parameters until you reach a pricey deductible — $6,850 in 2016. Insurers also have a range of high-deductible plans available directly through their websites.
While you’ll pay low premiums with a catastrophic or high-deductible plan, experts say only those who are young and in excellent health should consider them. And make sure you have a way to meet the high deductible if you need to — otherwise, your cheap plan can become very costly if you need care that isn’t covered.
If you’re shopping through your state marketplace, know that catastrophic plans aren’t eligible for subsidies that apply to other marketplace plans. If you’re eligible for subsidies, the savings can make up most of the cost difference between catastrophic plans and high-deductible bronze plans, sometimes making bronze the way to go because of better coverage.
One more tip: Consider opening a health savings account (HSA) if you go with a high-deductible plan. You can sock away money in an HSA completely tax-free to help you pay for health care. Individuals can contribute up to $3,350 in 2016 as long as they are enrolled in a health care plan with a deductible of at least $1,300.
If you don’t use the funds by the end of the year, don’t worry — they can roll over to the next year. Some financial advisors even recommend using HSAs as a supplementary, tax-advantaged retirement account.
6. Be Wary of Short-Term Plans
Short-term or temporary health insurance plans are likely your cheapest option of all. How cheap? I found short-term plans for myself on eHealthInsurance for as little as $53 per month. These plans are also your only option if you’re shopping for health coverage outside of open enrollment and don’t have a qualifying event that makes you eligible for special enrollment.
But before you jump at a short-term plan to save some cash, beware of the pitfalls that come with these bare-bones policies. First, the protections afforded by the ACA don’t apply here. That means if you have pre-existing conditions, short-term plan providers might not cover you, and if you become seriously ill, you might not be able to renew your plan. And because short-term plans don’t qualify as adequate coverage under the ACA, you will still be hit with the same tax penalties that people without any sort of health coverage must pay.
Second, know just how skimpy the coverage is under short-term plans. Unlike ACA-approved catastrophic plans, preventative care including immunizations and physicals probably won’t be covered. The plans also come with a lifetime cap on care, unlike regular health insurance, so you could run out of coverage in the event of very serious injury or illness.
They also aren’t HSA-eligible, and if you do end up needing significant coverage, you could still be out a large chunk of change thanks to a high deductible — the average annual deductible in 2014 was $3,589 for plans sold by eHealthInsurance.
Bottom line: There are lots of limitations to short-term plans. Although they may be your cheapest option, experts warn against using them except as a last resort in between jobs. Otherwise, a low-cost catastrophic or bronze plan will offer better coverage.