7 Things to Consider When Choosing a Health Insurance Plan | Real Simple

Yes, health insurance can be expensive, but the government may be able to help. The IRS offers what is known as the “premium tax credit,” which is a “refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange.”

So, who gets a credit? Well, the math is a little confusing. “In general, individuals and families may be eligible for the premium tax credit if their household income for the year is at least 100 percent but no more than 400 percent of the federal poverty line for their family size,” the IRS explains. While this number may change, in 2021, the Department of Health and Human Services shared, the poverty guideline is $26,500 for a family or household of four persons living in one of the 48 contiguous states or the District of Columbia, (It notes, “separate poverty guideline figures are developed for Alaska and Hawaii, and different guidelines may apply to the Territories.”) That means an individual earning between $12,880 (the poverty line) and $51,520 (400 percent above the poverty line) would qualify for a credit, while a family of four making between $26,500 to $106,000 would qualify.

Yes, it’s extremely easy to get sticker shock over the monthly premiums (the price you have to pay each month to maintain your health insurance), but it’s crucial to take a look at the plan’s deductible (the price you pay before your insurance company will pay a claim) as well.

“I would caution people to look at all the plans and really think about: Is it worth paying a lower premium or paying a little bit more in order to have much lower out-of-pocket costs if something happens?” Louise Norris, health care expert and author of The Insider’s Guide to Obamacare’s Open Enrollment, shared with Real Simple.

According to Norris, a generally healthy person may be OK choosing a high deductible but the low premium plan because that person may not ever need to use the insurance for emergency reasons. However, someone who is already facing a health challenge–say, battling cancer–may also want to go for a higher deductible but a lower premium plan. That’s because a person battling cancer is likely going to hit that deductible no matter what but could save a bit of money by paying a lower premium instead.  

It’s those in the middle, with moderate healthcare costs such as an upcoming surgery or medical expenses, who need to put in the work.

“They’re the ones who are oftentimes best served by one of the more mid-range plans,” Norris said. “They really have got to drill down and personalize their plan to their own situation. I always advise people, look at the total premiums you’re going to pay over the whole year and look at your total out-of-pocket costs. Then, calculate a worst-case scenario, and then consider your total out-of-pocket costs in a medium range scenario. And decide on a plan from there.”