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Health insurance is one of those things you should really never go without. All it takes is a single emergency room trip and battery of tests to potentially leave you on the hook for thousands of dollars in medical bills — bills that could quickly become medical debt if you don’t have a pile of cash laying around in your savings account.
Some people have access to subsidized health insurance through their employers. If you’re self-employed or work for a small business that doesn’t offer a health plan, then you’ll generally need to buy your own coverage through HealthCare.gov.
If that’s the case, you get a limited window to sign up for coverage during annual open enrollment, which runs from Nov. 1 through Jan. 15. Since the time to choose your upcoming health plan is now, here’s a step-by-step approach to take.
Step 1: See how much you spent on healthcare this past year
The amount of money you spent on healthcare costs this past year and the frequency at which you saw the doctor should influence your decision when it comes to choosing a health plan for 2024. Why? If you racked up a lot of expenses over the past 12 months, it could be a sign that a lower-deductible plan is a good choice for you, as opposed to a plan with lower premium costs and higher deductibles.
The health insurance plans you get to choose from come in four tiers:
The lower your plan’s tier, the less you’ll pay for your premiums. But lower-tier plans tend to have higher deductibles. The math there may not work out in your favor if you end up having to use your coverage a lot.
For example, a bronze plan might come with a $2,400 annual premium but a $4,000 deductible. If you get injured and need to meet that deductible in full, you’re looking at $6,400. A higher-tiered plan might cost you $3,600 a year in premiums but come with a $1,200 deductible. So that would leave you paying $4,800 instead of $6,400.
Step 2: Update your personal details
The cost of your health coverage will depend on factors that include:
- Your geographic location
- The size of your family
- Your income
It’s important to update this information each year on your HealthCare.gov account, as it could dictate what health plan options you’ll be presented with and what your costs will be. Keep in mind that you may be eligible for a health insurance subsidy that offsets your costs based on your income and family size, so it’s important to make sure that information is up to date.
Step 3: Review the plan choices in your area
Once you’ve updated your personal details, you’ll be given a list of plans to choose from. And then it’s really a matter of crunching numbers and using common sense based on your anticipated healthcare needs and spending.
When looking at plans, pay attention to premiums as well as deductibles. Also check to see which plans are eligible for a health savings account (HSA), if that’s an option you’re eager to take advantage of.
Remember, the tax savings you get from contributing to an HSA could help offset the expense of a higher-deductible plan. Plus, you’ll generally get lower premiums when you opt for a plan with a higher deductible.
If you’re responsible for securing your own health insurance, you have a pretty big decision on your hands. Take the time to explore your choices in the coming weeks and don’t rush through the process. You don’t want to act hastily and wind up with a not-so-great plan.
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