Millennials and Gen X-ers Are Spending Too Much on Obamacare

NEW YORK (MainStreet) — Too many Millennials and Gen X-ers have been buying the wrong health insurance and paying for additional coverage that they scarcely use.

But now is the time for consumers to put thorough thought into their health care choices: Obamacare open enrollment is right around the corner, starting on November 15 and ending February 15, 2015. Unless you experience a major life event such as getting married or divorced, moving for a job in another city or having a child, this may be your one and only chance to find the coverage you need for 2015. Paying attention to open enrollment is definitely helpful even if you already have coverage. Use this time to shop around and make sure you’re in the right plan for your needs and budget.

During the last open enrollment, many Gen Y-ers and X-ers waited till the very end to sign up for coverage.

“It’s a safe bet that a lot of them just picked the cheapest thing they could find, not really understanding how their coverage would really work,” said Carrie McLean, director of customer care at eHealth.com, an online health insurance exchange based in Mountain View, Calif.

If you don’t want to get stuck with the wrong health plan for 2015, consumers need to do a little research now to understand their coverage options for the next open enrollment period.

The true cost of any plan is about more than just your monthly premium, even if that is all you care about right now. The premium is the amount you pay each month to keep your coverage in effect and could be taking out a large chunk of your paycheck. A third of eHealth customers said in a recent survey they would choose a plan with a lower monthly premium.

An equally important factor to consider is your annual deductible or the amount you must pay out of pocket for most covered medical care before your insurance company picks up the tab. Generally speaking, plans with lower monthly premiums come with higher annual deductibles and vice versa.

If you are one of those people who are lucky enough to visit the doctor rarely and do not need to use prescription drugs, a low premium plan with a higher deductible plan may suit your needs. Consider a plan with a somewhat higher monthly premium and a lower monthly deductible to better balance your costs if you are constantly trekking in to see the doctor or do use prescription drugs on a regular basis, she said.

You might be taking home a somewhat decent paycheck and still qualify for government subsidies in 2015. Government subsidies may be available if you earn 400% of the federal poverty level or less or the equivalent of about $46,000 for a single person.

Even if you received a government subsidy in 2014, you may not automatically continue to get one in 2015 and may need to reapply during open enrollment, said McLean. Even if you’re happy with your current plan, you should reapply because changes in the “benchmark” plan in your area or what defines the value of subsidies for people where you live can alter the amount of subsidies you receive in 2015.

“Health insurance isn’t cheap and monthly premiums can look intimidating,” she said. “To learn more about subsidies, visit eHealth’s Subsidy Help Center.”

Mom and Dad’s health insurance plan might be great, but don’t plan on staying on it forever. The health reform law allows your parents to keep you enrolled in the family plan only until you turn 26 and then you are on your own.

Even if you have not reached the maximum age, staying on your parents’ plan may not be the best idea especially if you live in a different state where the access to network doctors and hospitals is non-existent.

“Seeing medical providers outside of your plan’s network can drastically reduce – even entirely negate – the coverage your plan offers,” she said.

There is no need to rush and buy a plan next week – you have four months, so look beyond government exchanges when you are shopping during open enrollment. Government exchanges offer only a selection of all the plans that may be available to you, so if you also shop through licensed private health insurance marketplaces, you will find more plans and more brand-name insurers than are available through your government exchange. All of these plans will still meet your coverage requirements under the law. You may also be able to apply for government subsidies through private marketplaces, depending on which state you live in.

“Government-run health insurance exchanges are a fine place to start, but don’t enroll in a plan until you’ve shopped around a bit,” McLean said.

Shop carefully and make sure your plan fits your needs because once open enrollment ends, you can not switch to another plan because you dislike your current one or it is more than what you want to spend.

In a recent eHealth survey, 23% of customers said that they would pick a plan accepted by their preferred doctor while 30% said they would choose a plan with a smaller annual deductible.

The right health insurance plan should address your current and projected health care needs, financial situation and your tolerance to risk, said Michael Mahoney, senior vice president of consumer marketing at GoHealth, a Chicago-based health insurance exchange.

“Every consumer may view these a little bit differently so the needs analysis is often the most critical part of the shopping process,” he said.

Consumers need to avoid shopping for “a major medical plan for $50 per month” and instead take into account variables such as how often you visit the doctor, maximum out-of-pocket costs and the plan’s network of physicians, Mahoney said.

“This can be an overwhelming process for some people, but fortunately, free professional assistance is available,” he said. “Licensed insurance advisors like those at GoHealth can help you understand your coverage options, balance your budget with your risk tolerance and walk you through the enrollment process to help you make a smart decision.”

When consumers are researching plans, they should note the difference between a licensed advisor and an exchange navigator. The government’s unlicensed exchange navigators cannot legally recommend specific health insurance plans, but licensed insurance advisors are trained to suggest specific insurance plans based on your budget and needs, Mahoney said.

--Written by Ellen Chang for MainStreet

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