Choosing the Right Health Insurance during Enrollment

Nov 12, 2020

You thought it was the Holiday Season, but it’s actually “Health Insurance Enrollment Season.”

With the Affordable Care Act (ACA or “Obamacare”) Enrollment Period in full swing, it’s critical to discuss your options as a business owner and make some strategic decisions. YES…you can actually be strategic with your health care insurance and out of pocket costs! Here are some essential items to keep in mind while you bargain shop this season.

First and foremost, remember the penalty for not having health insurance was repealed on January 1st, 2019. Thus, the government is no longer pressuring you to get insurance and hitting you over the head with a penalty if you don’t. YOU decide what the right choice is for you!

The Employed – If you have a W-2 job where your employer provides health insurance, don’t worry about the Enrollment Period or its Deadline. Follow your employer’s enrollment procedure and the deadlines they impose. Make sure to contact your employer to know when your enrollment period is and the procedure to be more actively involved and what your choices are…and keep reading below! There are strategies you can STILL take advantage of even if you don’t have a small business.

The Self-Employed or UninsuredIf you own a small business or are simply without health insurance, December 15th is a big deal. If you don’t act by December 15th and obtain health insurance coverage, you can’t get 2021 coverage unless you qualify under a Special Enrollment Period. These special exceptions are essentially defined as ‘life events’ which allow you to obtain health insurance any time of the year. The following are just a few of the special circumstances:

  • Losing health insurance coverage
  • Getting married
  • Having a baby
  • Moving
  • and many more…go here for the entire list of Special Enrollment exceptions.

Take the Deadline Seriously – I missed the deadline myself a year ago, and to be blunt, it was a nightmare! Even if you don’t use the ‘exchange’ (more on this below), independent insurance agents selling health insurance have to comply with the stringent ‘special enrollment exceptions,’ and it’s a miserable experience to try and get coverage again. I assure you that standing in line at the DMV for 5 hours would be a more pleasant experience than trying to get health insurance outside of the Enrollment Period. Again, the deadline is THIS December 15th, 2020, for obtaining insurance that becomes effective January 1st, 2021. Make sure you have your application in and don’t delay. Even though we are in the crazy “Covid 19 Year”, there hasn’t been any government talk about extending the enrollment deadline as they have done in year’s past.

“The Strategy” – Yes…there are truly several tricks or strategies to maximizing your tax-write offs and acquiring the correct health insurance policy. I’ve been teaching these techniques/approaches to my clients for years, and it’s saved them thousands of dollars.

First, DON’T get the ‘best health insurance,’ get the insurance that FITS YOU best. I know it’s hard to predict your health condition next year, but look into your crystal ball and do the best you can in deciding what insurance you may need. Then…

  • IF you are generally healthy, I would suggest you get a ‘high deductible plan’ that qualifies you for a Health Savings Account (HSA). See “The Power of Health Savings Accounts” for more information. This approach will save you in taxes and allow you to create a bucket of wealth you can take with you anywhere for the rest of your life. You can use an HSA to pay for health care costs and still have a health insurance policy to fall back on if things get bad, AND you can hopefully get some lower insurance premiums to boot! NOTE- When you are shopping for your insurance policy, you will typically look at a ‘Bronze’ plan (see Metal types below).
  • IF you have a lot of health challenges (like our family) 🙂 and have high health care costs; it’s in your best interest to push as many expenses onto the insurance company as you can. Shop for a policy with a lower deductible and an excellent co-pay plan. Of course, these premiums will generally be more expensive, but the plan’s increased coverage should make up for the cost of the better policy. If you are a small business owner, you will deduct your health insurance premiums and can also determine if you can qualify for and implement a Health Reimbursement Arrangement (HRA). See “How an HRA can Save You Thousands when facing health Care Costs” for more information. NOTE- When you are shopping for insurance policies, you will typically be looking for a Platinum or Gold plan (see Metal types below).
  • Finally, some people are now turning to “Health Care Sharing Ministries” as a more affordable alternative to traditional health insurance. Members of the group pay a monthly contribution/premium to a ‘shared fund’ and are required to also cover an initial percentage of their medical costs. Then the participants can receive ‘reimbursements’ for qualified medical expenses from . The goal is to cut out insurance companies and save costs. So far, they seem to be accomplishing what they set out to do. Enrollment in these ‘Ministries’ has doubled since the passage of the Affordable Health Care Act. See “What you Need to Know about Health Care Sharing Ministries (HCSM)” for more information. 

4 Metal Types of Insurance Plans – It’s important to understand the “Metal” classification of health insurance plans and the differences between each one. Essentially, you will have to choose between a Platinum, Gold, Silver, or Bronze plan, with each having different benefits, deductibles, and of course, premiums. Generally, the Platinum plans provide the greatest benefits and lowest deductibles. On the other extreme, the Bronze plans have high deductibles, which allow you to fund an HSA and tend to be the most affordable. Keep your anticipated health in mind as you try and choose the right type of plan for your situation.

To Exchange or not Exchange. Be aware of what enrollment options are available in your area. Are you using a State Exchange or HealthCare.gov? Also, don’t feel you are stuck with these exchanges either. They can be a great place to start but shop around to understand your options and then seek a provider directly or through an insurance agent. Also, don’t forget the “Open Market.”  The private marketplace for insurance is still alive and well.

Don’t Be Fooled! – The “Network” is the real issue. As you look closer, you will be surprised to see the wide range in premiums between the different types of “Metal” plans is NOT because of the deductible or even some of the co-pay benefits. The reason is “the network” of doctors that come with a particular plan. Many people don’t realize that the savings under certain policies are because the insurance company provides a smaller network of doctors under the plan and may get stripped of additional benefits, like dental or vision care.

The bottom line, I know how easy it is to get overwhelmed and frustrated when going thru the health insurance ‘shopping’ process. Knowledge is power, and you need to know there are options. Keep learning about the topic and hang in there. 

* To sign up for Mark’s weekly Free E-Newsletter and receive his Free E-Book “The Top 10 Best Tax Saving Secrets Everyone Should Know” visit www.markjkohler.com.

Mark J. Kohler is a CPA, Attorney, co-host of the Radio Show “Refresh Your Wealth” and author of the new book “The Business Owner’s Guide to Financial Freedom- What Wall Street isn’t Telling You” and, “The Tax and Legal Playbook- Game Changing Solutions For Your Small Business Questions” He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP.