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Small Business Employee Benefits and HR Blog

How to Shop and Buy Health Coverage in 2016

How employees can shop and buy coverage in 2016This year, November 1 marks the time of year when anyone can sign up for individual health insurance again. It’s also the time of year when many small businesses adopt reimbursement programs to contribute to employees’ health insurance policies.

As employees come to you asking how to shop and buy health insurance coverage in 2016, here are ten simple tips to help.

Note - This blog post is from our new eBook, "Small Business Guide to Open Enrollment". To download the free resource, click here.

10 Tips on Buying Health Coverage This Year

1) This year’s health insurance sign-up period (“annual open enrollment”) lasts from November 1, 2015 to January 31, 2016. During this time, you and your employees can select a new individual health insurance policy, switch policies, or renew your current plan.

2) If you miss the annual sign-up period, you may have to wait until next year to enroll in coverage, unless you have a qualifying life event.

3) Individual health insurance plans are not new, but there are new advantages including choice, guaranteed coverage, portability, and lower costs.

4) When you apply for individual health insurance during the sign-up period, you’ll need to provide information about your household, income, and current insurance coverage. Gathering the necessary materials for open enrollment makes applying for coverage quick and easy. Download this free ebook for an application checklist.

5) As you shop for a health plan, understanding the standardized categories of coverage (“metal tiers”) will help you select the right health plan.

For example, if you anticipate using a lot of medical services, it makes sense to select a platinum or gold plan. Although the premium is higher, you will pay less out-of-pocket when you receive medical care. If you do not anticipate having a lot of medical needs, consider selecting a silver or bronze plan. Although there will be higher out-of-pocket costs when you need medical services, you will pay a significantly lower premium.

6) To select the right health insurance plan, it is also important to understand these five basic health insurance terms: premium, deductible, co-pay, coinsurance, and out-of-pocket maximum. Click here for a refresher.

7) Still unsure about which plan is best? Work with a licensed health insurance professional. It won’t cost you any more money, and they are pros at helping you evaluate options.

8) The premium tax credits provide significant savings to most Americans. In 2014, 87 percent of people who purchased a health plan through the federally-run Marketplace received a discount, paying only $82/month on average. You are eligible for a premium tax credit if you meet certain income requirements and do not have access to affordable health insurance through an employer or government program (such as Medicaid, Medicare, or CHIP).

9) Most Americans are now required to have health insurance, or pay a tax penalty if you don't. The penalty for not having “minimum essential coverage” in 2016 is either a flat fee ($695 for an individual, up to $2,085 for a family) or a 2.5 percent of household income, whichever is greater.

10) Employers can help employees pay for their premium by setting up a formal, tax-free healthcare reimbursement plan or providing a taxable health insurance stipend.

Bonus Tip - While employers can help employees understand the how to shop for and buy a plan, and offer a reimbursement plan to help cover the premium cost, employers should not be directly involved with the selection or purchase of an individual policy. Read here why.

Conclusion

As more and more small business employees shop for and purchase individual health insurance, it is common for employees to come to their managers for help navigating options. Unsure where to turn for resources? HR managers and small business owners can start with these ten tips.

What questions do you have about this year’s open enrollment period or about shopping for coverage? Leave a comment below. We’d be happy to answer!

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