Buying health insurance for the first time can be overwhelming, but it doesn't have to be. We break down how to decide where you’ll buy insurance, how to choose a plan that works for you, costs to consider, and how to enroll to start your coverage.

Confused about buying health insurance? You’re not alone. Purchasing health insurance can be extremely complicated, especially if you’re getting insurance for the first time on your own.

After I turned 26 and was dropped from my parent’s policy, I spent hours researching the various plans, benefits, prices, and companies. But ultimately, I ended up with more questions than answers and just settled on the cheapest policy I could find.

Fast forward to today. I’ve had my own medical coverage for a few years, which has given me time to learn the ins and outs of health insurance. If you need help choosing the best health insurance plan, I can help you get started.

To get health insurance, first decide where you will purchase coverage

As a (perhaps obvious) first step, you need to decide where you are going to purchase the plan. There are two main ways you can get health coverage: through your employer or through your state’s Health Insurance Marketplace.

Read more: FAQ: The young adult’s guide to affordable health insurance

Through your employer

Most people have health insurance through their employer, which is called group health insurance. Of the 92% of Americans who have health insurance, more than 56% get insurance through work, according to 2019 data from the CDC.

If you have a full-time job, you probably have access to health insurance as an employee benefit. Typically, your employer offers several health insurance plans from one company, like Aetna or Blue Cross Blue Shield. 

When you start the job, you’ll be given the option to enroll in one of the company’s health insurance plans within a certain period of time (i.e., 30 days). The biggest benefit of group health insurance is that the rates are usually more affordable because your company pays a portion of the premium.

However, keep in mind that if you get group health insurance, you will have fewer plan options to choose from. For example, your company might offer an HMO and PPO plan, but not an EPO plan (we’ll talk more about specific plans later). 

If you choose to get health insurance through your employer, all you have to do is pick your plan. Your company’s benefits administration should handle the rest. Plus, the monthly premium comes directly out of your paycheck, so you never actually see that money.

Through the state Marketplace

The other way you can get health insurance is through your state’s Health Insurance Marketplace, thanks to the Affordable Care Act (ACA), which expanded health insurance access for uninsured individuals. 

Getting insurance through the Marketplace can be more complicated than getting insurance from an employer. However, it’s a good option for some people, including those who are self-employed or unemployed.

Also, if you qualify for Medicaid in your state, which provides affordable health insurance for low-income individuals, you can only get insurance through the Marketplace. The same goes for families who qualify for a tax credit, or the Children’s Health Insurance Program (CHIP).

How To Pick A Health Insurance Plan - Healthcare.gov front page

To get health insurance through the Marketplace, you can visit HealthCare.gov and click the “Take the first step to apply” button. From there, you will be asked to input your state. If your state has its own insurance Marketplace, you will be redirected to that website. Otherwise, you will be brought to the federal health insurance website.

So, what are the pros and cons of private insurance through the Marketplace? The biggest advantage is that you have the widest range of plan options and providers to choose from. Unlike group health insurance, you probably won’t be limited to just two or three options.

On the other hand, health insurance through the state Marketplace is usually more expensive. Depending on the plan you choose, and whether you qualify for premium tax credits, it can be significantly more expensive than insurance through an employer.

Another thing to know about getting health insurance through the state Marketplace is that you can’t purchase coverage whenever you want. You have to get coverage during the annual Open Enrollment period, or during a Special Enrollment Period if you have a “Qualifying Life Event.”

Here’s what you need to know about these eligibility periods:

Get coverage during Open Enrollment

Open Enrollment happens once per year, usually between November 1 and December 15. During this time, you can enroll in a new health insurance plan, or switch plans for the coming year. 

Keep in mind that when you purchase health insurance during Open Enrollment, your benefits may not take effect immediately. Usually, your coverage begins in early January, and your current plan remains valid until that time.

Get coverage after a Qualifying Life Event

A Qualifying Life Event allows you to buy health insurance at any point during the year through a Special Enrollment Period. However, you must purchase insurance within 60 days of the qualifying event. After that time, the Special Enrollment Period ends.

Common examples of Qualifying Life Events include:

  • Moving to a new state.
  • Getting married (or divorced).
  • Giving birth or adopting.
  • Turning 26 and losing coverage from a parent.
  • Losing insurance through your employer.

You can see more Qualifying Life Events on HealthCare.gov.

Next, compare the plans available

Once you’ve decided where you will purchase a health insurance plan, the next step is to compare the various plans available. This part can be confusing, so take some time to get familiar with the plans and how they differ.

Here are the most common types of health insurance plans you can get:

Plan typePlan overview
Health Maintenance Organization
(HMO)
- In-network care is fully covered.
- If you visit a provider out-of-network, you are responsible for 100% of the cost.
- Referrals are required in order to see a specialist.
- Low or no deductible.
Preferred Provider Organization
(PPO)
- One of the most flexible health insurance plans.
- In-network services are covered in full, and out-of-network services are partially covered.
- Don’t need a referral to see a specialist.
- Deductible is usually required.
Point-of-Service
(POS)
- Hybrid plan that combines an HMO and PPO plan.
- In-network services are covered in full, and out-of-network services are partially covered.
- Referrals are required in order to see a specialist.
- Low or no deductible.
Exclusive Provider Organization
(EPO)
- In-network care is fully covered.
- If you visit a provider out-of-network, you are responsible for 100% of the cost.
- Similar to an HMO, but with a larger provider network.
- Referrals are usually required in order to see a specialist.
- Low or no deductible.
High Deductible Health Plan
(HDHP)
- Most health plans have a high-deductible version, which have lower monthly premiums.
- Often supplemented with a Health Savings Account (HSA) to offset some of the deductible cost.
Catastrophic Health Plan- Only available for people under 30 who cannot get employer or Marketplace coverage due to a hardship exemption or financial exemption.
- Covers all essential health benefits and some preventive services.
- Low premiums with a fixed deductible of $8,150.
- Services are covered at 100% once you reach the deductible.

Read more: Understanding your health insurance: deductible, co-pay, co-insurance, and out-of-pocket-maximum

Consider the out-of-pocket costs 

It’s no secret that health care plans can be expensive, whether you buy a plan from your employer or the state Marketplace.

Once you’ve narrowed down your options and you have an idea of what plan type is right for you, it’s a good idea to compare the out-of-pocket costs of each

Here are some of the monetary considerations you will want to think about when buying health insurance.

  • Premium: This is the cost of keeping your policy in force, which depends on things like your age, where you live, and whether you smoke. It is also based on the type of plan, deductible, and out-of-pocket costs.
  • Deductible: The deductible is the amount you’re responsible for paying towards covered medical services before your insurance company will start paying.
  • Out-of-pocket maximum: This is the amount of money you are required to pay towards covered medical services in a given year. Once you reach the maximum, your insurance policy covers 100% of your covered medical expenses.
  • Copayment or coinsurance: Some health insurance plans have a copayment or coinsurance. It’s a fixed amount of money you have to pay towards covered services once you’ve reached your deductible. 

Apply, review the plan options, and get a quote

When you apply for a health insurance policy, either through your employer or the Marketplace, you will be presented with your plan options. These are based on your location, age, income, and dependents if you need to insure a child or spouse. You will also find out if you are eligible to receive any tax credits.

Once you input your personal information, you will be presented with a variety of plans to choose from. You will see the name of the plan, the provider, the premium, and the out-of-pocket costs, like the deductible, and copay.

In addition to the plan information, you will also see the plan tier. All health insurance plans fall within a tier: Bronze, Silver, Gold, or Platinum. These categories correlate to the amount of money that your insurance company will pay and the cost.

Here’s a closer look at the differences between the health insurance plan tiers

Plan tierTier overview
Bronze- Insurance company pays 60%, you pay 40%.
- Lowest premiums and highest out-of-pocket costs.
Silver- Insurance company pays 70%, you pay 30%.
- Moderate premiums.
- Lower deductible than Bronze plan.
Gold- Insurance company pays 80%, you pay 20%.
- High premiums with a lower cost of care.
- Lower deductible than Silver plan.
Platinum- Insurance company pays 90%, you pay 10%.
- Most expensive premiums with the lowest cost of care.
- Very low deductibles.

So, which plan should you choose?

To narrow your choices, it really comes down to what you’re looking for in a health plan. 

For example, if you have a doctor you enjoy working with, you’ll want to pick a plan that covers their network. If you want a plan with a high level of coverage, only look for Silver, Gold, and Platinum plans. If you care most about getting the lowest premium, filter the results to show plans under a certain monthly cost.

Next, look at the fine print for each plan you’re comparing. If you purchase a plan online through the Marketplace, you’ll see a button for “view plan details,” or something similar.

The plan details provide a comprehensive summary of the policy, including the costs, what types of medications are covered, what hospital services are covered, what surgeries are covered, and how much the plan covers for each service or treatment

Depending on your state’s Marketplace website, you might also be able to select several plans and compare them side-by-side.

Purchasing a health plan through an insurance aggregator

If you want to explore your plan options further, you can consider applying for health insurance through an insurance aggregator, like Policygenius.

The application process is similar — you’ll input your location, income, and some other personal information, like your desired monthly budget and list of medications. Based on your responses, the aggregator’s algorithm will match you with a variety of plans that are best suited for your needs.

If you’re purchasing health insurance on your own for the first time, using an aggregator can simplify the process tremendously. You’ll spend less time comparing plans individually, reading the fine print, and calculating the out-of-pocket costs, like you would with a Marketplace plan. 

However, the downside of using an insurance aggregator is that you might not get access to the same range of plans you would get through the Marketplace. For example, if you are interested in an EPO plan, a site like Policygenius might not offer that type of plan in your area.

Read more: Policygenius review

What to expect after you enroll

Once you choose a health insurance plan, the only thing left to do is enroll.

If you are purchasing coverage through your employer, you can simply let the benefits administrator know which one you want to enroll in, and they will do the rest.

If you buy coverage through the Marketplace or an insurance aggregator, you can choose your plan and complete the checkout process online. Remember that the cost of the plan is the amount you will pay on a monthly basis.

People who purchase health insurance after a Qualifying Life Event can typically get coverage within a day or so. Without a Qualifying Life Event, you might have to wait several weeks for your coverage to take effect. Before you purchase the policy, you will get to choose the start date.

Summary

Although navigating the world of health insurance can be complicated, it doesn’t have to be. You just need to have a basic understanding of what the plans cover, how much they cost, and what type of benefits they provide (easier said than done, I know.)

Purchasing health insurance for the first time is a big step for Millennials and Gen Z, and if you’re still on the fence, know that having health insurance is a great investment in your well-being. In my opinion, it’s well worth the cost.

Most of us have experienced unexpected medical issues, like an unplanned surgery, an injury, or just a trip to the local urgent care center. Without health insurance, you’re responsible for covering these costs out-of-pocket, which can get very expensive.

So, before you purchase a health insurance plan, follow the steps in this guide to make the process as easy as possible. It takes some time and research, but having health insurance offers valuable peace of mind, and it could save you lots of money in the long run. 

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About the author

Total Articles: 21
Elizabeth Rivelli is a freelance writer specializing in insurance and personal finance. She has more than five years of experience in blog writing, social media management, and content marketing. Elizabeth's insurance writing has been featured in dozens of online publications, including Investopedia, The Balance, Forbes, Bankrate, NextAdvisor, and Insurance.com. She has also written for several insurance carriers. Elizabeth holds a degree in Communication Studies from Northeastern University in Boston. She has been living in New England for over a decade.