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As individuals come together to form households, a lot of new couples combine health insurance coverage without thinking through the decision. Getting married is considered a qualifying life event that grants you access to a special enrollment period. That means you have 60 days after saying “I do,” to buy or switch healthcare plans. Time may be ticking, but take your time to consider your options and avoid a hasty shotgun health insurance decision.
Married Couples Can Come Out Ahead with Separate Health Insurance Plans
While you check the “married” box, you may want to keep your health insurance plan status as “single.” It might seem counterintuitive to do that since it’s often assumed that family health plans save money. But that’s not always true.
Sometimes going it alone with health insurance makes more financial sense. This is often true when people meet the love of their lives, but find their healthcare needs are far different. If one of you typically requires more medical services than the other or has a health condition that requires ongoing care, choosing separate health insurance policy might save you money.
5 Things to Consider When Deciding Whether to Keep Separate Health Plans
Shop carefully before buying new health insurance coverage on or away from the state-based or federal health insurance exchanges (aka Marketplaces) — or hopping onto your new partner’s employer-based coverage. Here are some things to consider carefully.
1. Deductibles
If you both expect a lot of healthcare costs, you may save by selecting two individual plans with lower deductibles as opposed to a family plan with a larger family deductible. This decision will take some number crunching, of course, to make sure the right combination of plans is a true value.
Also, if you and your spouse have widely different medical needs, you may come out ahead if one of you selects a high-deductible health insurance plan and the other a plan with a lower deductible. This choice can obviously backfire if you both end up using a lot of medical care in one year. However, if one of you historically uses health insurance for preventive care alone and rarely dips into your deductible, while the other always meets his or her deductible, you might come out ahead.
2. Premiums
When healthcare needs are disproportionate between spouses, it may seem obvious to select a low-deductible family plan that minimizes out-of-pocket costs. However, it is typical that a lower deductible comes with a higher monthly premium. Buying separate health insurance plans can help mitigate your premium spending. It’s a delicate balance but you can sometimes find the right combination after careful research.
The healthier spouse may decide a bronze-tiered plan, which tends to have the lowest monthly costs, best meets his or her needs, while the spouse that requires more healthcare opts for a gold-tiered plan, which tends to have out-of-pocket costs that max out at only around 10% of your medical bills. Using a hypothetical 30-year-old couple from Denver, note how the couple would save thousands of dollars in monthly premium and deductible costs by getting individual plans as described in Scenario A as opposed to a family plan in Scenario B:
Scenario A with Separate Plans: Total Expense
The healthier spouse chooses an HSA-qualified PPO bronze plan with a $6,250 deductible. It costs $212 per month without an Obamacare subsidy. After spending $6,250 to meet the deductible, the enrolled member pays nothing more in coinsurance for covered care.
The spouse with more healthcare needs chooses an HSA-qualified PPO gold plan from the same company. It has a $2,000 deductible and costs $317 per month without an Obamacare subsidy. The enrolled member pays no coinsurance for covered care beyond $2,000 to satisfy the deductible.
Over the year, this couple will pay $6,348 in health insurance premiums. What they pay toward deductibles will depend on how much healthcare they require. However, if the healthier spouse only uses preventive care as is typical for her, it is possible the couple will pay no more than his $2,000 in deductible costs for the year.
VERSUS:
Scenario B with One Family Plan: Total Expense
The couple decides to buy an HSA-qualified PPO gold plan from the same company in scenario A. They will pay $7,596 a year in health insurance premiums — $1,248 more than if they’d chosen separate plans according to their healthcare needs. In addition, the annual family deductible is $4,000 before the insurer begins paying the plan’s coinsurance.
3. Copayments
One of you may opt for a traditional copayment (or copay) plan that charges flat rates for certain covered care while the other decides to enroll in a high-deductible health insurance plan paired with a health savings account. If so, you could get the best of both worlds. Copayment plans often collect a bit higher monthly premiums, but they can save you money if you make frequent doctor visits. If you rarely see the doctor, it might be smarter to go with a high-deductible plan, which will have lower monthly premium costs. You could put the money you save on premiums towards a Health Savings Account, a tax-advantaged account specifically for people with high-deductibles.
4. Prescription Drug Deductibles
As with annual medical care deductibles, having separate health insurance plans may help you lower what you pay toward prescription drug deductibles. If one of you doesn’t take any medications and the other does, consider selecting plans that appeal to these needs. These prescription deductibles are in addition to your annual medical-care deductible. The total amount of your deductible costs — and whether it is combined for medical and prescription — will vary by plan.
5. Combined Deductibles
If you have combined deductibles, your medical and prescription costs will accrue in one total deductible. However, you may still have to pay some form of out-of-pocket cost-sharing, even after a deductible is met.
For example, Larry, whose health plan has a deductible of $3,000, spent $250 on prescription medication and $2,750 out-of-pocket on minor surgery so far this year. Thereby, he met his $3,000 deductible for the rest of the plan’s calendar year.
With his deductible met, going forward Larry figures he will only have to pay $10 for each refill of the generic prescription he buys and any coinsurance for future procedures or office visits.
Combined medical and prescription drug deductibles can be found in most bronze, silver and gold plans when shopping on the Health Insurance Marketplace.
The average plan combined deductible for the four standard tiers in 2021 are:
- Bronze: $6,921
- Silver: $4,816
- Gold: $1,641
- Platinum: $0
6. Separate Prescription Deductibles
Prescription costs alone count toward a plan’s separate deductible. Drug thresholds are usually much lower and easier to fulfill in a plan year than medical treatment deductibles.
Marketplace plans offer many gold- and platinum-tier prescription plans. In 2019, 48% of gold plans and 54% of platinum plans offered separate drug deductibles.
7. Personal Preferences
Each of you may have a preferred doctor, specialist, hospital or health insurance company. If so, take your preferences into account when choosing a health plan. One plan may not include you or your spouse’s preferred providers or hospitals in its network. Purchasing individual plans may cost you more out of pocket and for premiums. But that may be money well spent to get access to your preferred providers.
Ultimately, every couple should consider their options (including employer-based plans, state-based exchanges, the federal marketplace, the private marketplace). Think about your typical healthcare needs and any potential treatment in the coming year such as surgeries or having a baby. Then, compare individual vs. family health plan costs and benefits.
On a final note, though married couples can buy individual Affordable Care Act health plans, by law they must file a joint tax return in order to cut their monthly premium by collecting an Obamacare tax-credit subsidy. To qualify for the tax credit, you must meet income requirements and buy health insurance through a state-based exchange or the federal marketplace. Subsidies may be applied across multiple health plans.
