Health Insurance Basics: What You Need to Know to Apply

Health Insurance Basics

The passage of the Affordable Care Act (ACA), also known as Obamacare, in 2010 brought about a lot of change in regard to how a good portion of the American public shops for and otherwise obtains health insurance.

The most obvious example of the changes that have taken place in the ensuing five or so years can be found in the health insurance marketplaces (also called exchanges) that were set up in the ACA’s wake. People who don’t have adequate health coverage through an employer, Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), or some other source can use these federal or state-run websites to find and buy coverage that fits their needs and budget.

Another example, though, becomes visible when a person goes to fill out an application for one of these individual (or family) health insurance plans.

Before the Affordable Care Act went into effect, companies offering this kind of insurance would ask people to include all sorts of information on their applications, including the date they’d like their coverage to be effective and whether they or anyone else named on the application previously had been denied insurance or had an insurance policy canceled or rescinded.

Companies also asked applicants to share a bunch of health details about themselves and any other family members looking to be covered, and then often used this information to determine a person’s premium rates. (They also sometimes used this information, especially if it was incorrect, to terminate an approved insurance contract.)

Application Changes Brought About by the ACA

For the most part, the days of the above are over thanks to the Affordable Care Act. Applicants no longer have to identify when they want their coverage to go into effect because most of them only can apply during certain, strictly defined “open enrollment” periods (which begin near the end of the year), and the effective date of coverage for those folks usually falls on the first day of the following year.

(Some people will be able to apply for coverage outside of this window, during a “special enrollment period,” but they’ll have to have been kept from taking advantage of the open enrollment period by one or more of a handful of “life events” that are detailed in our article, “Understanding the Affordable Care Act.”)

Today, those applying for individual or family health insurance plans through the federal or state-run marketplaces no longer need to worry about providing the entire, intricate medical and health histories of themselves and their loved ones on their applications.

That’s because one of the main reforms attached to the ACA prohibited insurance providers from refusing to sell or renew plans because of a person’s pre-existing conditions or from charging higher rates because of a person’s health status.

As a result, one of the only health-related questions you’re likely to find on an application for this sort of insurance is: excluding religious and ceremonial use, have you used any tobacco products regularly (four or more times per week) within the last six months?

This question will show up from time to time—though not on applications related to the federal health marketplace or even a few of the state-based ones–because the Affordable Care Act allows insurance companies to charge people who use tobacco products up to 50 percent more for premiums. (Although it also allows states to mandate a lower percentage or no surcharge at all, and a number of states have taken the government up on the latter offer so far.)

Optional Health-Related Questions

The only other health-related questions you may encounter while filling out an application via one of the state-run health insurance marketplaces–you won’t see them mentioned on applications tied to the federal exchange—are likely to be optional.

For example, some state exchange plans application may  include a small section that asks people the following questions:

  • Have you thought about doing any of the following to improve your health: stop smoking, lose weight, or getting more exercise?
  • Do you or any of your dependents applying for coverage have diabetes, asthma, heart failure, coronary artery disease, chronic obstructive lung disease (COPD), or any other condition that is treated with medicine or limits activities?
  • Is there anything that stops you or your dependents from taking care of your health as well as you would like?
  • In the last three months, have you or your dependents gone to the hospital or emergency room for a condition other than an accident?

These questions aren’t included so the provider can deny coverage or increase the premiums of those who apply for health insurance, though; they’re asked so the provider can assist—using a range of support programs–people who may answer “yes” to one or more of them.

Basic Information

Other than that, applications tied to the federal and state exchanges focus on information that should be readily available or easily accessible, including the names, genders, dates of birth, and Social Security Numbers (or document numbers, for any eligible immigrants who need coverage) of anyone who may be named in the policy.

Health insurance applications also may ask you to share the following:

  • Employer and income information for you and your family members (taken from pay stubs, W-2 forms, or wage and tax statements)
  • Policy numbers for current health insurance plans
  • Information about job-related health insurance that’s available to you or your family
  • Any anticipated medical and prescription needs

As with the above, the point of these questions usually is to let you know if you qualify for any subsidies, credits, and the like, although some insurance companies will ask you to share this information (salary details, especially) for statistical purposes.

Qualifying Events

If you attempt to apply for health insurance after open enrollment has closed, you’ll also be asked to specify if one or more of a long list of “qualifying events” prevented you from picking a plan during that period.

Among the events that could qualify you to buy a plan as part of a special enrollment period are:

  • Losing your health coverage, including an employer plan (with some exceptions)
  • Permanently moving to an area where your prior health plan doesn’t provide coverage
  • Having a baby, adopting a child, or placing a child for adoption or in foster care
  • Getting married or entering into a domestic partnership
  • Finalizing a divorce or terminating a domestic partnership

Other Application Info That Impacts Your Premiums

Earlier, it was mentioned that the Affordable Care Act allows insurance companies to charge people who use tobacco products up to 50 percent more for premiums than people who don’t use them.

Aside from that, companies are only able to take into account the following four pieces of information—all of which are likely to be included on an application you fill out–when determining how much you’ll pay for health insurance:

  • Age—According to healthcare.gov, insurance providers can charge older people up to three times more for their premiums than younger people.
  • Individual vs. family—You may end up paying more than you would otherwise if the plan you’re applying for will cover a spouse or one or more dependents.
  • Plan type—The type or category of health insurance plan you purchase from the federal or state marketplaces determines how much you’ll have to hand over for premiums and out-of-pocket costs.
  • Where you live—This can have a big impact on the size of your premium payments thanks to things like the cost of living in your particular area, competition, and regulation.

Other Things to Consider Regrading Premium Costs

You can save money on your health insurance premiums by selecting higher deductibles. Examine the insurance quotes sensibly; if you have to pay more out-of-pocket expenses for the benefits you use the most, even the low-cost plan might end up costing you more in the end.