Families come in all shapes and sizes. Some are dual-parent, some are single-parent, some are blended and some don’t fall into any of these categories. When you’re a single parent, you’re often solely or mostly responsible for meeting your children’s needs and that can feel overwhelming - especially when it comes to health insurance. If you are the parent responsible for your children’s health insurance, here’s a guide to choosing the right plan for your family.
Common insurance options
Before you can start assessing which options are best for you and your family, you need to know what the options are. As you’ll see below, some are the usual suspects like employer-sponsored insurance plans. But depending on your age and income level, you might be eligible for resources that don’t require you to pay full price for your family’s health insurance premium.
Employer-sponsored health plan
This is the health insurance option most people are familiar with. If your employer offers a health plan as a benefit of employment, it could come in the form of a Preferred Provider Organization (PPO), a Health Management Organization (HMO), and a Health Reimbursement Arrangement (HRA).
- PPO. Traditional PPOs tend to cast the widest net of in-network medical providers and usually offer partial coverage of out-of-network care. You get to choose the doctor’s you see without needing a referral and the annual deductible is usually low. The downside is that traditional PPOs also tend to have the highest monthly premium.
One form of PPO is a High Deductible Health Plan (HDHP). These typically have the lowest of the monthly premiums in exchange for a high annual deductible (most preventative care is 100% covered before the deductible is met). An added benefit of an HDHP is the ability to contribute to a Health Savings Account (HSA) into which you deposit pre-tax money to pay for qualified medical expenses, your deductible or to save for the future.
HMO. HMOs run differently from PPOs. They typically come with lower monthly premiums than PPOs and low to no annual deductible. But they have a narrower network of providers you can see and offer no coverage for out-of-network care. You must choose a primary care provider who manages your medical care, and you need his or her referral to see a specialist.
HRA. HRAs are a strategy smaller employers can use where they offer employees a set annual amount they can use to get reimbursed for approved medical expenses. With an HRA, you must pay for the medical care up front and your employer will reimburse you according to their policy.
Private market individual and family plans
If your employer doesn’t offer health coverage, or if it does offer a health plan but you determine it’s not right for you and your family, you can always purchase a health plan on the private market. You can find a wide range of PPOs, HMOs and HDHPs and depending on your income level, you might qualify for a government subsidy that results in low or no-cost premiums.
Medicaid is a government program that provides health coverage to low-income adults, families and children. In order to apply for the program you must meet your state’s designated income level requirement which could be a percentage of the federal poverty level (FPL) or a dollar amount based on household size. Check if you meet your state’s eligibility requirement to apply for one of the Medicaid programs.
Children’s Health Insurance Program (CHIP)
CHIP is a division under Medicaid that provides health coverage to children from birth to age 19. You can apply for CHIP for your child even if you’re not on Medicaid and states also have the option of covering pregnant women through CHIP. To see if you meet your state’s income eligibility for CHIP, refer to Medicaid's site.
Short term health insurance
Short term health insurance is intended to provide you with temporary health coverage during a lapse in permanent coverage. An example of short-term coverage many people are familiar with is COBRA, which is available to employees who have lost employer-sponsored health insurance. If you sign up for COBRA, you get to keep your previous employer-sponsored health insurance but you must pay 100% of the premium (Note: most employers pay at least 50% premium cost for employees).
You can also purchase short-term coverage in the private market. But be careful when considering these plans, they are expensive and are intended to offer coverage against catastrophic medical bills for a short period of time. They are not intended to be a long-term health insurance solution.
The Affordable Care Act (ACA) made it a requirement that health insurance plans cover dependents up to age 26. So if you’re under the age of 26, and your parents have employer-sponsored health insurance or a private plan, it could make sense to buy coverage as their dependent. It’s typically cheaper to add coverage for a dependent to an existing plan than it is to buy a separate health insurance plan.
Factors to consider as a single parent
In order to choose the best insurance coverage for your needs and the needs of your child, you’ll have to consider a few factors:
- Your health needs
- The health needs of your children
- The options for which you qualify
What are your health needs?
Choosing a plan that adequately covers both your health needs and those of your child is one of the best ways to ensure the insurance plan is also affordable. By adequate coverage we mean: the health plan covers care for chronic conditions you may have, regular prescriptions you take, and includes any doctors or other medical providers you see and don’t want to lose access to. If alternative treatments like acupuncture are important to you, make sure the health insurance plan includes at least partial coverage.
A great way to make sure you have the right level of coverage is to think back to the medical care you’ve needed in the past two years. And then to estimate what you know you’ll need this year. Then look for a plan that matches that.
What are your children's needs?
As a parent, it might feel comforting to have health insurance that pays the maximum for every possible scenario, especially if you have an accident-prone or dare devil child. But all-encompassing plans aren’t always the most economic choice for families. To make sure you have a health insurance plan that covers more of the medical care you need and less of the care you don’t, ask yourself: when have we needed medical care in the last two years? What are we likely to need in the coming year?
What are the options that meet those needs?
If your employer offers sponsored health insurance, this is usually the cheapest way to buy a family health plan since most employers cover a large percentage of the employees’ monthly premiums and usually a smaller percentage of dependents’ premiums. Even if your employer doesn’t help pay for dependents’ premiums, it still may be cheaper to add them to your plan as companies can negotiate cheaper rates than individuals.
Private market health plans
If you’re looking to purchase a family health insurance plan in the private market, you will notice that plans are broken up into four categories called tiers:
Bronze plans typically have the lowest premiums so the health plans are attractive, but they also have the highest out-of-pocket cost when you receive care and bronze deductibles can be thousands of dollars a year. Preventative medicine like wellness visits and vaccines are usually covered pre-deductible so if your children are generally healthy and see the doctor for wellness visits and the occasional illness like an ear infection or strep throat, this could be a good choice.
Silver plans typically have higher premiums than Bronze plans but more of your costs will be covered when you need healthcare. Silver deductibles are also usually lower than Bronze deductibles. Something to note about silver plans, is that you might qualify for cost-sharing benefits from the government. If you do, then you must order a Silver plan and your monthly premium could end up being cheaper than with a Bronze plan.
Gold health plans usually have high monthly premiums and low costs when you receive medical care. Gold plan deductibles are also usually low. If any of your children have conditions that need to be managed by a specialist, non-generic medication or with other medical care, a Gold health plan could be a good choice if you can afford the monthly premium.
Platinum plans have the highest monthly premium and the lowest costs when you get care (insurance usually pays about 90% of your costs). Platinum deductibles are also very low. Like Gold plans, Platinum plans are a good choice if your children require a lot of care and you can afford to pay high monthly premiums in order for more of that care to be covered.
If you need a little help deciding between health plans, check out Lively’s Health Plan Comparison Calculator.
Medicaid, CHIP, and your parents
Your ability to utilize any of these three options will be dependent on whether you qualify based on your income level or age. If your income is too high for you to qualify for Medicaid, but your child qualifies for CHIP, it might make sense to split up your health insurance.
You can get an individual plan for yourself through an employer, the private market or your parents (if you’re under the age of 26), and your child will receive coverage through the government program. If you purchase an HDHP plan for yourself, you can contribute pretax money into an HSA and use those contributions to pay for qualified medical expenses for you AND your dependent, even if your child(ren) aren’t covered under your health insurance plan.
Unfortunately, your parents can’t add your child to their health insurance plan as a dependent unless they are your child’s legal guardian and your child lives with them. If that’s not the case but you have the option to be added to your parent’s plan as a dependent, you could buy a separate plan for your child through the private market or CHIP (if you qualify).
Short term health insurance
Short term health insurance plans could be a good option if you’re trying to fill a short gap in employer-sponsored coverage. For instance, if you know you will be starting a new job in a month or two and just need insurance in case of an emergency.
Who pays for what?
Whether or not you’re divorced, if you have primary or sole custody of the children, generally speaking, you are responsible for providing their primary health insurance. The exceptions to this rule are these:
- The other parent has employer-sponsored health insurance and you do not
- There’s been a court order for the other parent to provide primary health insurance for the children.
If you receive child support from the other parent, you can use that money to pay for:
- Surgery costs
- Dental braces
- Special healthcare for any special needs your children have
Choose what's right for you
At the end of the day, the best health insurance plan will be the one at the nexus of what covers your children’s medical needs and what you can afford. You don’t want to be over-insured or insurance-poor. You want adequate coverage that allows you to have money for the other things in life.
Learn more with Lively
If you have specific questions about any of the options listed above, including how an HSA can help you save money on medical expenses, check out Lively’s huge library of resources. Want to learn more about setting up an HSA? Get in touch with us today.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.