Health insurance can be a confusing subject for many people. As a single mother, it can be especially difficult to find and choose the right insurance coverage for you and your family.
Finding Health Insurance
The best place to start is with a basic understanding of the different health insurance options available for you and your children. Your choices will include federal programs like Medicaid, employer insurance plans, private insurance policies, or insurance from the children's father. While it may seem overwhelming at first, when you break things down into simple terms and evaluate each option individually, you'll find it's not as complex as many people make it out to be.
Excepting Medicaid, single mothers should be able to qualify for the insurance plans outlined below through your employer or through the official health insurance marketplace if you're not satisfied with what your employer offers.
The primary goal of Medicaid is to provide healthcare coverage to those who can't afford to purchase health insurance on their own. Federal and state governments jointly manage the Medicaid program, but each state oversees their own, which must follow certain guidelines to qualify for federal funding. Because each individual state runs Medicaid, however, qualification requirements and benefits will vary some from state-to-state. You'll want to first check the requirements in your home state to see whether you and/or your children qualify for coverage from Medicaid.
Income levels that are used to determine if someone qualifies for Medicaid coverage are expressed as a percentage of the federal poverty level. Each state sets their own requirements. To be eligible for Medicaid coverage, your income would need to be at or under the required percentage. Any child support you receive will count as income for eligibility. Likewise, other assistance payments, such as Social Security, are considered income. Below are some examples of the income requirements for a family of three in the two highest and two lowest states.
Maximum income as percent of Federal Poverty Level
Several basic factors determine eligibility for Medicaid coverage, including:
- Income level
In some states, your income level may mean your child qualifies for free coverage, but you do not. You may also qualify for insurance for your child under the Children's Health Insurance Program (CHIP), which is offered on its own through Medicaid, as well. CHIP is managed at the state level, so qualification requirements vary. Both programs may go by different names in some states.
Copay plans are the health insurance policies that most people are familiar with. If you've ever had insurance through your employer, you most likely had a copay plan. Single mothers may find a copay plan useful if their child is frequently ill because it helps to lower the amount you must pay each time you visit a doctor.
This type of policy usually has higher monthly premiums than other types of health insurance plans, but it limits the amount you have to pay out-of-pocket for your health and medical costs. When someone with a copay plan visits a doctor, that person only pays a small amount, usually between $25-$50 per office call. The insurance company pays for everything else. Copay plans typically also include coverage for prescription drugs, another benefit for mothers of children who need regular medications or who are prone to catching colds and viruses that require antibiotics.
With most copay plans, there is also a deductible for medical expenses that are not covered by the normal copay insurance. This can include things like hospitalization, certain medical tests, chiropractic, and other procedures that do not fall under preventative care. The exact amount of the deductible and what is or is not covered by the copay portion of the policy will vary by insurance company.
A high-deductible plan has lower monthly premiums than a copay plan, but requires that the policyholder pay for their own medical costs until a yearly deductible is met. Once that point is reached, the insurance company pays for any additional medical expenses incurred for the year.
In general, this type of policy is recommended for people who are healthy and don't see doctors regularly but still want to have insurance coverage in case of an accident or major illness. This type of plan offers the advantage of lower monthly costs, which can be helpful for low-income, single mothers. However, if your child is injured or becomes ill, you will be left paying for them to receive care and most medications. Basic preventative services, such as annual physicals, vaccines, and generic drugs are usually still covered at very low or no cost.
Of course, there are disadvantages as well. The insured person must pay for all but the most basic health costs out-of-pocket until the deductible is met. In many cases, charges from out-of-network providers or drugs are not counted toward meeting deductibles.
Health Savings Accounts
Health Savings Accounts (HSA's) are a slight variation on the high-deductible policy. The basic premise is the same, but HSA's also have a special savings account that allows the policyholder to save money in a tax-free account to help pay for yearly deductible costs.
To meet the ACA insurance requirements and avoid penalties from the IRS, an HSA must be paired with a qualified insurance plan. For 2015 and 2016, any self-only coverage with a deductible of $1,300 or more, or family coverage with a deductible of at least $2,600, will qualify. This is a great option for families, and especially for single parents, but may be out of reach for many people if their employer does not provide this type of coverage.
Short-Term Health Insurance Policy
A short-term insurance policy fills in the gaps for someone who needs health insurance for a short period. This could be a great option for single mothers who find themselves in between two jobs and needing coverage for themselves and their child. When they begin a new job and receive their new insurance plan, the short-term policy can then be dropped.
Short-term insurance usually has two different types of payment options. If you know how long you will need coverage, you can purchase it for that fixed period. If you are unsure of the exact period you will need the coverage, however, you should be able to set up a plan with monthly premium payments for anywhere from six to twelve months.
Father's Insurance Plan
Depending on your child support and custody agreement, your children's father may be required to carry health insurance for them. Talk to your attorney about health insurance requirements for your children, as well as which of you (if not both of you) is required to maintain health insurance. It is important to make sure at least one of you is covering your children's health insurance, so this is typically part of any parenting and support plan.
Costs To Consider
When considering healthcare insurance costs, it's important to not only look at the premiums you will have to pay, but how much you could potentially have to pay in deductibles and copays over the course of a year. In general, the higher the premiums you pay, the lower your out-of-pocket expenses will be and vice versa. Paying lower premiums may not be to your advantage if you will be making regular visits to the doctor and have to pay larger copays, which is likely if you have young children or have children who get sick often. To get an idea of what different types of plans will cost, you can get estimated yearly premium and out-of-pocket costs by entering some basic information about you and your family on the Healthcare.gov plan comparison page.
It's also important to note that under the ACA, your child must have health insurance, or you will be subject to penalties from the IRS. The coverage can come from Medicaid/CHIP, from you, or from the other parent, but if the child is not covered, the person claiming the child as a dependent on their tax return will be responsible for paying the penalty. For single mothers and particularly those who are low income, this cost can become yet another financial burden.
Advantages and Disadvantages
If you have the choice of coverage from your employer or coverage provided through the Affordable Care Act (Obamacare), you'll want to consider the advantages and disadvantages of both options. The costs, items covered, and healthcare locations available to you will vary.
Affordable Care Act
- Some people qualify for subsidies to help with premiums and out-of-pocket expenses
- No rejections for pre-existing conditions
- Broad coverage for prescription drugs
Disadvantages are as follows:
- May include benefits you don't need
- Can be expensive if you don't qualify for subsidies
- Bronze plans have very high deductibles
- Many plans have restrictive limits on available healthcare providers
- Enrollment limited to specific annual periods
- A broad array of health insurance benefits
- Generally lower premiums because of employer subsidies
- Employer subsidies are not taxable benefits for employees
- Maximum of 12 months that coverage can be denied for a pre-existing condition
Disadvantages are as follows:
- Coverage stops if employment ends for any reason
- Insurance choices are limited to a selection approved by the employer
- Smaller employers often provide smaller subsidies than larger employers
Choose What Works for You
Finding the best type of healthcare coverage for you and your children will depend on your income, where you live, and the type of coverage that will best suit your situation. Besides online resources, discussing your needs with a private insurance agent or your employer's insurance provider will shed additional light on the types of policies available, as well as their associated premiums. While it will take time to evaluate all of your options, following the general guidelines outlined here will help you identify what makes most sense based on need and affordability.