Self-Pay Health Insurance

Summary of Self-Pay Health Insurance

by Quint Tatro & Daniel Czulno, CFP® a passionate look at everything money from budgeting, savings, investing, stocks, bonds, debt. For those that enjoy Dave Ramsey, Jill On Money, Smart Money, BiggerPockets it’s worth a listen!, Bleav

15m•November 17, 2025
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Overview of Self-Pay Health Insurance (DIY Money — episode)

This episode of DIY Money (hosts Allie and Logan) answers a listener question from Caroline — a 25‑year‑old turning 26 who will lose her parents' insurance and needs to pick a self‑pay plan (her employer — a private household — will cover the premium but not via a group plan). The hosts explain where to look for coverage, how plan types differ, alternative options (COBRA, state exchanges, gap insurance), how income and government subsidies affect cost, and practical steps to choose the right plan.

Key points & main takeaways

  • If your employer offers group health insurance, it’s usually the best first option — but not all employers (like private households) can offer that.
  • Most people without employer coverage buy through the health insurance marketplace/exchange (healthcare.gov or a state‑run exchange).
  • Plan tradeoff: lower monthly premium usually means higher deductible and more out‑of‑pocket risk (high deductible plans); higher premium usually lowers your deductible and out‑of‑pocket costs (e.g., PPO‑like plans).
  • Income determines eligibility for premium tax credits (subsidies). At the time of the episode, expanded premium tax credits were active through Dec 31, 2025, but future availability was uncertain — check current law before enrolling.
  • Alternatives to marketplace include COBRA (temporary extension of employer plan), purchasing via private brokers/agents, or employer‑offered gap coverage for early retirees.
  • Check provider networks, prescription coverage, deductibles, out‑of‑pocket maximums, and HSA eligibility when comparing plans.
  • It’s often worth consulting a local expert/broker — especially if you have upcoming surgery or ongoing health needs — because shopping exchanges can be confusing.

Plan types explained (simple)

  • High Deductible Health Plan (HDHP)
    • Lower monthly premium, higher deductible (you pay more up front).
    • Often HSA‑eligible (tax‑advantaged savings for medical expenses).
    • Good if you’re generally healthy and want lower monthly cost.
  • Lower Deductible / Higher Premium Plans (PPO/managed care variants)
    • Higher monthly premium, lower deductible and more coverage early.
    • Better if you expect significant upcoming medical costs (e.g., surgery).
  • Important metrics to compare across plans:
    • Monthly premium
    • Deductible
    • Out‑of‑pocket maximum
    • Network of providers (are your doctors/hospital covered?)
    • Prescription drug coverage and tiers
    • HSA eligibility (if you want the HSA benefit)

Other coverage options

  • Marketplace / Exchange
    • Nationwide: healthcare.gov for federal marketplace states.
    • Some states run their own exchanges — search “[Your state] health exchange.”
    • You’ll input expected income and household info to see plans and subsidy amounts.
  • COBRA
    • Temporary extension of previous employer’s plan (usually more expensive because you pay full cost + admin).
    • Duration can be 18–36 months depending on situation.
    • Run the math — sometimes marketplace plans with subsidies are cheaper than COBRA.
  • Gap insurance / employer continuation for early retirees
    • Some employers offer group continuation or “gap” coverage for people retiring before Medicare (e.g., ages 60–65). This can be cheaper than buying a new individual plan.
  • Private broker/agent
    • Can save time and help pick the right plan (may charge a fee or be paid by carriers). Useful when you have complex needs or imminent surgery.

Actionable checklist for someone like Caroline

  1. Gather facts
    • Expected household income for the year (critical for subsidy estimates).
    • Dates of coverage loss and surgery date.
    • List of current doctors, preferred hospitals, and prescription meds.
  2. Check employer offer
    • Confirm the household employer will pay the premium and how they want you enrolled (will they reimburse, pay directly, or expect you to choose and submit receipts?).
    • Ask whether they can offer a group plan or COBRA.
  3. Visit the right exchange
    • Go to healthcare.gov (or your state’s exchange) and create an account.
    • Enter income and personal info, then compare plans.
  4. Compare plans side‑by‑side
    • Verify network (are your surgeons/hospital in‑network?).
    • Compare premiums, deductibles, OOP max, and prescription coverage.
    • Consider HSA eligibility if you want to save pre‑tax for medical costs.
  5. Factor in upcoming surgery
    • If surgery is imminent, favor lower deductible/lower OOP options if they materially reduce your expected out‑of‑pocket cost.
  6. Consider expert help
    • If overwhelmed or you have complex needs, contact a local broker or certified navigator.
  7. Enroll before the coverage gap
    • Watch open enrollment deadlines and qualifying life event windows so coverage starts when you need it.
  8. Keep documentation
    • Save receipts and enrollment confirmations; if using an HSA, track qualified expenses.

Tips & pitfalls

  • Don’t pick a plan based solely on a low monthly premium — a low premium plan can cost far more if you need surgery or other major care.
  • Always confirm your providers are in‑network for the plan you choose; out‑of‑network costs can be dramatically higher.
  • If subsidies are available where you live, income is the key driver — a small change in reported income can materially change your monthly cost.
  • Marketplace websites can be slow/confusing; allow time and ask for help if needed.
  • If your employer will pay, clarify whether they will pay directly to the insurer or reimburse you — this affects timing and proof needed for enrollment.

When to get professional help

  • If you have scheduled surgery or ongoing medical conditions.
  • If you’re unsure how to estimate your annual income (it affects subsidies).
  • If you’re comparing COBRA versus marketplace and the math looks close.
  • If your state has a complex, state‑run exchange — certified navigators and brokers can guide enrollment without cost in many cases.

Resources

  • healthcare.gov (federal marketplace) or “[Your state] health exchange” for state sites
  • Local certified navigators or independent insurance brokers (search “[your city] ACA navigator”)
  • Employer HR / household employer to confirm coverage options (COBRA, gap, or direct premium payment)
  • HSA information from IRS (if considering HDHP + HSA)

Final note: Government subsidy rules were in flux at the time of the episode (the expanded premium tax credit coverage was in place through Dec 31, 2025). Before enrolling, verify the current subsidy rules and deadlines so you’re basing decisions on up‑to‑date policy.