The New Graduate’s Guide to Health Insurance

If you're picking a health plan on your own for the first time, now is the time to learn the basics. It's also time to work it into your budget.

“Health care is just going to be an expense you should plan for,” says Ellen FitzPatrick, health finance expert at Copatient, a company that helps consumers manage medical bills.

Even if some of these rules change in coming months or years, health insurance can protect you from financial crisis due to medical bills. Here's what you need to know before you choose a health insurance plan during this open enrollment period.

Now is the time to buy health insurance

You can only sign up for health insurance during certain times each year, called enrollment periods. If you get coverage from an employer, you'll pick a plan during your workplace open enrollment period. Employer open enrollment times are often in the fall.

Until you're 26, you can stay on a parent's health plan. After that, you'll need to buy health insurance yourself. If you're getting an Obamacare plan for 2017 on your own, you can shop during the open enrollment from Nov. 1 to Jan. 31. You can buy a plan:

• Through the federal or a state marketplace, depending on your state. They can all be accessed through Healthcare.gov.
• Through a health insurance quotes website.
• Through a broker.
• Directly from an insurer.

You must buy through a state or federal marketplace if you want to receive the health insurance subsidies that lower your monthly premium. Eligibility for a subsidy is based on your income.

After open enrollment is over, you won't be able to sign up for an Obamacare plan until next year unless you have a qualifying life event . Getting married, losing a job or a moving to another state all qualify you for a special enrollment period.

There's a possibility that Obamacare will be repealed or revised in 2017, but it's still a financial good bet to buy health insurance for 2017.

Don't overlook plan type

The two most common types of health plans are:

• Preferred provider organizations (PPOs) , which allow you to visit any hospital or doctor and have the plan pick up part of the bill.
• Health maintenance organizations (HMOs), which typically won't pay for any medical care if you see a non-network doctor, except in some emergencies.

There's a lot more to the differences between an HMO and a PPO , and there are other plan types such as point of service (POS) plans and exclusive provider organizations (EPOs). Provider networks offered by each plan are typically getting smaller each year, FitzPatrick says, so verify with your insurer or doctor's office that your doctor is in your network to keep costs low.

There are multiple costs to consider

The monthly premium is how much you pay each month to have insurance, whether you use it or not.

There are other important numbers to consider before you buy a health plan:

• Deductible: The amount you pay upfront for medical care or prescriptions each year before the plan kicks in and pays anything.
• Copayments: A flat price for care or treatment, such as $25 to see a primary care doctor or $10 for a generic drug.
• Coinsurance: A percentage of a medical charge you pay, such as 20% of a laboratory fee.
• Out-of-pocket spending limit: The maximum you'll spend on your own care in deductibles, copays and coinsurance before the plan pays 100% of your bills. In 2017 plans, this can be no more than $7,150 for an individual.

What health insurance will pay for

All health plans have to include the same 10 essential health benefits — outpatient care; inpatient care; emergency room treatment; maternity care; mental health/substance abuse services; prescriptions; services related to injury, disability or chronic conditions; lab tests; preventive services; and pediatric services, including vision and dental care.

Outside of the essential health benefits, insurers can cover what they want. The spending limit, copays, deductible and coinsurance only apply to benefits that the plan will pay for; if you need care that isn't covered, you'll pay full price.

A policy's summary of benefits that explains what's covered and how much it costs is typically available online (or from your employer) when it's time to choose a plan.

If you don't buy health insurance, you may have to pay a tax penalty

There is a penalty for not having health insurance if you go more than three consecutive calendar months without it. If you have insurance for part of the year, you pay the penalty for each full month you went without.

That penalty can be 2.5% of your modified adjusted gross income. If you choose not to have insurance in 2017, the penalty will come out of your tax refund for that year.

Lacie Glover is a staff writer at NerdWallet, a personal finance website. Email: lacie@nerdwallet.com . Twitter: @LacieWrites.