Choosing the right health insurance plan is one of the most important financial choices you’ll ever make. As healthcare costs rise and plan options become more complicated, knowing how to compare and evaluate plans can save you thousands of dollars and make sure you get the coverage you need. This complete guide will help you think about all the important things you need to think about when choosing health insurance.
Getting the Basics Down
Before comparing plans, it’s important to know some important health insurance terms that will affect your costs and coverage:
The premium is the amount you pay each month for your insurance plan, even if you don’t use any healthcare services. The deductible is the amount you have to pay out of your own pocket before your insurance starts to pay for things. Copayment, or copay, is a set amount you pay for certain services, like seeing a doctor or getting a prescription. Coinsurance is the part of your costs that you pay after you meet your deductible. Lastly, the out-of-pocket maximum is the most you’ll have to pay for covered services in a year.
Step 1: Figure out what kind of care you need
Take an honest look at your current and future healthcare needs to begin. Think about how often you see a doctor, any long-term health problems that need ongoing care, any prescription drugs you take regularly, and any big changes you want to make in your life, like having a baby or having surgery.
You might want to look into a high-deductible plan with lower premiums if you don’t go to the doctor very often and are generally healthy. But if you have ongoing health problems or take expensive medications, a plan with higher premiums but lower deductibles and copays might be cheaper in the long run.
Step 2: Learn about the different types of plans
Different types of plans have different levels of flexibility and costs. Health Maintenance Organizations (HMOs) usually have lower costs, but you have to choose a primary care doctor and get referrals for specialists. Most of the time, you can only see providers in the plan’s network.
Preferred Provider Organizations (PPOs) give you more options. You can see specialists without a referral, and they cover some out-of-network providers, but they cost more. Point of Service (POS) plans are a mix of HMOs and PPOs. They require you to have a primary care doctor but also cover some services outside of your network.
High Deductible Health Plans (HDHPs) and Health Savings Accounts (HSAs) can help healthy people save money on taxes and for future medical costs.
Step 3: Figure out how much everything will cost.
When you compare plans, don’t just look at the monthly premiums. Add up your premiums, estimated deductible costs, copays for regular services, and prescription costs to get an idea of how much you will have to pay each year. Think about what could happen to your health in the best and worst cases.
For instance, depending on how much you use healthcare, a plan with a $200 monthly premium ($2,400 yearly) and a $1,000 deductible might cost less overall than a plan with a $300 monthly premium ($3,600 yearly) and a $500 deductible.
Step 4: Look at the networks of providers
Check to see if the plan’s network includes the doctors, specialists, and hospitals you want to use. Care that is not in your network may cost a lot more or not be covered at all. If you have a good relationship with your healthcare providers, call them to find out which insurance plans they accept.
If you have long-term health problems, you should pay special attention to specialist networks. Your primary care doctor might be in your plan, but your cardiologist or dermatologist might not be, which could lead to unexpected costs.
Step 5: Check the coverage for prescription drugs
If you take medicine on a regular basis, be sure to read the formulary (list of covered drugs) for each plan. Not only should you check if your medications are covered, but you should also check which tier they are in, since this will change the amount of your copay or coinsurance.
Some plans may require prior authorization or step therapy (trying cheaper options first) for some drugs. Take these possible costs and barriers into account when making your choice.
Step 6: Think about other benefits
Most modern health insurance plans offer more than just basic medical coverage. These could be telehealth services, mental health coverage, wellness programs, gym memberships, or services that help you stay healthy.
Look at these extras and see if they fit your needs and lifestyle. If you travel for work a lot, strong telehealth options might be useful. If you want to stay healthy, look for plans that cover all of your wellness needs and screenings.
Things to Think About
Your insurance needs can change a lot depending on your life situation. Families should think about things like pediatric coverage, maternity benefits, and family deductibles compared to individual deductibles. Young adults may care more about lower premiums and catastrophic coverage, while older adults usually do better with more complete coverage.
If you’re self-employed or between jobs, you might want to look into short-term plans or COBRA continuation coverage as temporary solutions while you look for long-term coverage.
Deciding What to Do
Make a chart that shows the most important features, costs, and network providers of your top plan choices. Don’t rush this choice. Take your time reading the plan documents and calling insurance companies with specific questions about how coverage works.
You might want to talk to a licensed insurance broker who can give you personalized advice based on your situation. Many brokers don’t charge consumers fees and can help them figure out complicated plan options.
Check and Change Every Year
Your health care needs and situation change over time, so every year during open enrollment periods, look over your plan choice. Things that worked well last year might not be the best choice for this year, especially if your health, income, or family situation has changed.
Keep track of all your medical bills throughout the year so you can make better choices about your plans in the future. This information will help you make better guesses about how much things will cost and see patterns in how you use healthcare.
Final Thoughts
You need to weigh the cost, coverage, and convenience of different health insurance plans against your own needs in order to choose the best one. The process may seem overwhelming, but taking the time to carefully consider your options will help you choose a plan that protects your finances and gives you access to good medical care.
Keep in mind that the plan with the lowest price isn’t always the best deal, and the plan with the highest price isn’t always the best fit for your needs. For your health and financial situation, look for the plan that gives you the best mix of coverage, network access, and total cost.
