Advertisement
Suggestions for Choosing a Health Insurance Plan
Tips for selecting a health plan
Get Familiar with the Basic Terms
Knowing a little about the basics of health insurance can save you a lot of confusion when selecting the right plan for you and your family. While it’s easy to get lost in all the jargon, there are few key terms that essential to understand. For those who’re new to health insurance, terms such as premium, deductible, copay, out-of-pocket maximum, and coinsurance can be a bit overwhelming.
The premium refers to the amount you pay every month for your health insurance whether or not you use medical services. The deductible is the amount you have to spend on covered services before the insurance starts to pay. Copay is a fixed amount you pay for a covered service, usually at the time of service. Out-of-pocket maximum is the most you could pay during a coverage period for your share of the covered services. Coinsurance is your share of the costs of a covered service calculated as a percent of the allowed amount for the service.
As an illustration, let’s say if your deductible is $500, you pay the first $500 of your medical expenses per year. After that point, your insurance company will start covering a portion or entirety of additional costs.
- Understand how premiums work
- Know your deductible and what it covers
- Understand what a copay is
- Recognize the implication of out-of-pocket maximum
- Know what coinsurance means in relation to your chosen plan
- Ensure you comprehend all these terms and how they apply to each potential plan
Consider Your Health Needs
Before choosing a health plan, consider your healthcare needs. Are you generally healthy and only need to visit the doctor occasionally for check-ups or minor illnesses? Or do you require regular medical care due to ongoing health issues? Your answer to this question will help shape the type of health plan that’s best for you.
If you rarely visit the doctor, then a plan with lower premiums and higher deductibles may be an ideal option for you. On the other hand, if you have various health conditions that need regular medical attention, consider looking for a plan with higher premiums but lower copays and a lower deductible.
To illustrate, someone who only needs to go through annual health check ups may opt for a high-deductible plan with lower monthly payments. However, for someone with chronic illness or multiple health issues, a plan with higher premiums but maximum coverage is better suited.
- Assess your current health status
- Determine how often you typically need medical care
- Choose the right balance between premiums and out-of-pocket costs
- If you’re relatively healthy, lean towards plans with lower premiums but higher deductibles
- If you require regular care, opt for plans with lower deductibles and copays but higher premiums
- Don’t forget to take into account expected changes in health circumstances like planned surgeries or pregnancies
Evaluate Your Budget
Equally pertinent is considering what you can afford to spend on health insurance. This isn’t just about being able to pay the premium each month. You also need to think about whether you have the financial resources to meet the out-of-pocket maximums if a significant health issue arises.
Remember, if you choose a lower premium plan, it comes with higher deductibles, which means you’ll pay more before the health coverage kicks in. Judge your comfort zone regarding potential risks and rewards to identify the correct balance.
Consider John’s scenario, who picked a low premium plan thinking it was affordable. But when he eventually got into a medical emergency, he was not ready for the high deductible that came with his choice of plan. So, it’s imperative to balance your monthly premiums with your potential maximum expenses.
- Consider both the regular costs (premiums) and unexpected costs (deductibles, copayments)
- Ensure you can afford the out-of-pocket maximum in case of a medical emergency
- Make a realistic budget plan after taking into account all these factors
- Avoid plans where you may struggle to keep up with the premium payments
- Rather than only looking at lower premiums, consider a balance with your potential maximum expenses
- Think about your risk tolerance for unexpected health care costs. It differs from person to person.
Doctor’s Network: In-network or Out-of-network
Quite rightly, many people have preferences when it comes to their healthcare providers. When choosing a health insurance plan, check if your preferred doctors are in-network. If your doctors aren’t in-network, you’ll end up paying more out of pocket.
Usually, health plans contract with a wide range of doctors, hospitals, pharmacies, and other healthcare providers to deliver care for members at lower costs. These providers are known as the “provider network” of the plan. Going to doctors within this network usually results in lower costs for patients.
For instance, Emily chose an insurance plan without checking if her longtime personal physician was part of their network, ending up with increased expenses for consultations because her doctor was considered out of network by her insurance.
- Always check whether your preferred healthcare providers are in-network
- Going out-of-network might cost you more
- If your chosen doctor isn’t in your new plan’s network, you’ll need to decide what’s more critical: keeping your doctor or switching to a new plan
- Some plans offer coverage outside the network, although it’s usually at a higher cost
- Also, review if the prescription medications you take will be covered and how well they will be covered under the potential plans
- In cases with no preference for specific doctors, ensure the potential plan’s network includes high-quality doctors and hospitals in your area
Types of Health Insurance Plans
Understanding the general types of health insurance plans can assist you to make a more informed decision. The common types of health insurance include Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), Exclusive Provider Organizations (EPOs), and Point of Service (POS) Plans.
While plan details may differ, HMOs tend to have lower out-of-pocket costs and are limited to care within the network unless in emergencies. PPOs have both in-network providers and allow using out-of-network providers at an additional cost. EPO plans cover only in-network care (except in emergencies), and POS are similar to PPO but require referrals from primary care doctors for specialists.
Assume Alex often needs to see various specialists due to his health condition. In this case, a POS plan requiring referrals would not be ideal because he already knows the specialists he needs to see.
- Check whether your chosen plan is an HMO, PPO, EPO or POS
- Each plan has its pros and cons. Make sure you understand them before choosing
- If seeing a specialist without needing a referral is important to you, avoid HMO or POS plans
- If keeping your costs low is a significant factor, look into HMOs that offer lower out-of-pocket costs
- People who want the flexibility to access services outside the network may opt for a PPO or POS plan
- Those who don’t mind not having out-of-network coverage can opt for an EPO which tends to have lower premiums compared to PPO or POS plans
Consider Additional Benefits
When comparing health insurance plans, it’s also necessary to consider the additional benefits offered. Many plans offer extra services beyond standard coverage, such as prescription drug coverage, mental healthcare, maternity care, preventive services such as vaccines and screenings, and chronic disease management.
While these extended benefits may or may not influence your choice of plan immediately, they might prove beneficial on a long-term basis, especially considering factors such as family planning, mental health needs, or managing existing chronic conditions.
Consider Sarah, who is planning to start a family soon. A health plan with robust maternity care and baby wellness programs would be most suitable for her.
- Look beyond basic coverage and consider the additional benefits
- Weigh whether services like dental, vision, or prescription drug coverage are important for your family
- If you’re planning to start a family, ensure your plan covers prenatal and postnatal care, as well as baby wellness visits
- If managing a chronic illness, check for benefits that aid in the care of your specific condition
- Also, see if mental health well-being sessions, counseling, or therapy are included in the plan. Mental health is equally important as physical health
- If you take regular medications, prescription drug coverage is a must-check benefit before buying
| Tips for Selecting A Health Plan | Explanation |
|:——————————-:|:————:|
| Understand Basic Terms | Be clear on terms like premium, deductible, copay, out-of-pocket maximum and coinsurance |
| Consider Your Health Needs | Gauge how frequently you need healthcare services |
| Evaluate Your Budget | Assess what you can afford including the unforeseen costs |
| Doctor’s Network | Confirm if your trusted doctors or health providers are within the network |
| Types of Health Plans | Understand the difference between HMOs, PPOs, EPOs, and POS Plans |
| Consider Additional Benefits | Look out for extra services like mental healthcare, maternity care etc.|