Choosing the right health insurance doesn’t need to be complicated. You never know when you or your family may be faced with an illness or injury; health insurance ensures you won’t face financial hardship over an unexpected visit to a doctor or hospital.
Not only is health insurance a good idea, the Affordable Care Act mandates that most Americans purchase coverage or face a financial penalty. If you’re currently without coverage, facing an upcoming loss of coverage, or want to know what your options are, keep reading.
Not sure where to begin when it comes to navigating the complex world of health insurance? Here are a few key tips and guidelines to help you through the process.
Know What's Available to You
First things first: find out what coverage options are currently available to you.
If you're employed, does your employer offer any type of health insurance plan for employees? If so, are you able to enroll now or will you need to wait until open enrollment, which often only happens once during the year?
Are you recently unemployed? If so, you may be able to preserve your health insurance coverage through a COBRA program. (These programs often come at a premium price.)
Do you qualify for coverage under a spouse’s benefits? Find out if you can be added onto his or her plan either during open enrollment or after a qualifying life event (such as marriage).
If none of these options apply to you, then you will most likely need to shop for health insurance coverage. Talk to your insurance professional about your needs. He/she can help you understand your options and find the right plan for you, your family, and your budget.
Here are some of the things your insurance advisor will discuss with you:
Explore Different Plan Types
There are many different types of health insurance plans available, with some of the most common including:
Health Maintenance Organizations (HMOs)
An HMO plan is the best option for those who are in need of a plan with low out-of-pocket costs and a "traditional" primary care doctor.
Preferred Provider Organizations (PPOs)
Well suited for situations where more provider options are desired, PPOs also come with the added benefit of typically not requiring a referral for most specialists or procedures.
Exclusive Provider Organizations (EPOs)
Generally, EPOs offer low out-of-pocket costs and do not require referrals, but you will need to stay in-network to receive care.
Point of Service Plans (POS)
This plan does not require you to stay in-network, however a POS plan can make receiving out-of-network care more costly as well as requiring that you receive a referral to be seen by an out-of-network doctor.
Consider Out-of-Pocket Costs
To find a plan that will work best with your finances and budget, be sure to consider out-of-pocket costs before signing up for coverage.
Some important out-of-pocket costs to consider include:
- Your deductible
- Premium amounts
- Out-of-pocket maximum
- Co-payment amount
It's a good idea to calculate exactly how much you can afford to comfortably pay for your medical expenses out-of-pocket on an annual basis.
Premiums vs Deductibles
There are two major cost components to insurance: premiums and deductibles. A premium is the price you pay for insurance coverage. Insurance premiums are typically paid in either monthly payment installments or as one up-front annual payment.
There are many factors that determine what your premium cost is. One of the factors that can impact your premium cost is your deductible amounts.
A deductible is the amount you pay before insurance covers the remaining cost of your health care. Typically, a lower deductible amount will result in a higher premium, while a higher deductible amount will result in a lower premium.
If you are willing to pay more out-of-pocket when you need medical care, it can potentially lower your monthly premium payments. This can be a good strategy for people who have a safety net of reserves set aside but want to free up more cash flow on a month-to-month basis. However, this cost saving strategy doesn’t pay off if you can’t afford the higher deductible amount if you happen to get sick or need medical treatment, so choose your deductible and premium amounts carefully.
Don't forget to take your future plans into consideration when deciding on coverage deductibles and other out-of-pocket costs. For example, if you plan on starting a family in the near future or have a major surgery coming up, you may want to opt for a plan that will cover more of your out-of-pocket costs up-front.
Consider What’s Important to You
Last but not least, be sure to factor in any specific benefits or types of coverage that are a must-have for you, based on your medical history.
For example, if you know you need to take a specific prescription medication, then you'll want to make sure to choose a health insurance plan that will cover your prescription.
On the same note, if you have certain doctors or specialists that you'd like to continue seeing even when your plan changes, you'll want to make sure they're in-network with your new plan. Otherwise, you might be forced to change doctors or be stuck paying higher out-of-network costs.
These are just a few of the most important considerations you'll want to think about as you explore your health insurance options and ultimately select the plan that's the best fit for you. Choosing a plan that meets your needs and aligns with your budget doesn’t need to be overwhelming. Let your insurance advisor be your guide and you can end up with the quality coverage you want at a price you can afford.