Important tips for Choosing Health Insurance Plan
If you’re young and in good health, your insurance needs may not be as high as someone who is older, has a chronic illness, or takes daily medications.
Help predict medical costs for the coming year by examining your health care usage from the previous year. “Calculating your health care budget is just like making a household budget,” says Tarra Jackson, personal finance consultant and MadamMoney.com blogger.
Gather last year’s explanation of benefits, or contact your insurance plan or health care providers to obtain a list of all your doctors’ visits, tests, medications, and any other health care-related expenses. Then separate expenses into copayments, coinsurance costs, non-covered services, and charges applied to your deductible. This will allow you to see where you spent the most money, and where you may need to increase your coverage in the future.
For example, if you frequently visited the doctor last year, you may want a plan with lower office-visit copays. If you have a condition that requires expensive tests, surgical procedures, or hospitalizations, shop for a plan that reduces your coinsurance and deductible for those services.
If you take regular prescriptions, be sure to read the plan’s policy on prescription medications. “Many people don’t know that there may be separate deductibles for prescription drugs,” Jackson says. Medication costs can add up, especially if you can’t take a generic substitution and your plan doesn’t cover certain name-brand drugs.
Additionally, if you’re planning a pregnancy or a surgery, figure those expenses into the equation.
Understand the Different Kinds of Health Insurance Plans
One way to keep insurance costs low is by restricting your choice of providers. No one wants to be told they can’t see the doctor they prefer, but this option — known as managed care — still offers quality care.
The main managed care option is the health maintenance organization (HMO) plan, the most tightly controlled type of plan with lower premiums and coinsurance.
Comparatively, preferred provider organization (PPO) plans cost more each month, but offer greater flexibility by allowing you to see doctors outside of the plan’s network.
While it isn’t a health insurance plan, another option for paying medical expenses is a health savings account (HSA). To qualify for an HSA, you must be enrolled in a high-deductible health plan. Although this option comes with a high deductible, the money contributed to the account is not subject to income tax when deposited.
How willing and able you are to understand and follow a plan’s restrictions will determine which type of plan is best for you.
Compare the Health Care Coverage and Premium Options
If you’re buying insurance on the new Health Insurance Exchange (also known as the Marketplace), you will see plans grouped into five categories: Platinum, Gold, Silver, Bronze, and Catastrophic. The system aggregates the various factors that control the cost and coverage levels of plans, such as premiums, copays, coinsurance, deductibles, and out-of-pocket maximums, and allows you to compare plans across the board.
Even if you utilize this aspect of the site, compare the details of each health insurance plan yourself so you can match them to your specific needs.
Consider Supplemental Health Insurance
Depending on your situation, you may want to broaden your insurance coverage. Gap insurance and hospital indemnity plans can protect you in the event of a catastrophic illness when your regular coverage falls short. However, understand what these plans do and do not cover.
“They’re not intended to be a substitute for major medical [insurance plans],” Jackson says. Combined with a Bronze-level plan, however, they might provide a layer of added protection at a cost much lower than the next-highest level of coverage.
If you’re unsure about your choices or need additional guidance, a licensed insurance agent can help you assess your needs and compare a wide variety of health insurance plans to find the coverage you need at the cost you can afford.