Tips for Choosing Health Insurance
Whether you’re going through open enrollment at work or shopping for health insurance on your own, the process can be daunting. Here are some tips to help you choose the best plan for you.
It’s important to look at the total cost of a health insurance plan. This includes the premium, deductible, and out-of-pocket costs.
- Consider Your Health
Whether you’re choosing an employer-sponsored plan or buying health insurance on your own, many factors go into deciding which type of coverage is best for you. Premiums, provider networks, drug formularies, and expected out-of-pocket costs are just some of the things to consider. But, it’s also important to think about how you and your family typically use healthcare. Do you visit your doctor a lot for routine check-ups, take a few prescription drugs, or have upcoming surgeries planned?
You may need to choose a plan that has a higher deductible to save money on monthly premiums, but it’s essential to carefully consider how much you might need to pay for medical care before reaching the deductible. Also, be sure to consider your options for getting care outside of the network. For example, some plans require you to get a referral from your primary care physician before seeing a specialist. This can limit your choices and may add a layer of complexity to the process. It’s always better to have a plan that works for your needs than not to have one at all.
- Do the math
A big part of picking a plan involves making tradeoffs between premiums, deductibles, and coverage. For instance, if you choose a plan with a lower premium but a higher deductible, it could save you money in the short term. However, you might end up paying more in the long run if you need to pay for something expensive.
The best way to get a clear picture of the cost of each option is to use calculators or spreadsheets that can help you compare the annual costs. Then imagine what you and your family would spend in a typical year: doctor visits, prescriptions, emergency room trips, and other unexpected care.
Once you know the total cost of each plan, you can start narrowing down options based on other factors, such as drug formularies and provider networks. It’s also important to remember that deductibles, copayments, and other out-of-pocket costs can change from one year to the next. So, it’s worth doing the math again each year to make sure you’re still getting the most out of your insurance.
- Look at out-of-pocket costs
It’s impossible to know for sure how much you will use medical care in any given year, but there are ways to compare costs. Look at the annual premium, deductible, and maximum out-of-pocket limits for each plan you’re considering. Also, consider the plan’s benefit design. For example, a health maintenance organization (HMO) typically has lower monthly premiums but restricts your choice of doctors to those that work for the HMO’s provider network. A preferred provider organization (PPO) typically has higher premiums but gives you more flexibility in choosing providers.
The federal online marketplace and many state marketplaces offer snapshots of these costs for each plan, so you can see the total yearly cost. You can also ask your employer’s people or HR team for a list of plans available through their marketplace.
- Review the provider list
When you receive your list of health plan options from your employer, look over the summary of benefits for each. This document will outline the different ways each plan covers costs (deductible, co-pays, and coinsurance), as well as any specific perks that may be included in the plan such as 24/7 support hotlines or telehealth visits.
Another thing to consider when reviewing the list of plans is which doctors and hospitals are considered part of each plan’s network. Some plans will pay more for visiting in-network providers than out-of-network ones. You can find out if your preferred providers are in-network by visiting the provider’s website or calling them directly.
If your preferred providers aren’t in the network, you may want to choose a different plan or pay out-of-pocket. Also, if you’re looking to save on premium costs, make sure you have enough coverage to meet your anticipated healthcare needs for the year ahead. Otherwise, you could end up paying more than you expected for your care. This could also lead to financial hardship if you’re not careful.
- Read the list of benefits
Health insurance plans are required by law to provide an easy-to-read summary of their coverage called a Summary of Benefits and Coverage (SBC). The SBC is intended to help consumers make apples-to-apples comparisons when shopping for coverage. It includes a breakdown of the plan’s benefits and coverage, as well as details about what portion of the cost-sharing structure (deductibles, copays, and coinsurance) the consumer will be responsible for covering. It also offers detailed examples of how the plan would handle 2 common medical scenarios: diabetes care and childbirth. This is one of the most important documents to review when shopping for individual or family health insurance.
- Look at the drug list
Every plan has a drug list (also known as a formulary). It is a list of drugs that the plan covers and what you will pay for them. This is an important step in choosing a health insurance plan because it can help you save money on prescriptions.
Each plan has a different drug list, and the drugs are often grouped into categories (tiers). The medications in lower tiers cost less than those in higher tiers. You can find a drug list on the website of each plan you’re considering. You can also use a tool such as eHealth’s plan finder to compare plans that cover your drugs.
Note that some drugs are administered by a doctor or health care provider, and not covered by pharmacy benefits. These are usually called “medical” drugs and can include things like contraceptive implants or chemotherapy infusions. A medical plan may also require prior authorization before your doctor will prescribe them. You can also ask your doctor if the drugs you need are on the drug preference list.
- Ask the right questions
It’s not always easy to know what questions to ask when choosing a health plan. But the right questions can help you narrow down your options and choose a plan that fits your lifestyle, budget, and healthcare needs.
For example, if you have a particular doctor you want to keep, check that they are included in the potential plan’s network. Also, find out whether a potential plan offers the prescription drugs you take and how much they cost.
Also, consider how often you or your family might need medical care and the kind of care that would be most helpful. If you have a specific medical condition, you may need to choose a plan with a low waiting period so you can get care sooner. You should also decide if you need a health savings account (HSA) or flexible spending account (FSA). Both are tax-advantaged ways to save money for healthcare costs, like medications and dental and vision care. They are typically available from workplaces that offer benefits, and sometimes from private insurers.
- Check the plan’s quality
The last thing you want is to be stuck with a plan that doesn’t meet your needs, whether it’s due to cost or because your doctors aren’t included. To check the quality of a plan, you can review its provider network on the insurer’s member portal or in a provider directory. Also, you can ask about the plan’s reputation and customer service.
Individual health insurance plans are often categorized by how much coverage they offer in terms of monthly premiums and out-of-pocket costs when you need care. For example, on the health insurance marketplace, you’ll find four “metal” categories: platinum, gold, silver, and bronze, with catastrophic plans available to certain people. However, the different levels of plans only indicate how you and your plan share costs, not the quality of the plan itself.
If you start looking for the right health insurance with a game plan in mind, it’s easier to narrow down your options. It’s also a good idea to review your current plan before open enrollment. You may be surprised to learn that you’re not getting everything you could from your current health insurance plan.