Having a health insurance plan is important for several reasons including the financial burden medical bills can cause if you or your loved ones become ill.
Health care costs are a huge problem in America.
Today, we provide some questions to ask yourself when choosing a health insurance plan.
Is Your Employer’s Health Insurance Plan Your Best Bet?
First, look at your employer’s health insurance plan to determine if the plan is right for you. It’s likely if you work for a company which offers a health insurance plan, you may be able to get coverage at reduced or no cost to you.
Health insurance through your employer generally gives you the option to buy into a group plan, which can be particularly beneficial if you’re not in good health or have pre-existing conditions.
However, if you’re paying for the insurance and are in good health, you might be better off getting an individual policy on your own as group plans usually base their premiums on the group’s average health. Therefore, if you are in good health you could find a lower cost plan or one with more benefits for the same price.
Is Your Doctor Covered in the Health Insurance Plan?
If you plan to keep your current doctor, make sure he or she is covered by the health insurance plan.
- Health Maintenance Organizations (HMOs) are the most restrictive as they limit you to doctors in their network.
- Preferred Provider Organization plans (PPOs) let you go outside the network for a higher fee.
- Point-of-Service plans (POS) are a hybrid, which means they allow you to pay extra to go outside the network but usually only after you get a referral from a primary care physician in the network.
Are Your Prescription Drugs Covered in the Health Insurance Plan?
Ensure any prescription medications you may need are covered by the health insurance plan as well.
Is The Health Insurance Plan Truly the Cheapest Overall?
Just because the health insurance plan offers the lowest premium plan doesn’t mean it’s the cheapest overall.
Don’t just look at the monthly premiums as they could be the least of your costs. There could be co-pays, which are a small percentage of costs you pay when you use a service.
The policy might also have an annual deductible, which is the amount you must pay out of pocket each year before your insurance kicks in, especially for major expenses.
Find out if your co-pays may or may not be counted as part of the deductible. Even after you meet the deductible, you may have to pay co-insurance, which is a percentage of the remaining costs up to an out-of-pocket maximum, if there is one.
For example, let’s say you have a policy with a $20 co-pay for doctor visits, a $1,000 annual deductible, and 20 percent coinsurance. After your doctor’s visit, you pay your $20 co-pay and then get a bill for $300, which you have to pay yourself since it’s below your deductible.
Later the same year, you have surgery for $3,000. Since you already paid $300 out of your $1,000 deductible, you only need to pay another $700 to cover it for the year. However, you still have to pay 20 percent of the remaining $2,300, or another $460.
All these expenses can really add up which is why you should make sure you have enough savings to cover the costs in addition to having enough income to pay the premiums.
However, don’t necessarily avoid high-deductible plans. This type of plan can save you a significant amount of money if you remain in good health and have savings to cover your medical expenses.
Another benefit for a high deductible plan is you might be eligible for a health savings account (HSA). A HSA account allows you to save money on a pre-tax basis, and then to use it tax free to pay for qualified out-of-pocket medical expenses.
If you withdraw the money for something else, you’ll have to pay taxes and a 20 percent penalty on the withdrawal, but anything you don’t use can eventually be withdrawn penalty free after age 65. If you can afford to make the contributions, a HSA can be a great way to save for your health expenses while lowering your taxes and saving tax deferred for retirement.
There are many factors to consider when deciding which health insurance plan is right for you. Be sure to do your research and ask questions before purchasing a health insurance plan. This is where an insurance agent can be a valuable resource. They can help you understand the language in your policy, explain the specific terms and conditions, and guide your decision around which health insurance policy is right for you.