Choosing your health insurance plan, like making any important decision, is all about doing your research and asking the right questions. There’s a lot of choice out there, with wildly different fees and benefits. Read up on them. Check them out thoroughly. Don’t make any decision too quickly, as health insurance is obviously an important element in your life. Places including Canada and the United Kingdom have a national health plan that covers the basics for its citizens, although additional private health insurance is available at a cost should someone want to bump up their coverage. The United States, however, does not have a national plan, and this article will examine American options more closely.
The right questions can be the difference between an appropriate choice and getting stuck with something that doesn’t work for you and/or your family.
Question 1: What’s the cost?
The cost is a rather important, and there are many elements to consider.
First and foremost, you need to ask about the monthly (sometimes offered at a slightly discounted annual) premiums. This is the basic amount you pay each and every month, whether you visit a doctor or not. This amount needs to be well within your budget, as there’s no getting out of it.
Unfortunately, the premiums are not the only payment you’ll have to make for your coverage. There are other fees involved - usually referred to as out-of-pocket costs - that will pop up if and when you see a doctor or have a problem. These include:
- Deductible - this is the amount that is your responsibility. You pay everything up until you hit that amount, after which time your insurance provider will start kicking in on payments. Deductibles may be annual (typically several thousand dollars) or per visit (perhaps $50 or so). What, if anything, is the plan deductible?
- Copay - this is a set amount that you pay each and every time you utilize a particular service covered by the plan, such as a $20 copay each time you see a general practitioner. The copay may be the same for everything, or it may vary depending on the service or specialist used.
- Coinsurance - this amount is typically a percentage that you are responsible for, no matter whether you’ve reached your deductible. Depending on the plan you choose, your coinsurance amount may be anywhere from 10-40% of the total bill. Higher premium plans will cover more of this, lowering your coinsurance amount.
Add up ALL fees to get a total cost involved with a plan.
Question 2: What is included? What is excluded?
Ask to see the Summary of Benefits and Coverage for every plan you are considering. There is a lot of difference from one to the next. Look at the specifics. Look for items like prescription medication, pre and post-natal care, pre-existing conditions, dental care, maximum benefits (does the coverage only go to a set amount each year, or is it unlimited? If it’s a set limit, is it a reasonable amount?), and anything else that may apply to you or your family specifically. If you need a particular treatment, is it covered?
Question 3: What’s the network?
Most plans use a set network of approved providers and practitioners. Is the family doctor you’ve gone to for years on the list? If not, can you still see him? Ask to see the network list and consider the options provided there. Can you work within it? What happens if you can’t?
Question 4: What type of plan is it?
Health plans typically fall under one of three types:
- HMO (Health Maintenance Organizations) - usually the cheapest option, but you have virtually no choice of provider (they use a very strict network list...you see who they tell you to see). Set premiums and copays for each service, but no deductible.
- PPO (Preferred Provider Organizations) - more expensive than an HMO, but also more choice of provider. You can opt to see an out-of-network provider for a higher cost. You’ll pay a higher premium, you may have a deductible, as well as copay and coinsurance costs.
- POS (Point of Service Plan) - a blend of both, as you can see an out-of-network provider, but you’ll need to first get a referral from someone within the plan’s network. You’ll pay premiums, deductible, copay, and coinsurance, with the last two going up for any provider out of the approved network.
Check out Four Types of Health Plans: How They Compare (the fourth, although more uncommon, is a high deductible plan) for a useful comparison.
A Few Other Considerations
Buying health insurance can also have tax implications. As is always the case when it comes to your finances, it is best to speak with a knowledgeable tax accountant or advisor. Generally speaking, low to middle income earners will be eligible for tax credits that help to reduce the cost of their health insurance premiums (purchased through their state’s approved health insurance marketplace). Government subsidies may also be available for other fees including deductibles, copay, and coinsurance costs. Lifehacker has a useful article (How Will the New Health Care Law Affect My Taxes) that outlines some of the other effects on salary and taxes for American citizens.
Choosing a health plan that works for your budget and your needs requires due diligence. Compare. Ask the right questions. And select based on the greatest fit to your situation and most importantly income.
Photo Credit: Images Money, via Flickr