How to Choose a Health Insurance Plan
Choosing a health insurance plan can seem like a daunting task. You need health insurance to protect you financially when an unexpected injury or health problem arises, but choosing the right policy involves research and comparison shopping. There are endless options at a number of price points from dozens of companies. To help you choose the best health care plan, this article covers the following topics:
- Why health insurance is important
- Employer sponsored health insurance
- Individual health insurance
- Types of health insurance plans
- How to choose a health insurance plan
If you’re generally in good health, you may think you don’t need health insurance. Foregoing a health insurance policy may seem like a good way to cut costs for young professionals with little cash. But having no health insurance is a dangerous risk. A minor car accident or surgery can quickly drain your savings account, and more serious accidents can lead to bankruptcy very early in your career.
It’s difficult to get health coverage if your insurance lapses longer than two months so make sure you always have coverage. This is especially true if you have a pre-existing condition, even a mild one such as asthma. Luckily, there are many affordable health insurance options that’ll keep you healthy without depleting your wallet.
According to the Agency for Healthcare Research and Quality, roughly 60 percent of the U.S. population has employer sponsored health insurance. It’s typically a good idea to elect health insurance coverage through your employer if it’s available. Employer sponsored health insurance plans are generally a better deal than individual policies because employers have access to lower group rates and often subsidize employee premiums, sometimes up to 75 percent. Some employers may withhold your portion of the premiums from your paycheck pretax which makes monthly payments even easier.
Employer sponsored health insurance also gives you COBRA coverage in the event that you leave your job and don’t have immediate access to health insurance through a new employer. If you work for a company with at least 20 employees and lose your job, COBRA – Consolidated Omnibus Budget Reconciliation Act – requires your former employer to let you keep your insurance policy for at least 18 months. This is typically much cheaper than individual health insurance even though you’ll have to pay the entire premium after you leave the company.
You’ll need to find an affordable health plan on your own if any of the following apply:
- You’re between jobs
- You’re a freelancer
- You’re self-employed
- Your company – or your significant other’s company – doesn’t offer health insurance coverage
Individual health insurance plans typically have more options than employer sponsored plans, but you’ll pay a higher price for individual coverage. To keep costs low, look into health coverage through your union, professional association, or any other group you belong to. If you don’t qualify, you still have plenty of options. HIPAA – Health Insurance Portability and Accountability Act of 1996 – guarantees that qualified individuals who have had health insurance coverage for at least 18 months will be allowed to purchase an individual health insurance policy if they meet certain criteria. For specific information about requirements, visit HIPPAA’s website. Once you understand your rights through HIPAA, compare individual health insurance costs and plans at ehealthinsrance.com.
Health insurance policies generally fall into three categories – fee for service, managed care and health savings accounts. Each type of coverage has pros and cons; here is a summary:
- Fee for service – If you elect a fee for service plan – also known as FFS or traditional indemnity – you’ll have the flexibility to choose any doctor you want and see a specialist without a referral. In exchange for this flexibility, you’ll pay higher premiums and out-of-pocket costs. Another drawback of these plans is the paperwork. Some doctors submit insurance claims for you, but others require you to pay the entire bill upfront and then file a claim for reimbursement with your insurance company.
- Managed care – If you opt for a managed care plan, you generally won’t have to submit any forms or claims. You’ll have lower out-of-pocket expenses as long as you see a doctor that participates in your health insurance plan or is in your network. There are a few types of managed care plans:
- HMO – This is one of the cheapest but least flexible plans. You’re required to select a primary care doctor and get a referral from him or her if you need to see a specialist.
- PPO – With this type of plan, you’re rewarded for using in-network providers with lower out-of-pocket costs. If you choose to go out of network, you’ll be partially reimbursed. With a PPO plan, you don’t need to choose a primary care physician or obtain a referral to see a specialist.
- POS – These plans are similar to PPOs; however a POS plan requires that you choose a primary care physician.
- Health Savings Account (HSA) – An HSA is a tax-free savings account where you save money to pay for routine medical expenses, prescriptions, and even over-the-counter drugs. You must have a high deductible health plan to open an HSA, which means your premiums will be much smaller. This is a good option if you want to minimize your costs while maintaining coverage in the event that an accident or serious illness strikes.
Finding an affordable health insurance plan that satisfies your needs and budget requires some research. You can work with an insurance agent or do your own research when comparing health insurance plans. Websites like insure.com maintain a national online database of carriers and allow you to search for policies that are available. Comparing health care plans doesn’t have to be overwhelming; however, there are a few things you should consider to make sure you’re getting the best health insurance policy:
- Services – Make a list of the health services you use or plan to use in the near future, and look for policies that cover these services. Don’t forget:
- Mental health
- Chiropractic services
- Costs – A low cost plan isn’t always your best option, but a good plan doesn’t have to break the bank. Calculate how much you’ll be able to spend on out-of-pocket expenses, and find a health insurance plan that meets your requirements. Don’t forget to factor in these expenses:
- Premiums – payments you make – usually monthly – that cover the cost of your plan membership.
- Deductibles – the dollar amount you’re required to pay before your plan covers any expenses.
- Copayments/Coinsurance – a fixed dollar amount or percentage of the total bill that you pay the doctor at the time of your treatment or visit.
- Restrictions – Understand the limitations of any plan you consider. Make sure your current doctors are covered by your new plan if you’d like to keep seeing the same health care providers. Also, find out if the insurance policy covers any pre-existing conditions you have.
With some time and research, you can find an affordable health insurance plan that fits your needs, saves you money, and helps you stay healthy.
By: Faith Hinz
Faith Hinz is a freelance writer who has written for industries ranging from healthcare to automotive. She lives and works in Chicago. Follow her on Twitter at www.twitter.com/faithaubrey and on her blog at www.advertisinginthecity.wordpress.com.