Choosing the right health insurance plan really boils down to dollar signs and access. You need to find a plan that is both affordable and usable for you (and your family if you have one). To get off on the right foot you’re gonna need to know some basic terms to compare health insurance plans and choose the best one.
Whether you use the gov’s Health Insurance Marketplace or your own employer to find health coverage, the first thing you want to get right is where and when you can enroll. Every year there is an ‘Open Enrollment’ period in late fall or early winter. During this time anyone can sign up for a health plan or change their current coverage.
Once the open enrollment period ends, then you can only sign up for a plan or make changes if you have a “qualifying life event.” Common qualifying life events include getting married, losing your coverage, or moving.
It seems there is nothing the health insurance world loves more than acronyms. When you’re looking at plans you will likely encounter HMO, PPO, EPO, and PSO. Ummmm, confusing? Yes. Let’s get rid of those question marks. Each acronym is attached to a specific type of plan and health network. This impacts the coverage you can get and your overall costs. Below are the most common types of health insurance plans you are likely to encounter.
|Plan Type||Out of Network Coverage?||How it Works|
|HMO: Health Maintenance Organization||No, unless it is an emergency.||These plans are generally offered within specific service areas. They come with lower out of pocket expenses but less choice when it comes to providers.|
|These plans are like hybrid HMO and PPO. You can see providers out of the network but you will pay more for it. If you stay in-network you have much lower costs. You will need a referral from your primary care doctor in order to see a specialist.|
You may qualify for Medicare or the Child Health Insurance program. These are free health care plans offered through your state for those with low income, disability, or other qualifying circumstances. Most of the time, these plans can come in the form of an HMO or PPO, so the network restrictions remain the same, but more of your costs are covered.
Ok, so know it’s time to look at the overall cost of your plan. The biggest mistake someone can make is only looking at the monthly cost (premium). You will want to review your premium, out of pocket expenses, copays, and deductibles to get an idea of the moola you’re going to be dropping on this health plan.
Premiums and Deductibles
Every month you will need to pay your premium just like you do your electric bill. Your deductible, on the other hand, is the amount you will need to pay before you get insurance coverage.
A lower premium often comes with a higher deductible. If you know you need quite a bit of healthcare, then you can often save money by paying a higher monthly premium and thus getting a lower deductible.
Out of Pocket Expenses
Your deductible is an out of pocket expense, but some plans will have additional out of pocket costs. (I know, it’s the pits). These out of pocket expenses commonly include copays and coinsurance.
Copays are flat fees you pay for specific services. This could look like $15 for generic prescriptions and $25 for an ER visit. Even if you have met your deductible you will still pay your copay for services.
Coinsurance is a percentage of coverage that your provider agrees to pay. The most common split is 80/20. For example, if you have surgery and you have met your deductible, then your insurance will pay for 80% of the cost and you will pay for 20%. Coinsurance often only applies to more complicated health problems and not routine care or preventative care. But every plan is different, so you will want to be sure.
A quick warning
If you find a health plan looks too good to be true it probably is. There are many individual ‘marketplaces’ online for health insurance. These ones are often selling short term coverage or plans that do not carry essential coverage. Do yourself a favor and read the fine print if it looks a little too good on paper.
Now that you’ve got your health insurance term toolbelt, you need to consider your own personal situation. If you regularly see the doctor, have a chronic condition, plan to start a family, or need to have a prescription filled each month then make sure your health plan works for these services and won’t cost you an arm and a leg (literally).