Health coverage has to be one of the most necessary (and sometimes most complicated) types of insurance out there. Whether it’s from your employer, family, or your own, having a good health insurance plan is essential when you most need it.
However, with its endless combinations of insurance companies, plan types, and benefits, it’s not easy knowing where to begin. If you’re struggling to make sense of it all or decide which one is best, we’re here to help. Here is what to need to know before choosing your health coverage.
There Is More Than One Type of Health Insurance
At first glance, you’ll find an alphabet soup worth of health insurance plans and tiers that will not make sense to the average policyholder. Here, we’ll break down the most common types of policies, and what each one entails to help you determine your out-of-pocket costs and which doctors you can see.
HMO (Health Maintenance Organization)
With HMO, you must select a primary care doctor, who will also be the “gatekeeper” for all additional care you receive. That means you’ll need referrals for a specialist, lab, or medical facility – except emergencies and OB-GYN.
PPO (Preferred Provider Organization)
This plan usually covers care by both in-network and out-of-network doctors. You don’t need a primary care doctor or referrals. However, this doesn’t stop out-of-network care from being more expensive than in-network care.
EPO (Exclusive Provider Organization)
EPO combines the flexibility of a PPO with the cost savings of an HMO. With this plan type, your primary care doctor is not the gatekeeper. However, EPO networks are often smaller, and you must stay within them for your care to be covered, although out-care emergencies might be covered. Otherwise, any out-network care will come out of your pocket.
POS (Point of Service)
POS is a hybrid of HMO and PPO plans. They combine lower costs for care of in-network doctors and coverage for out-of-network care with a referral. This plan requires you to have referrals from your primary caregiver, even if the specialist is inside the network coverage.
The Lowest Premium Plan Doesn’t Mean The Cheapest
Many make their choice based on the monthly premium, but that’s the first mistake. Plans with lower monthly costs tend to be more expensive in other ways.
The first expense to look for is the copay, which is a fraction of the cost of the care you receive. The second extra payment amount to expect is the annual deductible, which you must pay out of pocket each year before your insurance starts kicking in, especially for major surgeries.
Keep in mind that even after you meet the deductible, you may have to pay coinsurance. It is a percentage of the remaining costs up to an out-of-pocket maximum if there is one.
High Deductible Health Plans Might Save You Money
An HDHP will usually have cheaper premiums than a plan with a lower deductible. For some, it is better to pay less in premiums and choose an HDHP. There’s a good chance you’ll save money, possibly several hundred dollars or more over the year, compared to paying high amounts over the year.
Having the HDHP also lets you contribute to a health savings account. If you fall within a certain tax bracket and pay three thousand in expenses, you can use your health savings account (HSA) to pay for them with pre-tax dollars.
Before deciding that a high deductible health insurance plan will be beneficial, you have to consider many factors. It highly depends on your medical history and if you expect any medical expenses later in the year. You must also be ready to have savings and shell out a lot of money out-of-pocket in the event of an emergency or unexpected condition.
Not All Health Insurance Plans Cover Prescription Drugs And Additional Care
Each insurer has a formulary – a list of medicines that are covered by the plan. If a medicine is not on the formulary, it most likely may not be covered. The medicines are categorized into tiers, and it determines how much you have to pay.
If you are currently or expected to take any medication in the near future, it’s important to find coverage for your prescriptions. Also, additional care such as preventative or post-care is not covered unless you specify. Alternative medicine such as chiropractic treatment is another one that will not be automatically covered, and you have to decide if it’s a deal-breaker or not.
Your Employer’s Plan May Not Be The Best Deal
Obtaining a health insurance plan is a common practice, and many times you can receive care at little to no cost. If you’re self-employed, you can access plans through trade associations like the Writers Guild of America and the Actors’ Equity Association. Also, if you lose your employment, you may be able to continue using your employer’s health insurance for up to 18 to 36 months.
Receiving coverage through your employer is excellent for pre-existing conditions, but if you’re in good health, you may be paying more than you have to. This is because your employer’s plan is based on the group’s average health. Having a policy tailored, based on your health, may give you better rates than you would receive from group ones.
Overall, the key to choosing a health care plan is narrowing it down to what is important to you. First, compare your immediate options such as your employer’s plan (if applicable) and the marketplace. Your coverage should include your doctor, your prescription medications, and the services you want.
You can then decide what you’re comfortable paying when it comes to premiums and potential out-of-pocket expenses. While the goal may be to save as much as you can, keep in mind that there’s no greater wealth than health.