Jane Dotson
Choosing a good medical insurance plan can be overwhelming, but it is a critical decision as choosing the wrong plan can be costly. There are several factors to consider when selecting a plan, such as your health status, age, income, and specific healthcare needs. It is important to understand key insurance terms like premiums, copays, coinsurance, and deductibles, and how they impact your out-of-pocket costs. Additionally, you should review the coverage offered, including prescription drugs, annual check-ups, and hospital coverage, to ensure it meets your specific needs. You can compare plans on government websites or through your employer, considering factors like cost, quality, and included medical professionals and facilities.
| Characteristics | Values |
|---|---|
| Age | If you are 65 or older, you are eligible for Medicare. |
| Employer | Most people get their insurance through their employer. Check with your supervisor or HR department to see what plans are available. |
| Income | If you have a low income, you may be eligible for Medicaid. |
| Healthcare.gov | If you don't get insurance through your employer, you can shop for insurance on Healthcare.gov. |
| Costs | Consider the monthly premium and out-of-pocket costs. Generally, the higher the premium, the lower your out-of-pocket costs. |
| Coverage | Make sure the plan covers the medication and medical services you need. |
| Doctors | Confirm whether the doctors you want to see are in-network with the insurance plan. |
| Alternatives | Consider Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) to set aside pre-tax dollars for healthcare expenses. |
| Reviews | Read reviews of insurance plans to help you make your decision. |
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What You'll Learn
Understanding key health insurance terms
Payer or Carrier
The health insurance company that pays to cover the cost of your care is known as the payer or carrier.
Point-of-Service (POS) Plan
A POS plan is a type of managed care plan that allows you to use out-of-network providers, but usually at an additional cost. You will typically pay a higher coinsurance and/or deductible for out-of-network providers and receive the highest benefits from in-network providers.
Pre-existing Condition
A pre-existing condition refers to a health problem that has been diagnosed or treated before purchasing a health insurance plan. Some insurance plans may not cover certain pre-existing conditions during a specific waiting period.
Preferred Provider Organization (PPO) Plan
A PPO plan offers greater freedom of choice than Health Maintenance Organization (HMO) plans. Customers can receive care from both in-network and out-of-network providers but will generally receive the highest level of benefits when using in-network providers.
Underwriting
Underwriting is the process by which insurance companies determine whether to offer coverage to an applicant and set the policy's premium. It involves assessing the risk associated with providing insurance coverage to an individual or business.
Waiting Period
The waiting period is the time an employee must wait before becoming eligible for coverage under their company's health plan. It can also refer to the period after a policy's effective date, during which certain pre-existing conditions may not be covered.
Allowable Charge or Allowed Amount
The allowable charge, also known as the allowed amount, is the maximum dollar amount that a health insurance company considers reasonable for medical services or supplies. It is based on the rates in your area and may be referred to as the "maximum allowable," "usual, customary, and reasonable (UCR) charge."
Premium
A premium is the ongoing amount you or your employer pays, typically monthly, quarterly, or yearly, for your health insurance plan. Higher premiums generally result in lower out-of-pocket costs, and vice versa.
Copay or Copayment
A copay or copayment is a fixed amount you pay for a covered health care service, usually at the time of service. For example, if your plan's allowable cost for a doctor's visit is $100 and your copay is $20, you will pay $20 at the time of the visit.
Coinsurance
Coinsurance is the percentage of the allowed amount for a covered health care service that you are responsible for paying. For instance, if the allowed amount for an office visit is $100 and your coinsurance is 20%, you will pay $20.
Deductible
A deductible is the amount you must pay for covered healthcare services before your insurance plan starts contributing. For example, if your deductible is $1,000, you will pay the first $1,000 of covered services yourself.
Out-of-Pocket Costs
Out-of-pocket costs refer to the expenses you pay directly for healthcare services, including deductibles, copayments, and coinsurance. These costs can vary depending on whether you use in-network or out-of-network providers.
Understanding these key terms can empower you to make more informed decisions when selecting a health insurance plan that best suits your needs and budget.
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Comparing health insurance plans
Provider Network
It is crucial to check if your preferred doctors and hospitals are included in the health insurance plan's network. You can do this by reviewing the health plan's provider directories and hospital lists, which are usually available on their websites. Some plans may offer broader networks, including national or multi-state providers, which can be beneficial if you require care while travelling or have family in other states.
Out-of-Pocket Costs
Understanding the out-of-pocket expenses associated with each plan is essential. These costs can include copays, coinsurance, and deductibles. Generally, plans with higher premiums tend to have lower out-of-pocket costs, and vice versa. It is worth noting that some plans may have additional copays and deductibles for specific services like emergency care, doctor visits, or prescriptions, so be sure to review these details carefully.
Plan Types
Different types of health insurance plans, such as HMOs, PPOs, EPOs, and POS plans, can vary in terms of provider flexibility and out-of-pocket costs. For example, HMOs typically offer lower costs when using in-network providers but may have limited coverage for out-of-network care. POS plans may require a referral from your primary care doctor to see a specialist, while PPOs might offer more flexibility in choosing providers but could result in higher out-of-pocket expenses.
Plan Benefits and Coverage
Review the summary of benefits provided by each plan to understand what services and prescriptions are covered and at what cost. Pay close attention to any limitations or exclusions, as these can vary significantly between plans. For instance, some plans may not cover injuries incurred under the influence of substances, which could result in unexpected financial burdens.
Location and Availability
Your location plays a significant role in determining which health insurance plans are available to you. Check if the plan's provider network includes your area of residence and whether there are any specific eligibility requirements, such as those imposed by HMOs. Additionally, consider whether you need coverage for multiple states or if you have specific needs, such as a family plan with higher out-of-pocket limits.
By carefully considering these factors and comparing different health insurance plans, you can make a well-informed decision about which plan best suits your healthcare needs and financial situation.
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Knowing your total healthcare costs
When picking a health insurance plan, it's important to consider your total healthcare costs. This includes your premium, deductible, and out-of-pocket costs.
Your premium is the monthly bill you pay to your insurance company, even if you don't use any medical services that month. Typically, the higher your premium, the lower your out-of-pocket costs, and vice versa. For example, a plan with higher monthly premiums may be a better choice if you frequently visit a doctor or take expensive medications. On the other hand, a plan with lower monthly premiums and higher out-of-pocket costs may be more suitable if you're in good health and rarely need medical services.
The deductible is the amount you'll need to pay for certain covered health services and prescription drugs before your insurance plan starts paying. For example, with a $2,000 deductible, you'll need to pay the first $2,000 of covered services yourself.
Out-of-pocket costs include copayments and coinsurance, which are the amounts you pay each time you receive medical care. For example, you may pay $20 for a doctor visit or 30% of hospital charges. There is usually an out-of-pocket maximum, after which the insurance company pays 100% of the covered services.
When comparing health insurance plans, it's essential to consider your estimated total yearly costs, not just the premium. You can use tools like the Health Insurance Marketplace Calculator to estimate your total costs based on your household income and the level of care you expect to need. Additionally, you can preview plans and prices on HealthCare.gov to make a more informed decision.
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Reviewing your plan annually
Reviewing your insurance plan annually is a good habit to get into. Medical professionals and insurance companies are continually updating their contracts, so it's important to stay on top of any changes that might affect you. Doctors or other professionals that were in-network last year may be out-of-network this year.
If you have ongoing health issues, are taking medication, or are expecting a baby, it's especially important to review your plan regularly. You don't want to be caught out by unexpected costs or a lack of coverage. Even if you're in good health, it's still a good idea to review your plan annually to make sure you're getting the best value for money.
- Understand the key terms: Know the difference between premiums, copays, coinsurance, and deductibles. This will help you compare plans and make an informed decision.
- Check the coverage: Review the summary of benefits, plan brochure, and provider directory to understand what's covered and what's not. Pay close attention to the list of covered drugs, especially if you take any regular medications.
- Consider your health needs: If you have any ongoing health issues or expect any significant life changes (such as starting a family), make sure your plan covers the necessary treatments and medications.
- Compare costs: Look at both the monthly premiums and the out-of-pocket costs. A higher-premium plan may offer lower out-of-pocket costs, which could be beneficial if you need frequent medical care or take expensive medications.
- Explore alternatives: Don't just stick with your current plan out of convenience. Shop around and compare other options on the Health Insurance Marketplace or through your employer. You may find a plan that better suits your needs at a more affordable price.
- Review your network: Check that the doctors and medical facilities you prefer are still in-network. If not, you may need to find alternative in-network providers or consider switching to a plan that covers them.
By reviewing your insurance plan annually, you can ensure that you're getting the coverage you need at a price you can afford. It's a small effort that can pay off in the long run, giving you peace of mind and potentially saving you money.
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Considering government-funded insurance
If you are 65 or older, you are eligible for Medicare, a federally run programme that covers much of your healthcare. You may also be eligible for Medicare if you have certain disabilities. Medicare Part A covers hospital care, while Medicare Part B covers medical services.
Medicaid is another government-funded health insurance option. It is a federal–state partnership that provides public funding for the healthcare of low-income children and adults. Initially, Medicaid was a medical care extension of federally funded programmes for the poor, with a focus on the aged, the disabled, and dependent children and their mothers. However, legislation in 1987 and 2000 expanded Medicaid coverage to include low-income pregnant women, more poor children, and some Medicare beneficiaries who were not eligible for cash assistance programmes. The funding and administrative responsibilities for Medicaid are shared by both the federal and state governments. The federal funding share, known as the Federal Medical Assistance Percentage (FMAP), is determined annually by a formula that compares the state's average per capita income level with the national income average. States with a higher per capita income level receive a smaller share of their costs reimbursed. By law, the FMAP cannot be lower than 50% or higher than 83%.
The State Children's Health Insurance Program (SCHIP) was created by the Balanced Budget Act of 1997 and provided new funds for states to cover uninsured children. This programme allowed nearly $40 billion in federal matching funds over fiscal years 1998 to 2008 to be used by states to offer coverage to children in families with incomes up to 200% of the FPL who did not qualify for Medicaid.
When considering government-funded insurance, it is important to understand some key health insurance terms. The amount you pay for your health insurance plan each month is known as the premium. Typically, the higher the premium, the lower your out-of-pocket costs, such as copays and coinsurance. Therefore, if you frequently visit a doctor or take expensive medications, a plan with a higher premium and lower out-of-pocket costs may be a better option. On the other hand, if you are generally in good health and rarely need medical services, a plan with lower monthly premiums and higher out-of-pocket costs may be more suitable.
To find a government-funded insurance plan, you can go to Healthcare.gov to locate your state Health Insurance Marketplace. Each state's marketplace has its own enrolment instructions and may have different eligibility criteria based on factors such as income and age. During the open enrolment period, you can explore the available options and expanded subsidies. It is important to carefully review the summary of benefits, plan brochure, provider directory, and list of covered drugs for each plan before making a decision.
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