How to Select a Health Insurance Plan

Health insurance is one of the most important financial protections in your life. Even if you think you’re healthy, emergencies happen, and health insurance can help you through them financially.

With any health insurance, you’ll pay monthly premiums and be responsible for a percentage of your medical bills, but overall, health insurance takes the burden off your shoulders. 

You have many options when choosing a health insurance plan, whether you do it through yourself or your employer. Here’s everything you must know.

What is Health Insurance?

Health insurance is a binding contract between you and the insurance company. The insurance company promises to pay a portion of eligible medical bills after you meet certain requirements, usually paying your deductible.

The agreement is usually for one year, and you pay a monthly premium for coverage.

Most policies have a deductible which is the amount of the medical expenses you must pay before the insurance company will cover anything, much like how car insurance works.

You may also have co-pays, which are amounts you must pay for services such as doctor visits or a trip to the emergency room.

Once you meet your deductible, the insurance company will have a set percentage you must pay for the services, such as 80/20. This means the insurance company pays 80% of the agreed-upon medical expenses, and you pay 20% of the amount.

The Types of Health Insurance Plans

There are several types of health insurance plans to consider:

• HMO (Health Maintenance Organization)– You must stay within the HMO network, seeing only doctors and hospitals named in the program. Most HMO patients also need a referral to see anyone outside of their primary care physician. The upside is that premiums are usually lower than your total out-of-pocket costs.

• PPO (Preferred Provider Organization)– This network is larger than an HMO network, and you can go outside of it but will incur lower charges if you stay within the network. You don’t need a referral to see a specialist or go to the hospital. You might have higher out-of-pocket costs, but you have more freedom regarding which doctors and specialists you see.

• POS – A Point of Service Plan appoints one doctor as your ‘director.’ The doctor must be within the network and will direct you to any specialists or other services needed. This plan requires referrals to see other doctors, but the network is larger than an HMO.

What to Look for in Health Insurance Plans

When choosing the right health insurance plan, specific factors must be considered. First, determine your family’s level of medical needs. For example, would it be challenging if you had to get referrals to see specialists or if your network was restricted?

If so, consider a PPO plan versus an HMO. If you don’t have medical issues in your family and don’t mind having a ‘medical home’ with one provider, an HMO may save you money. Once you choose the type of plan, there will be multiple options within those plans. 

Here’s what to consider:

• What services are covered?

Not all insurance plans cover the same services. Think of the services your family might need now or in the future. For example, do you plan on getting pregnant? You’ll need maternity benefits. Does your family use chiropractic care or mental health services?

Always read the fine print, learn what services are covered and their limits. For example, some plans may limit mental health services to a certain number of visits per year or a dollar amount in services.

• Are pre-existing conditions covered?

If you’re getting group coverage through your employer or the Marketplace, pre-existing conditions aren’t an issue. However, if you get private health insurance, pre-existing conditions usually aren’t covered for at least 12 months, sometimes longer.

For example, if you had a heart condition last year and need to see a doctor about it this year with a new insurance that doesn’t cover pre-existing conditions, they may not pay cover the cost of any doctor or hospital visits regarding the condition.

• What’s the deductible?

The deductible is your financial responsibility for medical expenses. The higher the deductible you take, the lower your premiums. But each time you have a medical expense, you’re responsible for the costs until you reach the deductible.

• Who’s covered?

Make sure you can get coverage for everyone in your family, especially your older children. Most plans cover children living at home until 26 years old, but always read the fine print.

Why It’s Important to Have Health Insurance

Health insurance might seem like a nuisance, especially when paying the full premium yourself. However, it’s a level of financial protection you can’t get anywhere else.

A typical doctor’s appointment may not seem like a big deal without health insurance, but the costs can be astronomical if a child breaks a bone or an adult has a heart attack. Surgery for a broken bone could cost $20,000+, and a heart attack could cost hundreds of thousands of dollars.

How Government Assistance can Help with your Health Insurance Plans

The government offers cost-sharing for individuals and families who qualify. The amount of assistance you receive depends on your income. Only the Silver plans offered on the Marketplace are eligible for government assistance, and you receive monthly credit when you pay your portion of the premium.

What Happens if You Don’t Have Health Insurance?

There isn’t a tax penalty for not having health insurance, but the financial consequences can be detrimental.

If you have any medical emergencies, the medical bills can be astronomical, making it impossible to meet. This could lead to financial problems, collections, and even bankruptcy. 

Final Thoughts

Everyone should have some level of health insurance to protect against the unknown. However, one major health issue could cause financial distress faster than you think.

Whether you have health insurance through your employer or need it through the Marketplace, there are many options to get the coverage you need to protect your family in a time of need. So find the best plan for your family’s medical needs and let health insurance give you peace of mind.