Having the security of health insurance is essential. Just a single health emergency can cost you thousands of dollars, and a major illness like cancer could wipe out your savings. That is why paying a monthly premium for a robust healthcare plan is a sound financial investment. After all, it isn’t about “if” you are going to have health problems, it is about “when.”
If you haven’t purchased a health insurance policy before, you may be unfamiliar with what you should get. Even, if you have a health policy already, you may want to re-evaluate your options because the insurance market has changed dramatically in the past few years.
The first major consideration when you are shopping for health insurance is, of course, cost. You want the most coverage possible for the amount of money you can devote to insurance. There are a number of ways to do this, but the most effective is to talk to insurers in your area. Health insurance prices are typically pegged to a region because health services costs vary according to geographical location.
You may wish to begin by learning many of the key terms that insurance agents use in describing policies. You can learn the basics about premiums, deductibles and co-pays from nonprofit groups online. It may also be useful to visit some of the websites of local agents and investigate what they have to offer before you sit down for a face-to-face meeting.
A key concept you should understand is that most health insurance policies are designed in one of two ways. If you get a policy with higher monthly premiums, you will likely pay less out-of-pocket fees when you obtain medical services. Conversely, the less you pay monthly, the more you will probably pay when you see a doctor or stay in a hospital. If you are young and healthy, it may be wiser to choose a higher deductible plan with lower monthly premiums, but keep in mind that serious accidents could still occur leaving you with sizable medical bills.
The government recently enacted the Affordable Care Act which allows you take advantage of tax credits to lower your monthly health insurance premiums. In many cases, you can save hundreds of dollars monthly, if you enroll in these plans. You must meet some income requirements and enroll in plans through HealthCare.gov.
When you are shopping for health insurance, you should also consider the size of your coverage network. Most insurers are able to lower costs by forging contracts with various physicians, hospitals and pharmacies. If you visit organizations outside of this network, you are raising costs for your insurer who will transfer those costs to you by refusing repayment or increasing your out-of-pocket expenses.
If you remain primarily within a single geographical region, then a HMO plan is probably your best option. A Health Maintenance Organization or HMO plan offers a variety of doctors and clinics, but you may only see them by getting a referral from your primary care doctor. HMO plans are usually the least expensive type of policy; in 2016, the average monthly cost of a HMO plan for a 21 year old was $230.
If you are outside of your home region a lot, then you may prefer an Exclusive Provider Organization or EPO plan. This is very similar to an HMO, but typically includes providers across the country rather than a single local market. Furthermore, an EPO is less restrictive, allowing you to see specialists without a referral from your primary care physician.
A Preferred Provider Organization or PPO plan is a more expensive option, but offers the greatest flexibility. Unlike HMO plans which typically do not reimburse policyholders for out-of-network visits, PPO plans allow policyholders to see providers out-of-network—although they will often charge a higher co-insurance or co-pay.
First Time Buyers
If you are new to buying health insurance, you may wish to keep in mind the following:
- Talk to insurance agents that represent a number insurers rather than just one, otherwise you are likely to get only one side of the story. You should also consult with many agents before making your choice.
- Be sure to read the policy and the full plan explanation carefully to learn what your benefits and financial responsibilities are. If you have any questions, ask your agent.
- Ask your agent how they are compensated. It is wise to learn if the agent is paid more for certain plans sold. If you suspect the agent is less than trustworthy, consider contacting your state insurance regulator to make sure the agent has a good history.
- Make sure you are purchasing health insurance policy, not a services discount. If you are unsure, then enquire with your state insurance board.
- Examine the details of how much your insurer is required to pay. Pay attention to the size of your premium, deductible, and co-payments. Furthermore, determine if you must follow a protocol prior to or following a medical visit. While most doctor’s offices will manage these duties, it is ultimately your responsibility that the repayment process is properly completed.
- Be on the lookout for terms like annual or lifetime maximum payouts. These kinds of policies cap how much they pay, and can leave you with a hefty debt if you encounter a major illness or injury.
- If you are chronically ill, be sure to closely examine your drug benefits to make sure they include commonly used medications.
Buying health insurance can be intimidating, but it is one of the wisest financial investments you can make. While there are a myriad of different types of health insurance plans varying in cost, benefits, coverage networks and access, there is a plan out there that is ideal for you and your family. It may take a while to finally find it, but when you do, you will be enormously happy that you and your loved ones have such financial security.