Affordable Care Act
How to Choose the Right Health Insurance Plan
Published on September 23, 2016
How do you choose the right health insurance plan? There are a lot of options to choose from, but health insurance is complicated and shoppers often feel intimidated by the small print. Here are some basic tips to help you through the health insurance shopping process.
Choosing a health insurance plan: know your budget
- Monthly premiums – Health insurance costs money, of course. But understanding the cost of a health insurance plan is more complex than looking at the price tag. There are different kinds of costs. First of all, there are the monthly premiums you need to pay to keep your coverage in effect. Some people get distracted by the monthly premium and never consider any other costs – but that’s a mistake.
- Deductibles, copayments and coinsurance – The second category of costs can be broadly described as “cost-sharing” expenses. These include things like copayments, deductibles, and coinsurance. Cost-sharing only comes into play when you actually receive medical care. It’s important to understand these costs when considering any new health insurance plan. A plan with a low monthly premium may sound great, but it’s not so great if you can’t afford your annual deductible when you get sick.
- Government subsidies – It’s also good to know if you’ll qualify for a government subsidy. Obamacare subsidies are available to qualifying consumers with a taxable household income of no more than 400% of the federal poverty level. For a single person in the contiguous US that translates to about $47,500 in 2016, or about $97,000 for a family of four. Government health insurance subsidies can make a big difference when it comes to what you actually pay for coverage.
Choosing health insurance: know the kinds of health insurance benefits you need and value
Under Obamacare, all major medical health insurance plans now cover the same basic suite of medical benefits. These include coverage for doctors and hospitals plus maternity care, women’s health care, pediatric care, and other items. What’s more, the Obamacare law requires all plans to provide coverage for certain kinds of preventive medical care at no out-of-pocket cost to the policy holder.
That’s good news, but it doesn’t mean that all health insurance plans cover all medical services or supplies, or cover them in the same way. For example, if you see the doctor regularly for an ongoing medical issue, you may want to consider a plan with a lower deductible. And if you take prescription drugs on a regular basis you need to make sure that the drug you need is covered at an affordable cost to you under any new plan you’re considering.
What’s more, if you have a preferred doctor or hospital that you want to keep visiting, you should make sure that these are within the insurance company’s network. Health insurance companies establish network relationships with specific medical providers and seeing someone outside of your insurance company’s network can leave you with little to no coverage, depending on your plan.
Choosing health insurance: know the different kinds of plans available
There are different types of health insurance plans available in the market today: HMO, PPO, and EPO-style plans, for example. And nowadays plans are designated by a metal level as well: bronze, silver, gold, or platinum. Understanding the differences between different kinds of plans can help you pick the right one for your needs.
- HMO (Health Maintenance Organization) plans – When it comes to plan types, the differences mostly have to do with doctor networks. HMO plans tend to limit you to a specific network of doctors and require that you pick a primary care physician. This primary care physician is your main point of contact for medical care and will refer you to specialists when necessary.
- PPO (Preferred Provider Organization) and EPO (Exclusive Provider Organization) plans – PPO plans tend to give you a bit more freedom when it comes to picking doctors and seeing specialists. You may have some coverage when seeing out-of-network doctors too. EPO plans are similar to PPOs, though they generally do not offer you coverage when going out of network.
- Metal levels – Metal levels serve as a short-hand way of understanding the cost-sharing requirements of different plans. The higher the metal level (platinum or gold, for example) the less you typically have to pay out of your own pocket when you receive medical care, but the higher your monthly premiums are likely to be. Conversely, lower metal levels plans (bronze or silver) tend to have lower monthly premiums but higher deductibles and other out-of-pocket costs.
Choosing health insurance: know where to find help
When you’re ready to shop for a new health insurance plan, you have a few options. You can shop through the government-run health insurance exchange in your state, through a licensed health insurance agent, or through the health insurance company directly. Sometimes you’ll find that the same plan is available through all three options – and the price is the same no matter where you buy.
You should know, however, that there are some benefits associated with shopping through a licensed agent, like eHealth. By asking questions and understanding your needs, agents can often help you narrow down your choices and pick between plans from different insurance companies. Unlike many of the “navigators” that staff many government-run exchanges, a licensed agent can legally make personal plan recommendations for you. A licensed agent can also serve as your advocate with the insurance company should any disputes over coverage or payments arise in the future.