Back in November, Equifax Finance Blogger Susan Johnston discussed the differences between HMO, PPO, and EPO health insurance plans. Now that you’ve decided on which plan might work best for you, it’s time to shop for and compare insurance plans to ensure you find the health insurance policy that fits your needs.
The Patient Protection and Affordable Care Act (PPACA, also called Obamacare) requires everyone, except those in very specific circumstances, to purchase health insurance. If it’s your first time enrolling in a health insurance plan, all of the options can be daunting. Should you go through the new Marketplace? What should you pay each month? Are you better off going with a high or low deductible?
There’s a lot to consider, so as you look through your health insurance options, here are a few things to remember:
Where to get health insurance
If you have a job that offers health insurance benefits, this is the first place to stop and find out what options you have. Many employers partially subsidize your health insurance so you pay a little bit less for your plan than you would if you paid for it yourself. Plus, you can have your premium automatically taken from your paycheck, resulting in a tax deduction.
When health insurance through an employer isn’t an option, you can look for insurance in other places. HealthCare.gov offers access to an exchange set up to find plans. If you are concerned about affordability, there are different plan levels, as well as tax benefits available to help you offset the costs.
Finally, you can also look for insurance on your own. You can often buy your plan directly from an insurer. You can also use an aggregator like Insurance.com that can help you review plans for which you are eligible and can give you multiple quotes from various companies.
How to compare health insurance plans
When comparing health insurance options, you need to pay attention to the coverage being offered as well as the price of the plan. First, determine your healthcare needs. How many times per year do you normally visit a healthcare provider? Do you have regular prescriptions? Are there people in your family with chronic conditions?
Then, determine which plan will cover all of your healthcare needs. Plan providers usually provide side-by-side comparisons of benefits and costs of plans, which can help you make a more informed decision.
What the cost of your health insurance plan might be
Once you have narrowed down the options, you need to figure out how you will pay for your plan. The first consideration is the deductible you can afford. Your deductible is the amount of money you pay out of pocket for your care. For example, if you have a deductible of $1,000, that means that you pay out of pocket for what you need—including prescriptions and office visits—until you spend $1,000.
If you are willing to pay more out of pocket for your care, your monthly premium (the amount you pay each month for coverage) will be smaller. If you pay for a high-deductible health plan, you can not only save on your premiums each month but also get an additional tax benefit by setting aside money in a health savings account (HSA).
There are also bare-bones health plans that are meant for what is considered “catastrophic” care, such as when you go to the hospital. Deductibles are generally high with these plans, and coverage is limited, but monthly costs are usually low. If you don’t have many healthcare needs, and you don’t have dependents, this type of plan can be a good choice.
On the other hand, if you have a lot of healthcare needs, it might make more sense to purchase a plan that costs more each month but has a lower deductible. These types of plans also generally come with manageable co-pays, which are what you pay out of pocket for a doctor visit or for a prescription. If a doctor visit normally costs $150, for example, your co-pay could be only $30, while the insurance company covers the rest.
Other procedures might have a co-pay expressed as a percentage. If you have a 20 percent co-pay for hospital stays, for example, it means that you are responsible for paying that portion. With a $10,000 hospital stay, you would pay $2,000 and the insurance company would pay $8,000.
If you have a partner who receives benefits at work, you can run the numbers to see what option will be best for you. It may make sense to insure your whole family with one plan, or it might be a better idea to split your insurance. A good financial planner or a knowledgeable human resources representative can help you work through the possibilities.
As you compare your options, make sure you get the coverage you need at a price you can afford, and remember that there are resources available to help you pay for your healthcare.