Health insurance is the legal entitlement to payment or reimbursement for some of your medical costs. It’s regulated at both the state and federal levels.
Choosing the right health plan is a complex process. These are the essential five steps to help you locate coverage that fits your needs and price range.
Determine Your Needs
The safety net that Health Insurance offers helps you cover medical costs. Typically, you make a monthly payment (the premium) to an insurer, which pays for your healthcare costs, less a deductible. A deductible is the amount you must pay each year before the plan begins to pay. Other out-of-pocket costs may include copays or coinsurance.
When choosing a health plan, consider your budget and future healthcare needs. Specific plans offer lower deductibles and more significant premiums, while others provide the opposite. Beyond affordability, consider the potential for unforeseen health challenges. When making your selection, give careful thought to the inclusion of Critical Illness coverage. This valuable benefit provides a lump-sum payment if you are diagnosed with a severe illness, such as cancer, heart attack, or stroke. This financial assistance can alleviate the financial burden of treatment and help you focus on recovery and well-being.
A Preferred Provider Organization (PPO) offers more flexibility than an HMO by allowing you to choose providers outside the plan’s network. However, it typically has a higher premium than an HMO. Another option is a high-deductible PPO, which generally has a greater deductible and a lower monthly premium.
Determine Your Budget
Just like you budget for rent, food, clothing, and other recurring expenses, you must plan for your monthly healthcare costs. This includes your fixed premium (the amount you pay each month to have health insurance), other routine costs, such as your copay or coinsurance, and the cost of specific procedures/medications you may want to undergo.
Your fixed premium is an excellent place to start, which you can estimate by looking at your previous medical and insurance bills. This is the recurring expense you’ll need to set aside each month, especially if you don’t have an employer-sponsored plan or are shopping in the health insurance marketplace.
You’ll also need to factor in your maximum out-of-pocket costs, which is the amount you must pay in a year before your health insurance starts paying for services. This helps you avoid breaking the bank with medical expenses and is a financial safety net.
Shop for Coverage
If you’re buying your health coverage (rather than having it automatically deducted from your paycheck), you may have many questions and options to consider. You’ll also have to learn different terminology, such as premiums, cost-sharing, and deductibles.
Price is significant for many shoppers, especially when selecting individual health insurance. But it should never be the sole determining factor.
The cheapest plan may cost you more in the long run if it has a high deductible that you can’t afford to meet. It’s also essential to ensure that your chosen plan covers your preferred doctors and treatments.
For example, some plans only cover doctors in their provider network, while others don’t. Check the directory for each preferred provider before selecting a plan. It can be cheaper to see in-network doctors; some plans will pay for out-of-network visits at a lower rate.
There are three ways to get health insurance in the US: privately, through the ACA Marketplace, or an employer’s group plan. If you choose to enroll in a plan through the ACA Marketplace, you must do so during the annual open enrollment period, typically from November 1st to January 15th. Outside of the open enrollment period, you may qualify for a particular one if you experience a qualifying life event.
If you are buying private health insurance, it is essential to understand how deductibles and copays work. It is also important to read the policy terms and conditions thoroughly.
Utilizing in-network physicians and hospitals is mandatory for specific private health insurance plans. These include health maintenance organizations (HMOs) and preferred provider organization (PPO) plans. Selecting a primary care physician who will recommend you to specialists is typically a requirement of HMOs. PPOs generally do not require referrals for specialists, but they will pay lower rates for providers in their network.