Health insurance plans are extremely complex, and come in many shapes and sizes. Determining which insurance plan is right for you is a complicated process. Obviously, you need to take into account your age, job, income, number of dependents, general health, number and severity of preexisting conditions, and other factors. Health insurance companies won’t do much to help you pick, since they’re primarily concerned in making money off of you. And the government is just making the process worse by adding levels of bureaucracy and regulation.
If you receive health insurance through your job, your first step should be to consult with your employer. Most companies offer a limited array of coverage, allowing you to select from an HMO and PPO, and then from a list of primary care providers. Lower wage jobs may offer more limited health care plans that will only pay for a certain amount of coverage per year. Talk with the accountant at your place of work and figure out what your options are.
But since not all insurance plans are created equal (or right for you), here’s a rundown of seven things to remember when picking a health insurance plan:
Keep a close eye on the yearly deductible
Insurance plans with high yearly deductibles won’t start paying for coverage until after you’ve paid a certain amount. You should determine what level of deductible is good for you based on the amount of coverage that you’ll need. If you suffer from a medical condition and require frequent trips to the doctor or hospital, you’ll obviously want a low deductible. But if you’re young and in good shape, signing on for a plan with a high deductible will keep your monthly premiums much lower. Just be mindful that you’re assuming greater risk with a high deductible.
Know your location
The state you live in can go a long way towards determining how expensive your health care will be. These trends change occasionally, but generally the most expensive health insurance plans are found in the northeast while the least expensive are found in the West and South. Massachusetts has been consistently rated as having the most expensive health insurance in the nation thanks to government “reforms” enacted there in 2006. At the same time though, northeastern states including Massachusetts have some of the best hospitals in the country. If you’re thinking about moving or live near a state border, you should research how expensive your health insurance costs will be – and how good the medical infrastructure is there. The same can be true on a local level; simply relocating a short distance, such as across a county line, can mean important differences in health care costs and access to quality care. Be sure to look into local variations if you are selecting a community to retire to.
Ask for a “free look.”
Believe it or not, many insurance plans offer free trial periods called free looks. If your insurance company offers a free look, you’ll have a matter of weeks to try out your health plan and see how you like it. If it’s not for you, you can get a full refund at the end of the trial period. Just make sure you carefully read all the rules and restrictions governing the free look period. Otherwise you may not qualify for that refund.
This isn’t feel-good nonsense; it’s very important when selecting a health insurance plan. Are you generally healthy or do you suffer from any medical conditions? Are you a risk-taker, or do you prefer to play it on the safe side? If you get sick, are you more likely to go to the doctor for immediate care or wait it out until your body heals? Buying health insurance is largely an issue of deciding between costs and risk. Should I pay more in premiums or risk paying much more if I need a major operation later in life? Knowing yourself well is the only way to answer that question.
Determine the lifetime maximum benefit
Often unknown to customers, many health insurance plans come with a lifetime maximum benefit. This is literally the maximum total amount of coverage you can receive while on the plan. (Bear in mind that many, though not all, new health insurance plans won’t have lifetime maximum benefits if the the 2010 health care ‘reform’ law holds up.) Again, this is a matter of risk. If you’re willing to take the chance, you’ll pay lower premiums for a lower lifetime maximum benefit. Obviously patients with serious and recurring medical conditions should steer clear of low lifetime maximum benefits.
Stay up to date on new laws governing health insurance
The government’s intervention in the health insurance industry has created a market that’s constantly changing. The 2010 health care ‘reform’ law, the Patient Protection and Affordable Care Act, for example, establishes insurance exchanges at the state level through which consumers can select from a menu of insurance plans. The law also allows young adults to remain on their parents’ insurance plans until they’re 26, which could be useful if your son or daughter suddenly loses a job.
As the health ‘reform’ law is taking its toll on the economy and on individuals, we can only hope that the government will cut back on its meddling ways, if not repeal Obamacare altogether. Early signs are not optimistic and the punitive penalties are growing each year. Stay abreast of what happens and pay particular attention to how changes may impact you. If there are any changes that impact your plan, you need to know about them.
Don’t be afraid to consult an insurance broker
Brokers can be pricey. But this is nothing less than your health that you’re talking about. If you still have serious doubts about which health insurance plan to purchase – and especially if you have a debilitating medical condition – try a one-time consultation with a broker who specializes in health insurance.
It may be that you think you’re looking for one thing, and in fact you need another. For instance, do you know the difference between Kaiser Permanent and Blue Cross Blue Shield/Anthem? Kaiser is a Medical System, BCBS is an insurance carrier that has relationships with doctors and hospitals and offers varying services such as an HMO (you use a selected network of providers) service and a PPO (you can select your caregivers) service.
The key difference with the KP system is that it is prepaid and so the incentive is to help patients stay healthy and get better faster and in an effective and efficient manner. In the Blue Shield model (unless you are in an HMO plan) your providers are paid more the sicker you are and the more they see you and do to you and order for you. No system is perfect but the incentives are aligned to promote health in one and to promote treatment in the other. Kaiser is not the only system that does this but is the most well known.
The Squirrel says: Generally fit and want to save money? High Deductible, HSA-compatible Health Plans: A high-deductible plan can be cheaper than regular plans on a monthly basis, because your coverage doesn’t begin until after you’ve paid for any health care up to the deductible amount (usually a few thousand dollars). Using a Health Savings Account (HSA), you can put away money towards that high deductible using pre-tax dollars, for some significant tax savings, and unlike FSAs, your money doesn’t have to be all used up every year. eHealthInsurance has a calculator for you to see the tax savings you can get using a HSA.