Health insurance is an important way to get the health care you need while protecting your finances from large medical costs. It's also important to find a health plan that fits into your budget from a trustworthy insurer.
However, not all health plans are equally beneficial.
So, how do you know if you have a good plan?
There are four essential things to look at when evaluating your health insurance options:
- Health services costs
- Prescription costs
Analyzing these four aspects will help you understand how good your health plan is and its overall affordability.
The most essential part of your health plan is what it covers. If there are medical services or prescriptions that you know you will need, check to make sure that the health plans you’re looking at covers those.
Health insurance plans on the Health Insurance Marketplace (on-exchange plans) cover the Essential Benefits outlined in the Affordable Care Act. Off-exchange plans offered by private insurers also meet these guidelines. Essential benefits include preventive care services like your annual physical, certain prescriptions and vaccinations, and care for pregnant women, children, and infants.
Plans that are not compliant with the Affordable Care Act may not cover all of the essential health benefits. These include short term health plans and indemnity plans. It’s especially important to carefully review the coverage on these plans before choosing one.
Some plans may also cover medical devices like crutches and blood sugar monitors. Coverage rules can vary by plan, so check your plan to learn more about what's covered.
Coverage also goes beyond covered services and medical devices. It includes the network of doctors and specialists included with your health plan. If you already have doctors that you like or prescriptions you require, it’s worth checking to make sure they would be covered under any new plan you’d choose.
When it comes to networks, some plans only offer in-network coverage. Other plans offer in- and out-of-network coverage, though the cost-sharing rules may put a higher burden on policyholders for out-of-network services. Emergency services are always covered, regardless of where they were received.
Keep in mind that health insurance companies have negotiated discounted rates with in-network providers, which makes visiting those providers cheaper for them. Since they do not have discounted rates from out-of-network providers, it's more expensive for the company when you receive out-of-network care. The company passes some of this expense on to you by charging higher rates in these cases.
Questions to ask yourself
- What health services do my family and I need?
- Are there procedures or surgeries that my family and I will need in the next year?
- What medications, medical devices, and prescriptions do my family and I need?
Know the answers to these questions before shopping for health insurance. This will help you quickly eliminate plans that won’t meet your health needs.
Health services costs
Many people assume that the monthly premiums reflect the full cost of the insurance plan. While premiums are the most frequently occurring cost for a health plan, the full cost also includes the cost-sharing burden on the policyholder.
Each health insurance plan has its own cost-sharing rules, so be sure to look at how much the health insurance plan covers for different medical services. This will be listed in your plan’s Schedule of Benefits. Depending on your plan’s cost-sharing rules, you may be responsible for a portion of the cost of the medical services you receive. This is in addition to the monthly premiums.
Fortunately, there are annual caps on how much you’ll have to pay for cost-sharing expenses. These are called the deductible and out-of-pocket limits. The deductible is the amount you must pay for your health expenses yourself before the insurance company will start paying some of the costs.
Don’t worry — many health plans cover preventive services fully, at no cost to you. Health insurance also gives you access to discounted, negotiated rates from health care providers in your plan’s network. These discounted rates are advantageous, even when additional coverage and cost-sharing is delayed.
The out-of-pocket maximum is the total amount you’d have to pay for health care costs for the year. Once it’s met, your insurance company will pay fully for covered services, other than your monthly premium. The deductible is often lower than the out-of-pocket max for this reason.
Copays and coinsurance count towards your deductible and out-of-pocket maximum.
Look at how high the deductible and out-of-pocket limits are for each health plan you consider. Compare the deductible and out-of-pocket limits across plans.
It can also be useful to look at differences in copays and coinsurance. Copays are a set amount that you pay when you receive medical services. Coinsurance is a set percentage of the cost of services that the policyholder is responsible for. Coinsurance can be trickier to estimate because it depends on the negotiated price the insurance company has with the doctor.
Questions to ask yourself
- What would the health services my family and I need cost under each health plan? (General information about these costs is available in each plan’s Schedule of Benefits. For specific pricing and cost information for your current providers, you can contact the insurance company directly.)
- Which plan has the best cost-sharing for specialist visits and urgent care clinics?
- Which plan has the best overall cost-sharing for the health services my family and I need?
The cost sharing methods for prescriptions varies based on what tier the prescription falls under. Depending on the plan, you’ll either pay copays or coinsurance on prescriptions.
Some health insurance plans may have different deductibles and out-of-pocket limits for medications than for other health services. Once these are met, the insurance kicks in at a higher level.
Questions to ask yourself
- What tiers are my family’s and my prescriptions in?
- What would the regular prescriptions that my family and I need cost? (General information about these costs is also available in each plan’s Schedule of Benefits. For specific pricing and cost information for your current providers, you can contact the insurance company directly.)
While the monthly premiums do not reflect the full cost of a health plan, they still contribute to the total cost of the plan and you need to make sure that they fit into your monthly budget.
Look at a few health plans to get a better sense of what current premium rates are in your area. You can also check to see if you qualify for a government subsidy that can make premiums for an on-exchange plan more affordable for you.
Questions to ask yourself
- What is the most I want to spend on health care next year? (Take the overall cost into account.)
- What is the most I can comfortably spend on premiums?
- What would I ideally spend on premiums?
Answering these questions will help you narrow down your options further and choose the most affordable plan for your situation.
Affordable health care
Fully evaluating your health insurance plan before enrolling will help you make an informed decision. Understanding the details of each health plan will help you find one that covers the medical services you need.
Looking at the deductible, out-of-pocket max, and cost-sharing amounts will give you a sense of what you’ll spend on medical care and medications in addition to the monthly premium. Working with the insurance company to get pricing on what different medical services and prescriptions would cost with a certain policy will help you understand the total cost of the plan in more detail.
Analyzing your budget, premium rates, cost-sharing expenses, and coverage are key to finding affordable health care.
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