Doing your homework before buying health insurance is a good idea for many reasons, but perhaps none is as worrisome in the short-term than how much health insurance costs. Unfortunately, the implications are even more dire in the long-term since choosing a bad health insurance plan now could wind up costing you even more down the road. So to avoid all of this so you can keep as much of your hard earned money in your pocket as possible, due diligence is necessary.
Four Key Factors that Should Play Into Your Health Insurance Decision
So where do you start? Right here! Here are four important things to keep in mind when looking for the best health insurance plan for you and your family:
Know What Types are Which. Health insurance plans can be confusing so make sure you take the time to get to know the difference between them. HMO stands for Health Maintenance Organization and consists of a network of doctors and health care providers that you must use if you want to avoid additional costs and remain in your coverage. Look at the specific providers and the coverage area of the HMO to make sure you and your family can reasonably use these doctors and are in the defined area. Preferred Provider Plans (PPP) extend their coverage beyond the networks that HMOs cover, but you still get more benefits by staying in the network. Still, this gives you more coverage outside of the network, thus giving you more options and leeway. If you have family outside of your PPP or HMO or your providers are not in your network, consider Major Medical or Indemnity Plans.
Predict to the Best of Your Ability. Be sure to also take your family’s needs into consideration. If you only expect to use your health insurance for preventative care, a higher deductible might be an option as long as your preventative care is covered before the deductible. But if you or a family member has any preexisting conditions or will need access to many health care services, going with a plan that doesn’t have a deductible (but rather fixed copayments per service) is a good idea. Remember that your entire costs are going to be the deductibles, copayments, coinsurance and the premium. While predicting the future is impossible, try to do some risk analysis here. Do you have kids that play high-impact sports? Then chances are they might need a bone set or some type of physical therapy should they get hurt. Does cancer run in your family? Then you know screenings are going to be important for your ongoing routine healthcare. Look at what your plan covers versus what you need, what you likely will need and what you probably won’t need (e.g. if you’ve had a vasectomy, chances are you won’t need prenatal coverage).
Don’t Be Fooled by Low Premiums. A low premium might sound cheaper in the short-term, but that could wind up being the only cost you incur that is low. Insurance companies are still companies—they are looking to make a profit and chances are, they will do it one way or another. For example, even with a low premium, you still have to pay a percentage of the costs for each service you use called co-pays. You also have to pay a certain amount of money out of your own pocket every year before your health insurance will start kicking in for the bills. This is called the annual deductible. Some co-pays count towards your annual deductible, depending on the plan. On top of that, you might have to pay for coinsurance. This is a set percentage of the remaining costs all the way up to a set maximum for out of pocket costs (if there even is a maximum). Take the whole picture into account before just deciding that low premiums indicate the cheapest plan for you.
Don’t Ignore High-Deductibles. On the other side of that same coin, it’s important to not make decisions based on a plan that looks expensive when it might be cheaper in the long run. Yes, knowing that you incur another high monthly bill can be disappointing and even frightening in a world where job security isn’t what it once was, but you might be able to save money if you stay healthy. Health Savings Accounts (HSA) allow you to save money before taxes and then use that money to pay for all of your qualified medical expenses that come out of pocket, tax free. Plus, if you need that money in a bind, you can simply withdraw it for a fee, pay the taxes on it and have to use as needed in any emergency. At 65 years old, you can withdraw it all, without penalty, making it a unique way to save for your retirement while still keeping your health the number one priority during your working years.
Image courtesy Stuart Miles/FreeDigitalPhotos.net
Author Bio – This guest post is written by James Andrews from KSS Insurance, a prominent insurance service provider specializing in Obamacare insurance.