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When buying health insurance, there are several options to choose from. The process can be overwhelming. Luckily, you are not alone. Selecting the right coverage for you or your family is an important decision that can greatly benefit your peace of mind, well-being, and long-term finances. To help you relax, we have put together some help for buying health insurance and useful tips to consider.
What Is Available for Your Needs When Buying Health Insurance?
The kind of health insurance an individual may need and have access to will vary due to several factors, including the number of independents on the plan, pre-existing medical conditions, age, employment, etc. Typically, the coverage needed for a family will be higher than that of a single individual. However, even if you are insuring just yourself, you may have a chronic medical condition that may require several doctor visits or medications. This situation might get quite pricy in the long term and may even equate to the cost of insuring a whole family. Similarly, as we age, our bodies lack the strength and endurance they once had during our youth. The immune system and metabolism can weaken with age, which may lead to needing medications and supplements. This necessity can perhaps also lead to the need for a plan with higher coverage.
The most common way non-government workers in the United States receive insurance is through their place of work. Depending on your employer, they may offer a few options for health insurance plans. If your place of work does not provide this, you are self-employed, or you are unemployed, you may be eligible to purchase insurance via insurers or federal healthcare programs. If you are employed and unsure of what is available, you may ask a higher-up or read your employee handbook. If you are unemployed or your employer does not offer an insurance plan, you can verify your eligibility for federal healthcare online.
Understanding the Types of Health Insurance Plans
The day has finally come, and it is time to choose a plan, but how should you do it? How do you know what would work best for your needs? The first thing an individual must know before making a decision is to understand at least basic insurance terminology and the different types of plans.
Some terms used with health insurance include:
- Health Insurance – a service that assists with payments for medical costs and fees.
- Premium – the monthly membership payment for the insurance plan.
- Out-of-pocket expenses – these are the costs for healthcare that the insurance will not cover, including:
- Deductible – the dollar amount one must pay before insurance begins to help cover medical charges.
- Copay – the fixed amount paid whenever utilizing a healthcare service.
- Coinsurance – the percentage amount paid whenever using a healthcare service.
Once you have a basic grasp of health insurance’s purpose and some key terminology, it is time to explore the different types of plans at your service.
The four kinds of plans include:
- A Health Maintenance Organization (HMO) is a plan that states you must use specific medical providers within the HMO. Otherwise, you may have to pay full price on fees. The choosing of a primary care physician is also required. Generally, a referral from your PCP is required to visit specialist medical professionals.
- An Exclusive Provider Organization (EPO) is a plan similar to an HMO, but a primary care physician is not required. You must still only use medical providers who are a part of the EPO.
- A Preferred Provider Organization (PPO) is a plan that allows a member to visit and use any medical provider. However, if you use a medical provider who is part of the PPO, your out-of-pocket costs will be lower than a provider outside of the PPO.
- A Point of Service (POS) is a plan similar to a PPO. You may visit any medical provider, but you are required to have a primary care physician. Typically, a referral from your PCP is required to see a specialist medical professional.
In general, insurance plans that allow much more freedom to visit whichever medical professional you want, such as PPO and POS, will have higher premiums than insurance plans that require only the visit of specific medical providers, HMO and EPO. Other factors will affect overall costs, but this characteristic is a significant distinction.
Premiums vs. Deductibles
A substantial factor when purchasing insurance is the overall out-of-pocket expenses, including the plan’s premium and deductible. Let’s say Individual A is in their youth with a healthy lifestyle. He will likely require less coverage than Individual B, who is older and follows unhealthy practices. For Individual B to have help covering his abundant fees, his monthly premium may be higher than Individual A’s. The most common plan typically has either a low premium, high deductible, or a high premium and low deductible. If you are young, it may be a better choice to go with a plan with a lower premium and higher deductible, but when it comes to paying for medical fees, your out-of-pocket cost may be high, and reaching your deductible may take longer, which can delay insurance coverage. These factors will vary from person to person, the selected health insurance plan, and the insurance provider.
If you are eligible or soon-to-be eligible for Medicare, you can read more about the different plans and their details on our website here.
Seeking Professional Advice
Per discussion, buying health insurance can be complicated, but professionals can provide advice tailored to your insurance needs. Consulting with an insurance agent who can provide information on plans and help match you with the best option is a great solution. Insurance brokers can compare plans across several health insurance providers and advise on the best choices. Certified Financial Planners (CFP) can offer an economic opinion and perspective by informing you how health insurance fits into your overall finances. These professionals can help you better balance your coverage with any other financial goals you wish to achieve. Consulting with experts can be a great source of support and ensure you make the best decision.
If you enjoyed this article and want to learn more about maintaining a good budget for your insurance, you may be interested in learning more here!
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