The health insurance landscape can be tricky to navigate, whether you’re going through the federal marketplace or through an employer.
Luckily, you’ve got a nerdy friend on your side to help you whittle down the choices and choose the best plan for you and your family. Here’s how to proceed—start to finish.
Start as soon as possible
Procrastination is not your friend when choosing a health insurance plan. Since many people wait until the last minute, websites may be slow and customer service lines may become backed up closer to the deadline. You also may have a lot of options to compare. The more time you have to scrutinize each, the better your chances of finding the best fit.
In the interest of saving yourself time and a last-minute headache, it may help to brush up on health insurance terminology in advance. Then, take the following steps to determine which plan is right for you.
Evaluate the networks of different plans
If you have doctors you like, you don’t want to be forced to leave them when you switch insurance plans. Call your doctors to ask which health insurance networks they’re included in. As an alternative, you can search the specific online directories for each plan you’re looking at later to see if your doctors are listed.
If you don’t have a preferred doctor, or have recently moved, you’ll still want a large network of doctors from which to choose. That will be easier once you’ve got the plans right in front of you; more on that below.
Find your Marketplace
Most people get health insurance through an employer. If this is your situation, you won’t need to use the government insurance exchanges, also known as marketplaces. If you wish to search for other plans in the exchanges, you may do so. However, if your employer already offers health insurance you may not qualify for premium subsidies, which lower monthly costs in exchange plans.
Those without employer-provided insurance should look to the Affordable Care Act marketplaces for health insurance. Several states run their own marketplaces, and the federal government runs the insurance exchange for everyone else. If you’re not sure whether your state has its own marketplace, head over to the federal marketplace, HealthCare.gov and type in your ZIP code. The site will redirect you to a state website, if appropriate.
You can also purchase insurance through a private exchange or through an insurer’s website. If you choose one of these options, you will not be eligible to receive premium subsidies, which are tax credits that work as discounts to your monthly premiums.
Pinpoint maximum premium budget
Before deciding on a premium budget (how much per month you can spend on health insurance), you’ll want to consider your regular monthly expenses and your typical health expenses. Since lower premiums often mean higher out-of-pocket costs, the cheapest plan available may actually prove very expensive if you access lots of health services throughout the year.
If possible, try to estimate how much you spent last year in total on health care, including premiums and out-of-pocket expenses. If you expect to have similar expenses this year, try and choose a plan with similar premiums, copays and deductibles. Note that this year, premiums will be a little higher than last year by about 10%, according to Kaiser Family Foundation.
In some cases, you’ll want to expand your health coverage considerably. By choosing a plan with a higher premium, you could save yourself a lot of money on out-of-pocket costs if you need frequent health care or expensive procedures. This is generally true for people with planned medical expenses, including (but not limited to):
- Having a baby
- Planned surgery, like a knee or hip replacement
- Increased volume of care due to a new diagnosis
You can only go so far with estimates, though. At any time, you or a family member may fall sick. For this reason, many people choose to have the most comprehensive insurance they can afford.
If you can’t afford a very high premium, consider a high-deductible health plan with a health savings account, or HSA. An HSA can help you save money for health expenses, which you can withdraw to pay medical bills later, untaxed, but you have to have a high-deductible plan to qualify for one. The good news is that these plans generally have lower monthly costs. If this sounds like a good option for you, consider how much you can save per month by going with a lower premium, and plan to contribute those savings to your HSA.
Choose plan structure and network
Once you’ve decided what you can afford, it’s time to determine a plan structure, which will, in part, determine your plan’s network.
Health insurance plans most commonly come as HMOs, PPOs, EPOs, or POS plans (spelled out in table below). Which type of plan you choose will help determine your costs and which doctors you can see. The type of plan should be included in the plan’s title and on the plan summary of benefits, which should be available online to help you compare plans. A link to the summary is usually near the plan’s title and cost on any online marketplace, and access to a provider directory should also be nearby. If you’re going through an employer, your boss’ insurance representative should have this information.
Types of health insurance plans
|Plan Type||Do You Have to Stay In-Network to Receive Coverage?||Do You Need a Referral for Procedures and Specialists?||Best for You If:|
|HMO (health maintenance organization)||Yes, except for emergencies||Yes||You want lower out-of-pocket costs and a more guided health care experience.|
|PPO (preferred provider organization)||No, but in-network care is less expensive.||No||You want more provider options and no required referrals.|
|EPO (exclusive provider organization)||Yes, except for emergencies||No||You want lower out-of-pocket costs but no required referrals.|
|POS (point of service) plan||No, but in-network care is less expensive. You still need a referral to go out of network.||Yes||You want more provider options and a more guided health care experience.|
The above table summarizes the most common plan types and their characteristics. Many wonder why referrals are a big deal. Plans using referrals (HMO and POS) require you to see your primary care physician before you can schedule a procedure or visit with a specialist, and because of this extra visit requirement, many people prefer other plans.
Now, back to that network. If you’ve got the list of networks your preferred doctors gave you, eliminate any plans they don’t take. If you don’t have a preferred doctor, you’ll probably want a plan with a large network so you’ll have more options to choose from. If you live in a rural community, a large network is especially important—health insurance isn’t very helpful if it covers no doctors in your area.
Before moving on, eliminate any plans that don’t have in-network doctors in your area, and those with very few options compared to other plans.
Compare out-of-pocket costs
Only slightly less important than network size and scope is cost sharing. Any plan’s summary of benefits should clearly lay out how much you’ll have to pay out-of-pocket for certain services. The federal marketplace website gives a snapshot of these costs for comparison, as do many state marketplaces.
This is where those health insurance vocab words come in—cost sharing can get very confusing. As the consumer, your portion of costs consists of the deductible, co-pay, and coinsurance. Many people confuse a deductible with total out-of-pocket costs. However, it’s that second number that will determine the maximum you will pay for care in addition to premiums.
As far as what plans cover, options vary, so your next goal is to narrow down choices based on out-of-pocket cost sharing.
You may want a plan with low out-of-pocket costs if:
- You see a doctor, such as a specialist, on a regular basis
- You frequently need emergency care
- You take expensive or brand-name medications on a regular basis
- You are expecting a baby, plan to have a baby, or have small children
- You have a planned surgery coming up
- You’ve recently been diagnosed with a chronic condition such as diabetes or cancer
You may want a plan with higher out-of-pocket costs if:
- You cannot afford a plan with lower out-of-pocket costs
- You are in good health and rarely see a doctor
- You rarely participate in activities with a high risk of injury
Compare covered benefits
By now, you (hopefully) have your plan options narrowed down to just a few. To narrow down further, go back to that summary of benefits to see if there are any plans that cover a wider scope of services. Some may have better coverage for things like physical therapy or mental health care, while others might have better emergency coverage. By skipping this quick but important step, you could miss out on a plan that’s much better tailored to you and your family.
Once you’ve got your plan options down to one or two, it’s time to address any lingering questions you may have. In many cases only a live human will do, so this is the time to call up the customer service line of any insurers you’re considering. Have your questions written down ahead of time, and have a pen or computer handy to record the answers.
Your questions will be specific to you and based on your current health situation. Some possible questions to ask include:
- I take X medication. How is that covered under this plan?
- What happens if I get sick when traveling abroad?
- Which drugs for X disease are covered under this plan?
- What maternity services are covered?
- How do I get started signing up, and what documents will I need?
Not everybody needs to take this step; you may be able to just choose and move on, purchasing your health plan. Don’t forget to discontinue your old plan before the new one starts, if switching, and good luck shopping.