You finally turned 26 and you have to shop for health insurance. Don’t settle for the plan with the lowest monthly payment or the plan your parents have.
You need to think carefully about health insurance plans and compare them. There are different variables that affect how much you’ll pay for one plan versus another.
The right plan for you should be affordable and fit your needs appropriately. It is possible to get too much coverage, believe it or not.
Continue reading to learn how to compare health insurance plans.
All Affordable Care Act (ACA) plans are required to cover preventive services such as an annual doctor visit, shots to prevent the flu and other illnesses, mammograms, and pap smears.
These types of services are completely free as long as they’re given by a professional within your plan’s network. You don’t have to worry about your deductible or a copay and coinsurance.
Many health plans outside of the ACA also include preventive care. If you decide to choose a plan from an independent marketplace, it’s wise to find one that covers basic preventive services.
How to Compare Health Insurance Plans
Health plans are made up of variables that determine how much you pay for your plan. It’s vital to consider all of the following variables when you’re shopping for a health insurance plan.
Health insurance won’t immediately cover your medical bills and dentist visits. Before your insurance will take care of these costs, you have to pay a specific amount out of your own pocket. This is called a deductible.
The deductible reverts back to zero every year. Some plans have $1,000 deductibles while others can be over $2,000. It’s rare to see deductibles $5,000 or more.
For example, if you have a $1,000 deductible, you have to pay $1,000 worth of health-related bills and then the insurance plan will begin to cover the costs.
A premium is an amount you pay monthly so that you keep your health insurance. In correlation to deductibles, your premium will be lower if you have a higher deductible.
Lower monthly payments may sound like the most affordable route, but then you’ll be forced to pay more to meet your deductible. This could land you into big trouble if you suffer a major injury or illness. You could be stuck with a medical bill for thousands of dollars.
Not only is the deductible higher, but other variables will cost you more out-of-pocket.
3. Copays and Coinsurance
A copayment is a fee that is usually charged every time you visit the doctor or obtain a health-related service. Copays are never insane amounts and can be $20 or even $10. You’ll only have to pay it when you’ve reached your deductible for the year.
The function of a copay is to discourage any unnecessary health care. If the appointment isn’t important, the patient is more likely to cancel it because then they won’t have to worry about a copay. Copays are supposed to make sure people aren’t overusing their health insurance.
Coinsurance has the same purpose. It can be said that coinsurance is more affective at discouraging than a copay because it can cost patients more.
Coinsurance is a fixed percentage of any health-related expenses. After you’ve paid the deductible, your plan may require you to pay 20% of all future bills from healthcare professionals. The health insurance will cover the other 80%.
If you have a large medical bill of $5,000 from an injury, you’d only have to pay $1,000.
4. Max Out-of-Pocket Costs
You won’t have to deal with coinsurance and copays for a full year, however. Every health insurance plan has a limit to how much someone pays out-of-pocket. Once the limit is reached, you don’t have to pay coinsurance or copays for the rest of the year.
This maximum also includes your deductible. Some plans don’t cover copayments.
Individual health care plans have lower out-of-pocket maximums than ones for families. An individual plan may have a limit of $4,000.
You don’t necessarily need to worried about a large medical bill because your coinsurance may go beyond the out-of-pocket limit. Your payments automatically stop at the limit and you may not pay the full coinsurance fee.
For example, with a $1,000 deductible that you’ve met and $500 paid in coinsurance, you’re maximum responsibility would be $2,500 of a large medical bill.
A person is eligible for a subsidy if they have an ACA plan and earn $47,000 or less a year. Subsidies are ways the government helps lower-income Americans pay for their health insurance. You can either get advance premium tax credits, Medicaid, or cost-sharing reductions.
Off-exchange plans from independent marketplaces are worth considering if you don’t qualify for a subsidy. Some of these plans are more flexible than on-exchange or government plans. They may even eliminate the need for a subsidy.
Types of Insurance Plans
The variables previously mentioned all change how much someone pays for health insurance. One plan may have a low premium but a high out-of-pocket limit.
Consider these variables as you learn about the types of health plans.
1. Low Deductible Plans
Low deductible plans require you to pay less out-of-pocket compared to a high deductible plan. A low deductible could be $1,000 for an individual and $2,000 for a family.
This kind of plan is more affordable for those who regularly visit health professionals because of an illness or prescription medications. A low deductible plan may be right for you if you have a chronic illness or are more likely to get injured.
The downside is that premiums are higher than those of high deductible plans. You’ll pay more each month but won’t have to shell out a ton of money if you have an out-of-pocket maximum you can afford.
2. High Deductible Plans
High deductible plans may have deductibles of $3,000. These plans have lower monthly premiums because you have to spend more out-of-pocket.
This plan is a good choice for young, healthy people and people who don’t have a lot of medical expenses.
Catastrophic plans are a type of high deductible plan. They’re only available to people under 30 years old and cover major illnesses and injuries. Consider this plan if you’re healthy and rarely go to doctors except for checkups.
Health maintenance organization plans (HMOs) keep your network limited. You have to choose a primary healthcare provider. A referral from them is needed in order to see another health professional.
The insurance plan also has to approve of the specialist visit or else you’ll have to pay the full bill. HMOs are popular because they have lower premiums.
Exclusive provider organization plans (EPOs) aren’t limited to one healthcare provider, but the network is still small. You won’t be covered if you see someone who is outside of the network unless there is an emergency.
Preferred provider organization plans (PPOs) also have a network of providers. As the name suggests, this is a preferred list of health professionals. If you go to one of these in-network providers, you’ll be charged an amount set by your plan and that provider.
The price to see an in-network provider will be less than that of a provider out-of-network. You don’t need to get a referral to see someone outside this network, but you’ll have to pay more.
Point of service plans (POS) may exempt visits to your primary physician and referrals from the deductible. You would only be responsible for the copay.
People with this plan can see out-of-network health professionals. The insurance won’t cover as much of the bills and you’ll likely have to pay the deductible.
Choosing a Health Insurance Plan
First-time health insurance buyers must put a lot of thought into the plan they choose. Consider how much you make in a month and if you can afford to pay a higher deductible.
Think about your yearly medical expenses. Do you go to the doctor often, get sick or injured a lot, or have a chronic illness?
One plan could be right for one person and not the other. Use this guide on how to compare health insurance plans to help you choose a fitting plan.