Finding the right health insurance plan that fits your needs can be a challenge. As healthcare costs continue to rise, choosing the right plan for you and your family is more important than ever. Here’s a list of 5 important considerations when starting your search…
Most people get their health insurance through their employer. If you aren’t one of those people, you can look for plans on the health insurance marketplace.
The best place to start If you’re new to this is healthcare.gov. This site was created under the Affordable Care Act, and it allows you to shop around for different health care plans.
If your employer offers health insurance, I recommend going through them. Plans in the marketplace will cost more because your employer likely pays a portion of your insurance premiums.
2. TYPE OF PLAN
There are numerous types of plans and below I’ll go over some of the benefits of each. (Source: Healthcare.gov)
Health Maintenance Organization (HMO): A plan that offers members care within a specific network. Members are required to select a primary care physician (PCP). It generally won’t cover out-of-network care except in an emergency. Your costs are typically lower with an HMO because it already has agreement in place with providers.
Preferred Provider Organization (PPO): A type of health plan where you pay less if you use providers in the plan’s network. Unlike an HMO, It doesn’t require you to choose a primary care physician (PCP). You can use doctors, hospitals, and providers outside of the network without a referral for an additional cost. With a PPO, the trade-off for receiving coverage outside of your network is usually a higher monthly premium
Exclusive Provider Organization (EPO): A managed care plan where services are covered only if you use doctors, specialists, or hospitals in the plan’s network (except in an emergency).
Point of Service (POS): A type of plan where you pay less if you use doctors, hospitals, and other health care providers that belong to the plan’s network. POS plans require you to get a referral from your primary care doctor in order to see a specialist.
Health insurance costs can vary based on several components:
Premium is what the amount that you pay for insurance. Typically charged on a monthly or annual basis.
Deductible is the initial amount you must cover before your plan begins to share the cost with you. Once you reach the deductible, your plan will begin to cover a portion of the costs for the remainder of the year.
Coinsurance percentage is the remaining charges you’ll be responsible for covering once you have exceeded your deductible. Your insurer then pays the remaining percentage.
Copay is a flat fee that your plan may require each time you visit your doctor or buy a prescription.
Out-of-pocket maximum is the cap on the amount of money you pay for covered health costs in a plan year.
4. HEALTH ACCOUNTS
When reviewing your benefits, it’s important to factor in tax advantaged medical accounts.
There are three types of health accounts available to supplement insurance coverages: HSAs, FSA, and HRAs. Here’s the main benefits of these accounts:
Health Savings Account (HSA): If you are in a high deductible health plan you can qualify for an HSA. Contributions to HSA are triple tax advantaged. This means that your contributions reduce your taxable income, any investment growth within the account is tax free, and qualified withdrawals for medical expenses are tax free.
If you don’t end up using the fund, when you turn 65 your HSA is treated like a traditional IRA where withdrawals are subject to income tax. In my opinion, the HSA is one of the best investment accounts and is far superior to the FSA.
Flexible Spending Accounts (FSA): If you are in a low deductible health plan an FSA is an employee sponsored plan that allows employees to set aside pre-tax money. The funds are subject to a use it or lose it rule. That means FSA participants typically need to spend all of their FSA funds by the end of the year.
Health Reimbursement Arrangement (HRA): This type of account is an employer funded plan that reimburses employees for medical expenses. It cannot be invested.
5. HEALTH STATUS
When looking for health insurance, you want to find the sweet spot between sufficient coverage and over-insuring.
It’s helpful to know what plan(s) work better for your circumstances. For example, if you and your spouse have unique health care needs, it may make sense to have separate plans with different benefits.
Types of plans from HealthCare.Gov
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