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Time is usually limited in choosing the best health insurance plan for your family, but rushing around and choosing the wrong one can be costly. Here’s a start-to-finish guide to choosing the best plan for you and your family, whether through the federal market or through an employer.
Step 1: Choose Your Health Plan Market
Most people with health insurance get it through an employer. If you are one of those people, you won’t need to use government exchanges or insurance markets. Essentially, your business is your market.
If your employer offers health insurance and you want to look for an alternative plan in the exchanges, you can. But the plans on the market are likely to cost a lot more. This is because most employers pay a portion of workers’ insurance premiums and because the plans have lower total premiums, on average.
If your job doesn’t provide health insurance, shop your state’s public market, if available, or the federal market for the lowest premiums. Start by going to HealthCare.gov and by entering your postal code during the open registration. You will be sent to your state’s exchange if there is one. Otherwise, you will be using the federal market.
You can also purchase health insurance through a private exchange or directly from an insurer. If you choose these options, you will not be eligible for premium tax credits, which are income-based rebates on your monthly premiums.
Step 2: Compare the types of health insurance plans
You will come across alphabet soup while shopping; the most common types of health insurance policies are HMO, PPO, EPO, or POS plans. The type you choose will help you determine your personal expenses and which doctors you can see.
While comparing the plans, look for a summary of the benefits. Online marketplaces usually provide a link to the summary and display the cost near the plan title. A provider directory, which lists physicians and clinics participating in the plan’s network, should also be available. If you go through an employer, ask your benefits administrator for the summary of benefits.
Comparison of health insurance plans: HMO vs PPO vs EPO vs POS
When comparing different diets, look at your family’s medical needs under a microscope. Look at the amount and type of treatment you have received in the past. While it’s impossible to predict all medical expenses, being aware of trends can help you make an informed decision.
If you choose an HMO or POS plan, which requires referrals, you usually need to see a primary care physician before planning a procedure or seeing a specialist. Because of this requirement, many people prefer other plans. Due to the restrictions, however, HMOs tend to be the cheapest type of health plan, overall.
POS and HMO plans may be better if you don’t mind having your GP choose specialists for you. One of the benefits is that there is less work on your end, since your doctor’s staff coordinate visits and manage medical records. If you choose a point-of-sale plan and go out of the network, be sure to get your doctor’s referral ahead of time to reduce out-of-pocket expenses.
If you prefer to choose your specialists, you might be more satisfied with a PPO or an EPO. An EPO can help keep costs down as long as you find suppliers in the network; this is more likely to be the case in a larger metropolitan area. A PPO may be preferable if you live in a remote or rural area with limited access to doctors and care, as you may be forced out of the network.
What about an HDHP with a health savings account?
A high deductible health plan can be any of the above types – HMO, PPO, EPO, or POS – but follows certain rules in order to be “HSA eligible”. These HDHPs usually have lower premiums, but you pay higher out-of-pocket expenses, especially up front. These are the only plans that allow you to open an HSA, which is a tax-efficient account that you can use to pay for healthcare costs. If you are interested in this arrangement, be sure to learn the ins and outs of HSA and HDHP first.
” MORE: HSA vs FSA: what’s the difference?
Step 3: Compare the health plan networks
Costs are lower when you see a network doctor because insurance companies contract lower rates with network providers. When you go out of the network, these doctors don’t have agreed rates, and you usually have to pay a higher portion of the cost.
If you have favorite doctors and want to keep seeing them, make sure they are listed in the vendor directories for the plan you are considering. You can also ask your doctors directly if they take a particular health plan.
If you don’t have a doctor of choice, look for a plan with a large network for more choices. A larger network is especially important if you live in a rural community, as you’ll be more likely to find a local doctor who will follow your plan.
Eliminate any plans that do not have local doctors in the network, if possible, and those that have very few provider options compared to other plans.
Step 4: Compare the reimbursable expenses
Reimbursable expenses are almost as important as the network. The summary of the benefits of any plan should clearly state how much you will need to pay out of pocket for the services. The Federal Marketplace website offers snapshots of these costs for comparison, as do many state markets.
It is here that it is useful to know a few words of the vocabulary of health insurance. As a consumer, your share of the costs consists of the deductible, co-payments, and coinsurance. The total you can spend in a year is limited and this maximum amount is also shown in your plan information. In general, the lower your premium, the higher your out-of-pocket expenses.
Your goal during this step is to narrow down the choices based on reimbursable expenses. A plan that pays a higher portion of your medical bills, but has higher monthly premiums, may be better if:
- You frequently see an attending physician or specialist.
- You often need emergency care.
- You regularly take expensive or brand name drugs.
- Are you expecting a baby, planning to have a baby, or have small children.
- You have planned surgery ahead.
- You have been diagnosed with a chronic disease such as diabetes or cancer.
A plan with higher out-of-pocket expenses and lower monthly premiums might be the best choice if:
- You can’t afford higher monthly premiums for a plan with lower reimbursable fees.
- You are in good health and rarely see a doctor.
Step 5: Compare the benefits
Right now, your options are probably limited to a few. To dig deeper, come back to this summary of benefits to see if any of the plans cover a wider range of services. Some may have better coverage for things like physical therapy, fertility treatments, or mental health care, while others may have better emergency coverage.
If you skip this quick but important step, you may be missing out on a plan that’s much better suited for you and your family.
Once you’ve chosen a few options, it’s time to answer all of the outstanding questions. In some cases it is enough to speak to one person, so maybe it is time to call the customer service lines for the plans. Write down your questions in advance and have a pen or computer handy to record the answers.
Here are some examples of what you might ask for:
- I am taking a certain medication. How is this covered by this plan?
- What medications for my condition are covered by this plan?
- What maternity services are covered?
- What happens if I fall ill while traveling abroad?
- How do I start registering and what documents do I need?
One final tip: don’t forget to end your old plan, if you have one, before the new one starts.
Checklist: Choosing a health insurance plan
Here’s a quick summary of the above steps:
- Go to your marketplace and view your plan options side by side.
- Decide what type of plan – HMO, PPO, EPO, or POS – is best for you and your family, and whether you want an HSA-eligible plan.
- Eliminate plans that exclude your doctor or any local doctor from the provider network.
- Determine if you want more extensive health coverage and higher premiums, or lower premiums and higher out-of-pocket expenses.
- Make sure that any plan you choose will pay for your regular and necessary care, like prescriptions and specialists.