Health insurance can seem hopelessly complicated, yet it may impact your everyday life more than any other kind of insurance you buy.
Your auto and home insurance, for example, protect expensive assets, but you may go years or even decades without filing a claim.
Life insurance should protect your family’s financial health when you die, but most of us expect that will be a long, long time from now, right?
Meanwhile, you could be dealing with your health insurance provider on a monthly or even weekly basis, depending on your health and the health conditions of your family members.
Or, even after going years without needing much medical attention, you could have an accident or an injury requiring hundreds of thousands of dollars in medical care.
Health insurance exists to insulate you from out-of-control medical costs which otherwise could put you in serious debt.
Having the right health coverage at the right price is essential.
And by price I mean copays, deductibles, and annual caps along with regular premiums, all of which combine to create the real cost of your health coverage.
Why is Health Coverage So Complex?
Health insurance includes a lot of moving targets:
- The cost of care can rise dramatically from year to year, especially when advances in medical technology change the quality of care.
- Federal and state governments frequently change regulations for insurers.
- Employers who help pay for coverage can alter the percentage they pay or even eliminate employer-sponsored plans.
- New research can change the way doctors treat certain health conditions, affecting cost.
- You, as the patient, can get a new diagnosis or have an accident or sudden illness, increasing the cost of your care overnight.
Because of these moving parts, a plan that covers you pretty well this year may be inadequate next year.
Or, the price you’re paying for care may increase, making it harder to keep the same level of coverage in place.
Control what you can.
Acknowledge your own specific needs before buying a health plan, then revisit your needs each time you renew or re-enroll in your plan.
There’s only so much you can control, though.
Other factors, such as where you get your insurance, will impact your choices:
- If you have an employer-sponsored plan, it may offer only two or three plan options.
- If you’re younger than 26 and can stay on your parents’ or guardians’ plan, you’re limited by their choices.
- If you’re a student on a university-sponsored plan, your institution may offer only one choice.
- If you qualify for Medicaid or Medicare, politicians may control what your plan covers, and it may change from year to year depending on your state’s political climate.
- Political leaders may also have a say in your coverage if you buy a plan through the Marketplace, created by the Affordable Care Act of 2010.
- Even if you buy your own coverage from an insurance provider, the amount in premiums and other fees you can afford will limit your choices.
First Step: Determine Your Needs
Even though you can’t control every variable in your health care situation, identifying what kind of plan you need will help.
Knowing what you need creates a standard.
Then you can assess available plans to see whether they come close to or meet your standard.
Here are some common needs to consider:
- Do you have a long-term relationship with a medical provider? You may want to make sure his or her care will be covered by your plan. This is especially important when you enter an HMO (details below).
- Do you (or a member of your family) have a chronic medical condition? If so, you may want a plan that offers flexibility when choosing medical specialists.
- Are you young and enjoy great health but have a very limited monthly budget? You may want to consider a catastrophic plan that would kick if you had an accident or sudden illness.
- Do you qualify for Medicaid but need more coverage than the program offers? You may want to look for supplemental coverage.
Once you have an ideal plan in mind, it’s time to look at the different kinds of plans and places you can get them.
Learning About Different Kinds of Health Plans
Many of the variables above will help determine what kind of health plan you need to buy.
Not all kinds of plans will be available to every shopper.
Health Maintenance Organization (HMO)
An HMO offers a network of providers and health care facilities from which you can choose, and your primary care physician acts as the hub of your network.
When you need to see a specialist, your primary care physician must make a referral, and he or she will almost always refer you to an in-network specialist.
When you stay within the network, things should go smoothly.
You seldom need to file paperwork; out-of-pocket costs tend to remain manageable.
But going out of network can cost you a lot.
If you visit an out-of-network specialist or hospital, you’ll be expected to pay the full price out of pocket.
If you’re away from home and have an emergency requiring you to visit an out-of-network hospital, your HMO can make an exception and cover the bill.
Even then, your HMO may not cover the doctors who treated you at that hospital.
Usually, you can find a good hospital and primary care physician in the network; finding specialists you like can be more challenging in some networks, though.
Preferred Provider Organization (PPO)
A PPO relaxes the limits of an HMO to a certain degree. A PPO still builds a network of providers, and you’d do better to stay in-network.
But if you go out of network, you aren’t on your own: Your PPO will reimburse you some of the costs.
You’d need to file paperwork to get reimbursed, and your plan will most likely cover a lower portion for out-of-network care than it would for in-network care.
But if you’d like more freedom to choose your own providers — especially the freedom to see a specialist without a primary care physician’s referral — a PPO can offer it.
A PPO tends to cost more in premiums than an HMO.
Exclusive Provider Organization (EPO)
An EPO mixes the features of an HMO and a PPO.
As with a PPO, an EPO does not require a referral to see a specialist.
But like an HMO, your EPO will not usually help pay for out-of-network visits.
Point of Service Plan (POS)
A POS is yet another mix of an HMO and PPO.
Like an HMO, you do need a physician’s referral to see a specialist.
Like a PPO, you can get some reimbursement even if you go out of network.
If you’re younger than 30, you can buy a catastrophic plan, which requires you to pay a high deductible — usually well into the thousands of dollars per year — before the insurance plan kicks in.
You may like this kind of plan if you want some insulation from the huge hospital bills that would result from an accident or sudden illness but you don’t plan to visit the doctor or the pharmacy on a regular basis.
Supplemental Care Plan
If you have a good health plan but you’d like more coverage for specific situations, you can buy a supplemental plan.
Your supplemental plan can pick up where your primary plan stops paying, reducing or sometimes eliminating your out-of-pocket expenses.
Some people buy supplemental plans to cover medical costs after an accident or hospitalization.
Beyond Premiums: The Real Cost of Health Coverage
The amount you spend on health insurance can be hard to track because you spend the money in a variety of ways:
- On insurance premiums: This is the regular bill paid to keep the health plan active. Historically, employers in the United States have deducted premiums from your paycheck and also have helped pay the premiums as a benefit of employment. This has been changing over the past couple decades.
- On copays: Most insurance plans require policyholders to pay a fee at the doctor’s office or pharmacy. The fee — usually ranging from $25 to $50 — may be only a fraction of the amount the provider bills, but copays still add up.
- On uncovered percentages: Along with a copay you may be responsible for a percentage of the provider’s bill. If your plan pays 80 percent of a radiologist’s bill, for example, you’d be responsible for the remaining 20 percent.
- On deductibles: Before your health plan starts paying, it may be require you to spend money out of pocket first. These payments to unlock coverage are called deductibles. Plans with higher deductibles usually offer lower premiums.
- On post-cap expenses: Because of the Affordable Care Act, insurance plans can no longer put lifetime spending caps on patients for essential services. However, an insurer can cap expenditures for non-essential services. We’ll get more into essential services below.
Think beyond the premium when shopping for the right plan. Consider all of the ways you can spend money on health care and look for a plan that fits the way you live.
A plan with high deductibles and expensive co-pays can lower your monthly premiums, for example, but would you be spending more on the deductible and copays than you would have spent on the premiums?
If so, you may do better with a different plan structure.
Only you can answer such a question, though. If you aren’t sure, look back on the past couple years. How often have you (or a covered family member) needed medical care? Do you have expensive prescriptions that may cost hundreds of dollars a month?
What Are Essential Health Care Benefits?
Along with requiring everyone to have health insurance and providing tax rebates to help qualified buyers pay their premiums, the Affordable Care Act of 2010 also identified “essential benefits” all health insurance plans must provide:
- Ambulatory Patient Care: This is a fancy term for going to the doctor when you’re sick.
- Prescription Drug Coverage: A plan must provide at least one drug in every category of pharmaceuticals.
- Emergency Care: A plan must cover emergency room visits when needed.
- Mental Health Care: Sometimes known as behavioral health, a plan must cover these services.
- Hospitalization: Your health care plan is required to pay a percentage of your hospital bill.
- Therapeutic Care: You may need physical or occupational therapy after an illness or accident. Your plan must cover this.
- Preventive and Wellness Care: Preventing an illness can save a tremendous amount of money. It makes sense that a plan should cover this.
- Laboratory Services Coverage: Insurers must help pay for your lab tests. These can also help prevent serious problems by detecting early signs.
- Pediatric Care: Children under 19 years old must get routine health care, including basic dental and vision benefits.
- Maternity and Newborn Care: A plan must cover maternity care and care for newborn babies.
If your plan would not offer one or more of the essential benefits, you could still face the Affordable Care Act’s tax penalty which is levied against people without any health coverage.
Do You Already Have Access to Health Insurance?
People who can find health coverage from another source may not need to shop for their own coverage. If you are:
- Younger than 26 and your parents or guardians have a family health plan? You can remain under their plan until your 26th birthday.
- 65 or older? Medicare covers citizens age 65 and older. Enrollment requirements vary from state to state.
- Financially challenged? Medicaid covers individuals and families who meet income qualifications. The qualifications vary from state to state. In some states, individuals earning less than 133 percent of the poverty level can get free coverage.
- Have help from an employer? Many employers still subsidize health plans for their employees. If you have this option available, it makes sense to buy in.
- A student? Many universities also offer health plans for students. While you usually can’t customize your coverage, student plans should be affordable, and you may even be able to pay premiums with scholarship or Financial Aid benefits.
People in these categories can still shop for their own primary coverage, but it may be difficult to find a better deal than what you already have available.
If you’re between 26 and 65 and cannot access Medicaid or a university or employer-sponsored health plan, it’s time to get health insurance quotes.
How to Get the Best Health Insurance Quotes
Here’s where the confusion can begin, so let’s backtrack and acknowledge what we already know:
- You know you need health insurance to insulate you from out-of-control costs resulting from an illness or an accident and to pay for preventive care. You also need care to avoid paying a tax penalty through the Affordable Care Act.
- You’ve thought about your specific needs and know whether a PPO, HMO, or some other alternative would best fit your needs and the needs of your family.
- You know to think about more than just premiums: copays, caps, and deductibles can add significantly to the cost of your plan.
- You know to find a plan offering the 10 elements of essential care outlined by the Affordable Care Act.
Ways to Get Quotes for Health Insurance
You’re well-armed with knowledge and are ready to shop for care.
Where do you begin?
Here are some options:
The Affordable Care Act created health insurance exchanges where you can get connected with a variety of health care plans, but only during Open Enrollment periods.
Enrollment periods usually begin in November and last about six weeks.
You can apply to enroll at other times during the year, but don’t expect an exception unless you’ve lost your previous insurance or had a life-changing event such as a new baby, a move, or a death in the family.
Despite its rocky start, HealthCare.gov can be helpful and simple to use, especially when you can qualify for tax subsidies, offsetting the cost of your care plan.
While shopping, you will likely come across this tiered system of plan levels which seems simple enough but can include a lot of nuances:
- Bronze: The insurer pays 60 percent of your care while you pay the other 30 percent
- Silver: The insurer pays 70 percent and you pay 30 percent.
- Gold: The insurer pays 80 percent; you pay 20 percent.
- Platinum: The insurer pays 90 percent; you pay 10 percent.
Despite this simple breakdown of costs, you’ll find some important differences within each category.
A Bronze plan, for example, could be an HMO or a PPO.
Different Bronze plans may also break down your portion of the costs differently.
Some may have higher deductibles and lower copays than other plans in the same category, for example.
So use your knowledge of these price-determining factors even when you see these simple categories.
Directly from a Provider
Buying health insurance directly from a provider offers a wider variety of options.
However, you can’t take advantage of tax subsidies.
Even without subsidies, any plan you buy must still meet the standards for essential care, and many insurers will use the metal-based tiers (Bronze, Silver, Gold, Platinum) to describe their plans.
You could spend weeks comparing plans, or you could hire an independent insurance agent to help.
Independent agents know nuances in the market and can more easily find a plan for you and your family.
Shop Exclusively Online
Since you can get a mortgage, a car, or even visit a doctor online, couldn’t you also find the right health insurance plan online?
Sure you can.
Just be sure you’re working with someone who knows the market, knows your needs, and won’t sell you a plan that doesn’t meet the essential standards.
Live Smart, Be Healthy, and Have a Backup Plan
Not to scare you, but your health really can change overnight.
Along with changing your lifestyle and your daily routine, a health crisis can also threaten your financial future.
How you eat, whether you exercise, your driving habits, and other choices you make can affect your chances of developing a serious illness or suffering an accident.
Still, life is unpredictable.
For the perils you can’t out-maneuver, your health insurance plan should be there to help insulate your exposure to the ever-rising costs of care.