How to Choose the Right Health Insurance for You

Do you know how to choose the right health coverage for your needs? Navigating health insurance options can be overwhelming, and if you don’t understand the jargon used to describe plans, you could end up with one that doesn’t fit your budget or give you the benefits you need. Whether you’re shopping for an individual health plan or a Medicare plan, learn how to compare plan options before you buy.

Health Plan Types

Health plans come in different varieties. The type of health plan you choose can impact both your costs and your coverage. Common plan types include:

• Health Maintenance Organizations (HMOs) typically require members to use providers within the plan’s network. With the exception of emergencies, if you see a provider who is not in your plan’s network, you probably won’t have coverage, meaning you’ll have to pay for the full costs on your own.
• Preferred Provider Organizations (PPOs) incentivize members to use network providers with lower out-of-pocket costs. If you see a provider who is outside of your network, your costs may be higher.
• High-Deductible Health Plans (HDHPs) have a large deductible that must be paid before the insurer begins paying its share of coverage. The upside is that these plans typically have relatively affordable premiums, so they may appeal to people in good health, especially when combined with a Health Savings Account (HSA).
• Fee-for-Service plans pay providers an agreed upon fee for each health service. Original Medicare is an example of a fee-for-service program.

Your Health Insurance Costs

When comparing health plans, you need to consider the costs you will pay. These costs take several forms, notably:

• This is what you pay to buy coverage, whether or not you actually receive care. Most premiums are paid on a monthly basis. If you are paying for group health insurance provided by an employer, your premiums may be deducted from your paycheck. Medicare premiums are often deducted from the member’s Social Security benefits. Otherwise, you will need to send the insurer a monthly payment. You may want to sign up for automatic payments to avoid missed payments that could lead to termination of coverage.
• This is what you have to pay out of pocket before the insurer starts to cover its share of costs. Some types of care, particularly preventive care, may be covered before the deductible is met. The deductible resets each plan year.
• Copays/Co-insurance. This is your share of the cost each type you receive care. It may be expressed as a flat fee or as a percentage.
• Out-of-Pocket Limit. This is the most you will be responsible for paying in a plan year. However, uncovered or out-of-pocket care may not apply to your out-of-pocket maximum.

Networks and Formularies

Many plans use networks and formularies.

• Networks show the providers and facilities that accept the insurance plan. If you see a provider or go to a facility outside of the network, you may not have coverage, or your costs may be higher. Networks may change during the year.
• Formularies show the prescription drugs that are covered by the plan. Many plans use a tiered formulary with different out of pocket costs depending on the tier.

Referrals and Prior Authorization

Some plans require you to secure a referral before seeing a specialty provider or prior authorization in certain situations.

• Before seeing a specialty provider, you may need to receive a referral from your primary care provider. For example, if you want to see a dermatologist, you may need to go to your primary doctor first to get a referral.
• Before receiving certain types of care, you may need prior authorization from your insurer. For example, if you doctor recommends a particular medication or elective surgery, the insurer may need to approve this first.

Referrals and prior authorization are intended to keep costs down, but some critics argue that they create barriers to care and cause delays in treatment, so it’s important to consider whether a plan requires referrals or prior authorization.

How to Compare Health Plans

Comparing health plans can take some time, but it’s worth the effort since your plan will impact your care and costs for the entire plan year.

• Add up your total expected costs. Don’t just look at premiums. Calculate how much you might pay for the care you expect to need.
• Look for your providers. If the plan uses a network, see if your providers are included.
• Check coverage for your prescriptions. If you take any prescriptions, see what the costs are.
• Consider the impact of unexpected health issues. Even if you don’t currently have any health concerns, consider the impact of an unexpected injury or illness. Could you afford the out-of-pocket costs?
• Look at the ratings and reviews. Medicare Advantage plans have a star rating that you can use to compare plans. You can also look up reviews for carriers. Keep in mind that most people only review insurance carriers when they have a complaint, so reviews may skew negatively.

Still confused about your health care insurance options? Don’t worry. Heffernan Insurance Brokers can help you navigate your choices. Learn more.