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How do I compare health insurance plans?

A brief overview...
  • Though cost is a major factor in choosing a health insurance plan, premium cost is just one of the factors
  • Before comparing plans available to you, consider your likely use of medical services for the year as well as the most likely kinds of emergency care you may see
  • Be sure to check the level of coverage for all of your potential conditions
  • Learn the difference between premium, deductible, copayments, and coinsurance and use these to get a true total cost of annual medical bills
  • Consider your tax credits for insurance as well as any tax deductions that you may be eligible for in your calculation as well

Comparing Health Insurance Plans

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While many people who are employed will simply go with the single health care plan made available to them, this is not always the case. Families who can choose between the plans of two different parents for their dependents and those who get their healthcare policies through the healthcare.gov exchange are both presented with options. Choosing the best plan for your situation should be about more than just the monthly premium, though.

Click here to get free personalized health insurance quotes based on the factors that matter most to you.

What You Need to Know

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The first step in figuring out the right plan for you is to prepare the information that you have on your expected medical care for the year. Gather the following information to get an idea of the cost and type of coverage that you may need:

  • The insurance options available to you through your employer and your spouse’s employer, if applicable
  • Available plans through the Healthcare.gov exchange
  • Any special incentive programs for medical care, such as a Health Savings Account (HSA) or a Flexible Spending Plan
  • Your tax information from the previous year
  • The annual cost of any pre-existing conditions that you may have
  • The list of any upcoming medical treatment that you may receive

Analyzing a Health Plan

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The first question that you need to ask is whether a health plan covers the item that you want treatment for, and to what extent. While many things are guaranteed, other treatment, like mental health coverage, can vary. It is important to look at the percent of care that you receive for any medical problems you have.

Consider looking at this for anything that you may be at risk for in the future as well. Daredevils should look at accident coverage, for example, while smokers may want to examine their coverage for COPD or cancer care.

Types of Insurance Costs

There are several different kinds of costs in insurance. While the monthly premium is the most well-known as it is the price you pay to have insurance at all, several other terms are important to know and consider when looking at insurance:

  • Deductible – The amount that you must pay out-of-pocket before an insurance company will begin to pay.
  • Copay or Copayment – The amount that you must pay at a minimum for every visit to a medical provider.
  • Coinsurance: This often kicks in when the deductible has been met. It is a percentage that you must pay into remaining medical bills, while insurance will cover the rest.
  • Out-of-Pocket Max – The most that you will need to pay in a year on covered items. This may or may not include co-pays.
  • In-Network vs Out-of-Network Costs – The amount that you will need to pay if you must seek treatment from an out-of-network provider.

Putting it Together: The Big Picture on Cost

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The tricky part of understanding insurance is taking all of this information and seeing what will work best for you. Here are some steps to look at your total out-of-pocket costs.

  1. Calculate your annual premium total.
  2. Look at the cost of your expected treatments. Is it a doctor’s visit? Regular medications? Medical supplies? Estimate the amount of this that you will need to pay versus the doctor.
  3. Will your expected medical care cost more than your annual deductible? Your annual copayment? By how much? Look at the cost of each treatment and calculate what insurance will cover before and after your deductible has expired. Add this to the total of each premium for the year.
  4. Is there an out-of-pocket max? If you are in a high-risk category, this can be a lifesaver if there is an unexpected trip (or trips) to the hospital.

This should give you a basic idea of your annual cost. A cheap premium may end up costing you more than an expensive plan with low out-of-pocket costs. The only way to discover this is to try and plan your costs. If you are unsure of the cost of something because it is new, call around to see if you can get a price range.

Possible Dealbreakers

There are a few things outside of cost that will affect your decision to choose one health care plan over another. These can include:

  • A company that doesn’t have your doctor in-network
  • A plan that doesn’t cover an illness or condition that you or a family member has
  • A limited geographical area of providers that is logistically difficult for you to access

Mitigating Factors

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The final thing to consider is your income level and the amount of tax credits that you may be eligible for. This may help to cover the cost of your insurance. For some people, this will just go to the overall price. For others, it may help you to afford a more comprehensive plan that will better cover certain items.

If you have been putting off knee surgery or another major procedure, these incentives may help you upgrade to a plan that will be more affordable at the end of the day while giving you the health care that you really need.

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