Health Insurance: What You Should Know Before Choosing
There are several times throughout your life that you may have to choose health insurance. Maybe you’re striking out on your own from the cushy embrace of your parent's plan, or you started a new job, or you’re scouring the Marketplace for a cheaper or better plan than your current one. No matter what led you to your search, picking the right plan is crucial to keeping both you AND your wallet in good shape.
So, what do you need to know when searching? This guide walks you through the questions you should be asking as you make your choice.
Step 1: Figure Out What’s Available to You and Compare
Health insurance comes in many forms. Your employer may offer health insurance benefits as part of your employment agreement -- and cover all or some of your premium. Or, depending on where you live, you may be able to access government-sponsored insurance, as the plans are available through federal and state-run insurance exchanges. You may even want to look into private insurance plans offered directly by the company. While these plans tend to be the most expensive, you never know what will work best for you unless you do thorough research.
Step 2: Run the Data
Once you know which kinds of health insurance are accessible to you, review the plans and compare them side by side. This is the only way you can determine which model works best for you. Do you prefer lower monthly costs with a higher deductible? This may make sense if you know your health insurance will mostly be reserved for emergencies. Are you willing to pay more for top-notch insurance? Will your employer or government subsidize all or part of your monthly premium? Even if you like your current plan, it's best practice to shop around and compare at least once a year to make sure you’re getting the best deal.
You can get a solid idea by taking a look at the following factors:
- Monthly premiums -- how much is your monthly out-of-pocket insurance bill?
- Yearly costs -- how much will you pay total when you add your monthly premium, copays, and deductible (how much do you have to pay out-of-pocket before some or all of your care is covered)?
Step 3: Factor in How Extensively You Expect to Use Your Healthcare
While we can’t predict exactly how our health will look throughout a given year, we can take a look at our average healthcare use and health habits and make a general estimate of how “much” healthcare coverage you need.
If you’re healthy and rarely go to the doctor, a plan with a lower premium and higher deductible may work for you -- it’ll cover you if you end up needing expensive emergency care, but you won’t pay high monthly premiums. Or, if you know you’ll be a frequent flier at your doctor’s office, or need specialized care, it may be best to choose a plan that covers a high percentage of your care, even if you pay a higher monthly premium.
Step 4: Choose a Plan
Now that you have compiled, researched, vetted, and compared -- you’re ready to choose your plan! As long as you did your due diligence, you should be in a good place to make the best decision for you.
Bonus Tip: Beware Healthcare Scams
As with everything, there are always unscrupulous grifters looking to make a dishonest buck off an honest person. If a healthcare plan seems too good to be true or is listed on a spammy website, back off. It's best to look for plans from trusted insurers or through your local or federal government healthcare portals.