Stressed about copays and deductibles? Have no idea what ‘open enrollment’ actually means? You’re not alone!
Did you know that a mere 4% of Americans can correctly define the terms and conditions for health insurance? Most of us find ourselves scratching our heads when it comes to dissecting how coverage works. However, choosing the best medical insurance is essential for your peace of mind. It’s also critical to maintaining your financial health.
Let’s get into what you need to know.
Identifying Your Marketplace
Most people obtain insurance through their employers. If your work offers coverage, this is almost guaranteed to be the cheapest option. That’s because your employer contributes to part of the coverage.
If you’re self-employed or don’t have insurance through work, you’ll need to secure insurance through your state’s marketplace.
You can also purchase health insurance directly from an insurance company or private exchange.
Identifying Your Plan
The most common types of health insurance plans are HMOs, PPOs, and EPOs.
HMO plans to have the lowest out-of-pocket expenses. However, procedures and specialists require a referral. This means you need to see a primary care physician before scheduling another appointment.
You also need to stay in-network to receive coverage.
PPO plans tend to cover more provider options compared to HMO plans. If you want to choose your own doctor, you’ll likely have an easier time with a PPO.
You don’t need referrals to obtain procedures or meet with specialists. Furthermore, you can go out-of-network to receive care (though it costs more than in-network care).
EPO plans also have lower out-of-pocket costs. They don’t require referrals. However, you must stay in-network to receive coverage.
To choose the best plan, you should consider your family’s medical needs and health history. Of course, it’s impossible to determine future medical expenses accurately, and you should be aware of your trends and habits.
Examining Out-of-Pocket Costs
All plans provide a summary of benefits outlining your out-of-pocket costs. These can be confusing, but it’s vital you understand how each of them works.
The deductible refers to how much you pay before the health insurance starts kicking in. If, for example, you have a $2500 deductible, you need to pay $2500 of out-of-pocket before the coverage begins covering such costs.
Your deductible resets every year.
Copay refers to the set rate you’ll pay for various health services at the time of care. For example, you may have a $50 copay for meeting with your primary care physician and a $100 copay for meeting with a specialist.
Coinsurance refers to the part of the medical costs that you pay after your deductible has been met. For example, if you have a 40% coinsurance, you will pay 40% of the bill (with your insurance covering the remaining 60%).
This figure refers to the maximum money you’ll have to pay in one year out-of-pocket for your health care. If you reach that number, your health insurance then covers 100% of the medical costs.
Maximum out-of-pocket limits for 2019 group plans are:
- $7,900 for self-only coverage
- $15,800 for family coverage
The premium refers to the monthly payment you make to the insurance company. Most employers automatically deduct this premium from your paycheck.
Examining Health Plan Networks
You’ll always save money by using in-network doctors. That’s because the insurance companies directly contract lower rates with in-network providers.
If you have doctors or specialists that you prefer seeing, make sure that they are in-network with your plan.
If you don’t have a preferred doctor, consider selecting a plan with a large network. This will provide you with more options.
Switching doctors? Due to HIPAA, your information is confidential and held in a secure patient portal (check out this useful article to learn more). You’ll need to sign a confidentiality waiver to release your records.
Comparing Health Benefits
You should thoroughly examine your summary of benefits to see which plans best cover your needed services. Some plans, for example, may have better coverage for medication or substance abuse services.
If you’re not sure about a particular question, it’s wise to call the insurance company directly.
Health Savings Accounts
Health Savings Accounts (HSAs) have received serious traction in recent years. Many financial buffs recommend them for their ‘triple-tax-advantage’ benefit.
HSA plans are available to people with high deductible health plans (minimum of $1350 for self-coverage and $2700 for family coverage). You can contribute $3,500 as an individual and $7000 for family coverage.
You don’t pay taxes on the money you put into the account. Furthermore, you won’t pay taxes when you withdraw the money. Finally, the money earns tax-free interest.
HSA balances roll over every year. At age 65, you can use these funds for any purpose without facing a penalty. However, you can also use the money to pay for eligible health care expenses at any time.
HSA plans can also be an excellent investment strategy. You can invest a portion of your funds in various stocks or mutual funds. Again, this money grows tax-free.
These plans don’t work for everyone (i.e, some employers don’t offer high deductible plans and some people need lower deductibles). That said, they can be useful in socking away additional money for medical costs.
Final Thoughts on Selecting the Best Medical Insurance
Choosing the best medical insurance is essential for supporting your family’s health needs. Once you determine your needs, the process of selecting a plan doesn’t feel so daunting.
Are you interested in cutting your family’s health care costs in 2019? Check out this article today!