Medical debt is the number one reason why Americans file for bankruptcy. With the astronomical costs of healthcare continuing to rise in the United States, you simply can't afford to have health insurance.
Unfortunately, health insurance is complicated. If you're not yet eligible for Medicare, you'll need to be responsible for your own insurance.
There are numerous types of health insurance, providers, policy options, plans, and more. In this article, you'll learn everything you need to know about health insurance so you can choose the right option for you.
Ready? Let's get started.
Understanding the Lingo :
Before we start talking about different plans and what they offer, it's a good idea to cut through the jargon. Here are some words you'll need to understand:
Premium :
Simply put, this is how much you pay each month to have health insurance. This could range from a few hundred to a few thousand dollars, depending on your age and health status.
Deductible :
This is how much you'll pay for health care yourself each year (out of pocket) before insurance kicks in and helps. For example, if you have a $3000 deductible, you'll pay for all expenses each year up to $3000, before insurance will start paying either all or a portion of your costs.
Thanks to Obamacare, health insurance now has to include preventative care like annual checkups, meaning it'll be paid for under most plans.
In-Network :
You didn't think you could see any provider or doctor you like did you? Nope.
Your insurance company will have an approved list that they're negotiated costs with. This means that you'll need to use them if you want lower costs.
Co-pay :
Your co-pay is a fee you have to pay when you use specific services. Unfortunately, it doesn't count towards your deductible. This means that if you have the flu or an ear infection, you'll still have to pay this even if you've met your deductible for the year.
Co-Insurance :
Even after you've met your deductible, you may still need to pay for some of your healthcare costs. For example, if you've met your $3000 deductible, and your plan has a 20% co-insurance, your insurance provider will only pay 80% of your costs.
Types of Health Insurance Plans :
You have a number of choices when you're looking for health insurance. Often, your employer will offer health insurance. However, some people still look for an alternative plan or don't have employer-provided health insurance. This is likely to be you if you're a freelancer or self-employed.
You'll find the lowest premiums on the Affordable Care Act Marketplace for your state. You can find this at HealthCare.gov.
On the marketplace, you'll notice that plans are organized by the type and level of benefits offered. These include platinum, gold, silver, and bronze.
Each plan has a set amount of costs with details varying according to the plan and the provider. Deductibles also vary:
Bronze :
Covers approximately 60% of medical costs while you pay 40%.
Silver :
Covers approximately 70% while you pay 30%.
Gold :
Covers approximately 80%, you pick up 20%.
Platinum :
Covers approximately 90% and you pay 10%.
Traditional Health Insurance Plans :
Along with the above options, each insurance provider will offer at least one of these common types of plans:
Health Maintenance Organization (HMO)
If you choose an HMO plan, all of your health services are delivered through a network of healthcare facilities and providers. This means that you have less freedom when it comes to choosing who you have as your provider. However, you also have the least amount of paperwork.
You'll deal with a primary care doctor who you'll need to see first before you're referred to a specialist. This is required before any specialist appointments are covered by your insurance.
The size of your network and the number of doctors within that network will be dependent on your location. If you stay in-network, you can save a lot of money on out-of-pocket costs and premiums. However, if you do see a doctor outside of the network, you're responsible for 100% of the bill.
Preferred Provider Organization (PPO)
If you choose a PPO plan, you have more freedom when it comes to choosing which health care providers you'd like to use. Unlike with an HMO, you don't need to see your primary care physician to get a referral in order to see a specialist.
You'll still have higher out-of-pocket costs if you choose to see a doctor that's out-of-network.
This also comes with more paperwork since you'll need to pay any out-of-network providers first and then file a claim to have your insurance company pay you back.
A PPO is a good option if you regularly need to see specialists.
Exclusive Provider Organization (EPO)
An EPO plan also gives you a little more freedom than an HMO when it comes to choosing which health care providers you'd like to use. You don't have to see your primary physician for a referral if you'd like to see a specialist.
However, if you choose to see an out-of-network provider, you'll be paying 100% of the bill yourself (unless it's an emergency).
If you don't mind limiting your providers to a particular network and don't want to rely on a primary physician, an EPO can be a good choice.
Point of Service (POS)
This is kind of like a mix of a PPO and HMO plan. You'll still get more freedom when it comes to choosing your providers compared to an HMO plan, but you can expect more paperwork if you go out-of-network.
You'll also need a primary care physician who will coordinate all of your care and refer you if you need to see a specialist. While you can see providers out-of-network, you can also expect to pay more. You'll also need to pay our medical bills upfront if you're out-of-network and then claim it back through your POS provider.
Catastrophic Plan :
This is also known as a High Deductible Health Plan, and it can be a good option if you're young and healthy. You'll generally need to be under 30 to qualify, and you're basically taking a gamble that you won't need to use your health insurance.
That's because you'll have very high deductibles, but lower premiums. You'll also be able to have 3 primary care visits before you need to worry about your deductible, and preventative care is also free.
Putting It All Together :
With so many options to choose from, it can seem impossible to choose which health insurance is right for you. Here are a few things to consider:
Networks :
As we've already discussed, you'll pay less when you go to a doctor that's considered in-network, since your insurance company has negotiated lower rates. If you have a preferred physician and you'd like to keep them as your primary doctor, check if they're in the network of the plans you're considering.
Even if you don't have a preferred doctor, it makes sense to choose an insurance plan with the largest possible network. This will give you more choices, and it's particularly important if you live rurally as it makes it more likely that you'll be able to find a doctor in your network.
Out-of-Pocket-Costs :
Now it's time to carefully compare the summary of benefits for each plan. These should clearly show you how much you'll need to pay out of pocket for each service.
This is why it's important to understand the vocabulary from the first section of this article. The deductible, coinsurance, copayments, and out-of-pocket expenses will help you choose the right plan for you.
Generally, the lower your out-of-pocket costs, the higher your premium and vice-versa.
Here are some things to consider:
- Do you frequently use emergency services?
- Do you often see specialists or your primary doctor?
- Do you take brand-name or expensive medications?
- Are you expecting a baby or planning to have one in the near future?
- Will you be having surgery soon?
- Have you been diagnosed with cancer, diabetes, or another chronic condition?
In the above cases, a plan with higher premiums which pays a higher portion of the costs of your medical care may be the right choice.
However, a plan with lower premiums and higher out-of-pocket costs may be a good option if:
- You're young and not planning to have kids soon
- You're in great health and don't see the doctor often
- You can't afford high monthly premiums
Benefits :
Once you've narrowed your choices down, check out the summary of benefits. Some plans will have a wider range of coverage for things like maternal health care, mental health, or physical therapy. Others could have better coverage in the event of an emergency. This site can help narrow down the best insurance if you're in Canada.
Now is also a good time to get on the phone to talk to customer service for the last couple of insurers you're considering.
Here are some questions to ask:
- Are my medications covered?
- Which maternity services will be covered if I have children?
- Am I covered when traveling out of the country?
- What documents do I need if I choose to sign up?
Wrapping Up :
As you can see, there are many different types of health insurance. The best type of insurance for you and your family will depend on your health, age, income, network, and more.
Above all, remember that health insurance is crucial. Otherwise, you could find yourself in a terrible financial situation.
Questions or comments? Get in touch today.
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