Do you know when the year’s most beautiful moment is? It’s not the holidays, don’t get me wrong. We’re talking about open enrollment season!
It’s the specific time of year when you compare insurance plans to determine which one is best for you.
Okay, we’ve got you covered. Comparing health insurance coverage is probably not something that excites anybody.
When it comes to making a decision, it’s critical to understand what each plan covers, how much it costs, and where you may use it. Keep on reading for our full breakdown of everything you need to know to pick the right health insurance plans for your needs.
Table of Contents
Types of Health Insurance Plans: The Basics
Let’s start with the basics.
We’ll explore the different types of health insurance plans that are available on the market. This way, you can compare them properly.
Preferred Provider Organization (PPO)
Preferred Provider Organization health plans establish a network of participating providers by contracting with hospitals and physicians.
Outside-network physicians are covered by these plans, but you’ll pay more out of pocket—often a lot more—than if you visit the plan’s recommended providers.
The exception to the norm is frequently emergency treatment. With 47 percent of insured employees participating in a PPO, PPOs are the most popular plan for individuals who receive their health insurance via work.
Health Maintenance Organization (HMO)
A health maintenance organization (HMO) is a kind of health insurance plan that exclusively covers treatment provided by physicians who work for (or contract with) the HMO.
That implies you won’t be covered for out-of-network treatment unless it’s an emergency. HMOs are often limited to a particular geographic region, so you’ll have to live or work in that area.
High Deductible Health Plan (HDHP)
Isn’t it fairly self-explanatory? These are health plans with large deductibles, as the name implies. These plans offer cheaper monthly premiums, but you’ll have to spend a lot more for health care out of pocket before your plan kicks in.
HDHPs may be used in conjunction with a health savings account (HSA), which you can contribute tax-free and utilize to cover qualifying medical expenditures.
You may be thinking to yourself, who decides what constitutes a “high” deductible?
That is an excellent question. The IRS is in charge of this. That’s the person. In 2020, an HDHP is any plan with a deductible of $1,400 or more for an individual or $2,800 or more for a family, according to the IRS.
In addition, an individual’s maximum out-of-pocket cost is $6,900, and a family’s maximum out-of-pocket expense is $13,800. Once you’ve reached these limitations, your health insurance will cover everything.
In addition, since you may contribute up to $3,550 for individuals and $7,100 for a family tax-free in 2020, the HSA is a wonderful feature of HDHP plans.
Even better, if you don’t use it, the money will roll over, and you may earn interest or other non-taxable profits on it.
That’s fantastic. It’s excellent for your future to be able to establish an HSA.
Compare Insurance Plans 101
There’s more to comparing insurance rates when it comes to selecting the right healthcare insurance plan for you and your family.
Yet, that doesn’t mean that out-of-pocket costs are a negligible consideration. We’ll explore both the financial factors, the needed insurance benefits.
Compare Your Out-of-Pocket Expenses
The network is almost as essential as the out-of-pocket expenses. The summary of benefits for any plan should make it clear how much you’ll have to spend out of pocket for treatments. Many state markets, as well as the federal marketplace, provide snapshots of these prices for comparison.
This is when knowing a few health insurance vocabulary terms comes in handy.
The deductible, copayments, and coinsurance are the components of your cost share as a customer. The amount of money you can spend out of pocket in a year is restricted, and your plan’s details will tell you how much you may spend. The lower your premium, the greater your out-of-pocket expenses will be.
The aim of this phase is to limit down your options depending on your out-of-pocket expenses. A plan that covers a greater percentage of your medical expenses in exchange for higher monthly premiums may be preferable if:
- You see your primary care physician or a specialist regularly.
- You need emergency treatment on a regular basis.
- You use costly or brand-name medicines.
- You’re expecting a kid, planning to have a child, or already have young children.
- You’re going to undergo surgery soon.
- You’ve been told you have a chronic illness like diabetes or cancer.
If you have greater out-of-pocket expenses and lower monthly premiums, a plan with higher out-of-pocket costs and cheaper monthly premiums may be the best option.
Compare the Insurance Benefits
You’ve probably narrowed down your choices to just a few. Return to the summary of benefits to see if any of the plans cover a broader range of services to narrow things down even more. You can learn more about the different kinds of possible benefits here.
Some individuals may have better coverage for physical therapy, fertility treatments, or mental health care, while others may have better emergency coverage.
You may miss out on a plan that is much better suited to you and your family if you skip this quick but crucial step.
Once you’ve narrowed your choices down to a few, it’s time to answer any remaining questions.
In some cases, speaking with a live person is the only option, so it’s time to call the plans’ customer service lines. Prepare ahead of time by writing down your questions and keeping a pen or computer handy to record the answers.
Picking an Insurance Provider: Simplified
We know how overwhelming it can be to pick and compare insurance plans every single year in the marketplace.
Hopefully, our guide has shed some light on the main factors and information you need to know to make a well-educated choice. And, if you liked reading our article, then you’ll want to check out our additional tips and strategies. All of those will be available in our health section.