How to Choose a Health Insurance Plan
It is important to understand the differences between the various health insurance programs that are available to you before choosing a plan.
When deciding on a health insurance plan, you will have to make a choice between multiple coverage levels and different types of plans.
Once you know what options are available through your state insurance marketplace, you can begin comparing the most important features of each program, such as the out-of-pocket costs, provider networks, amount of choice you have in deciding who will provide your medical care, the amount of claims and paperwork that are required and whatever other health plan features are important to you.
Laying out the differences between each plan should significantly cut down on which plans you are choosing from if not clearly show you which is better suited to your needs. If you are still unsure about which health insurance plan is best for you, prioritizing your list of important features should help you narrow your choices.
Common Health Insurance Plans and Coverage Levels
Each state health insurance marketplaces offers different types of health insurance plans to choose from for all enrollees. These plans differ in many important ways, particularly their costs, coverage policies and provider network options. If you purchase the health insurance yourself rather than purchasing insurance through a job, each type of insurance plan will have varying “metal coverage levels,” namely bronze, silver, gold and platinum in addition to a couple other more specific options.
These are the six most common health insurance programs and the basic details about each that you are most likely to come across:
- Health Maintenance Organization (HMOs) are health insurance plans for individuals who are not concerned about choosing their own doctors or facilities or about seeing their primary care physician before any medical specialists. With coverage for only in-network medical services, HMOs tend to be some of the most cost-effective health care options offered by health care providers.
- Preferred Provider Organizations (PPOs) offer enrollees limited coverage for out-of-network medical services and the possibility of seeing a specialist without a referral. These health care plans usually cost more than HMOs and require claims to be filed for out-of-network health care.
- Exclusive Provider Organizations (EPOs) are not very different from PPOs in that specialists can be seen without the recommendation of a primary care physician. EPOs tend to cost less, however, because they do not include any coverage for out-of-network medical services. Like HMOs, paperwork is very minimal with this type of health insurance plan.
- Point-of-Service (POS) Plans tend to be less comprehensive, allowing enrollees to choose their doctors and medical facilities but only with a recommendation from their primary care doctor. Many POS plans have different rates for in-network and out-of-network medical services and varying amounts of paperwork to complete.
- High-Deductible Health Plans with or without a Health Savings Account (HDHPs/HSA) are also great for individuals who prioritize provider choice when deciding which health plan is right for them, but they are most beneficial for low-risk groups that do not expect to have to pay the entire deductible cost, which tends to be high on type of health insurance plan. HSAs are an optional part of HDHPs, providing a tax-free savings account to help individuals save for medical related expenses.
- Fee for Service (FFS) Plans allow participants to receive medical care from whoever they choose for set fees, without a recommendation from a primary care doctor. Such freedom to choose comes at a higher than average price tag, however.
Each health insurance plan can be purchased at differing coverage levels. The most common coverage levels that you will have to choose from once you have settled on a basic health insurance program include:
- Bronze Health Insurance Plans that pay about 60 percent of medical costs.
- Silver Health Insurance Plans that pay about 70 percent of medical costs.
- Gold Health Insurance Plans that pay about 80 percent of medical costs.
- Platinum Health Insurance Plans that pay about 90 percent of medical costs.
- Catastrophic Health Insurance Plans that pay less than 60 percent of medical costs for eligible low-risk enrollees younger than 30 years of age.
- Family Health Insurance Plans that cover multiple family members under one policy with varying coverage levels.
Important Health Insurance Features to Compare between Plans
Learning about the basics of each health insurance program is the first step to finding the health care plan that is right for you. Once you know how the most common health insurance plans work, you can start comparing the details of each plan’s most important features to come to the final decision about the best plan for you.
Consider the following central aspects of each health insurance plan to help you choose:
- Out-of-Pocket Costs: Most people have a maximum amount of money that they can spend every year on medical services and must therefore work within that budget to choose available programs. In addition to the set annual or monthly premium you must pay, other out-of-pocket costs for insurance to take into consideration when calculating the total cost of a plan can include deductibles, copayments and co-insurance fees. Make sure to note how much you will have to pay into the plan before 100 percent coverage kicks in and whether the health services you regularly need are covered for free or with low associated costs. In most cases, insurance plans with higher premiums have lower associated costs and vice versa.
- Provider Networks: Once you are clear which health insurance plans are within your budget, the next important point of comparison between plans is the health provider network. If you prefer to see specific doctors or visit specific medical facilities that are out of your network, look for insurance plans that provide coverage for out-of-network care like PPO and POS plans.
- Freedom of Choice: Your medical needs change over time, so you want to make sure that whatever insurance plan you choose can offer you all the medical services you need now and that you will need in the future at an affordable rate. If you think that you may want to have the option of seeing out-of-network doctors, do not forget to take the plan’s freedom of choice into account when choosing which plan is right for you.
- Claims Procedure: After you submit your initial application for health insurance, the most paperwork that you will be required to fill out in most cases will center around claims forms. Depending on the plan, visiting an out-of-network doctor or facility, paying up front for a typically covered medical service, receiving medical services out of state in an emergency and many other situations may require enrollees to submit claims forms. Many insurance providers offer electronic options for claim submissions and organization to minimize the amount of actual paperwork that must be dealt with on both sides.
- Additional Insurance Features: Once you have begun comparing the aforementioned insurance plan characteristics, it will hopefully become clear if you need any medical service that is not a common feature of most programs. For example, if you plan on traveling abroad for significant periods of time, for example, you should compare the international coverage options of each insurance plan and the total costs for receiving medical care out of the country.