Open enrollment season is upon us. Whether you select health insurance through an employer, Medicare, or government exchange, October and November are when most Americans have the opportunity to switch plans.
Though shopping for health insurance may seem overwhelming, breaking down the process can make it much easier to digest. To help you break down this daunting process, we’ve created a guide to help simplify your steps and what you should consider.
A premium is the amount of money charged by your insurance company for the plan you’ve chosen. It is usually paid on a monthly basis but can be billed in a number of ways. You must pay your premium to keep your coverage active, regardless of whether you use it or not. Since premiums are the amount of money you’ll pay every month for coverage, they are the most obvious expense associated with health insurance.
While it’s important to find insurance that fits your budget, the cheapest plan may not be the best. Low premiums can mean higher deductibles or a restricted network. Instead of buying based on premiums alone, the monthly cost should be just one criterion you consider when selecting a plan.
10 Factors that Affect Premiums:
- State and federal laws dictate what health insurance must cover and how much insurers can charge.
- Whether you are insured through an employer’s group plan or buy it on your own
- Your income. Low-wage workers tend to pay more through employers but may pay less through a federal or state exchange due to subsidies
- Your employer’s size. Insurance is usually cheaper at large companies.
- The state in which you reside.
- Where you live. Premiums tend to be lower in urban areas versus rural areas.
- The county in which you live. Some counties have only one plan, while others have more competition, which helps to reduce costs.
- The type of plan you choose. Preferred provider organizations (PPOs) and platinum plans through the federal health insurance marketplace tend to cost the most.
- Your age. Older individuals may pay up to three times more.
- Your tobacco use. Premiums for tobacco users may cost up to 50% more.
Most health insurance plans come with several out-of-pocket costs. The deductible is the amount you’ll pay upfront before insurance coverage begins. Some preventative care services, such as immunizations and cancer screenings can be exempt from deductibles, thanks to the Affordable Care Act. Health insurance policies may also charge copayments and coinsurance once a deductible is met.
Prescription Drug Coverage
It’s not enough to know your plan has prescription drug coverage. It’s also important to know that your specific prescriptions will be covered. Many insurers use formularies, or lists of covered drugs, that categorize prescription tiers. Generics may have a low copay while brand-name drugs may cost more. Keep in mind, some insurers may require patients to try lower-tier drugs first or get prior authorization before the plan will pay for expensive medications.
Most policies have networks of participating providers, so you are unable to go to whichever doctor you prefer. Using a physician or facility outside the network could result in higher copayments or even a denied claim.
Before switching health plans, ensure your preferred doctors will be covered. Since networks can change each year, it’s smart to double-check the physician list before re-enrolling in your current plan. People should also consider the type of policy that will be best for their situation.
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A Health Maintenance Organization (HMO) plan is one of the cheapest types of health insurance. It has low premiums and deductibles and fixed copays for doctor visits. HMOs require you to choose doctors within their network. When you sign up for the plan, you’ll select a primary care physician (PCP), whom you’ll see for regular checkups. Because all your health services are funneled through your PCP, it’s important to find one you trust. HMOs are a good choice if you’re on a tight budget and don’t have many medical issues.
As with an HMO, a Point of Service (POS) plan requires that you get a referral from your PCP before seeing a specialist. However, for a slightly higher premium than an HMO, this plan covers out-of-network doctors, though you’ll pay more than for in-network doctors. This difference is important if you are managing a condition and one or more of your doctors are not in-network.
An Exclusion Provider Organization (EPO) is a lesser-known plan type. Like HMOs, EPOs cover only in-network care, but networks are generally larger than for HMOs. They may not require referrals from a PCP. In terms of premium costs, they are higher than HMOs, but lower than PPOs.
A Preferred Provider Organization (PPO) has pricier premiums than an HMO or POS. But this plan allows you to see specialists and out-of-network doctors without a referral. Copays and coinsurance for in-network doctors are low. If you know you’ll need more health care in the coming year and you can afford higher premiums, a PPO is a good choice.
- HDHP with HSA
A High Deductible Health Plan (HDHP) has low premiums but higher immediate out-of-pocket costs. Employers often paid HDHPs with a Health Savings Account (HSA) funded to cover some or all of your deductible. You may also deposit pre-tax dollars in your account to cover medical expenses. Depending on your age, services such as mammograms, colonoscopies, annual wellness visits, and vaccinations may be covered free of charge, even if you haven’t met your deductible.
Your Claims History and Future Expectations
Knowing a plan’s deductibles and network details is most helpful when viewed in the context of your health history. People should look at their claims from the previous year for guidance on the upcoming year’s enrollment. Take into account if you met your deductible, which prescriptions you filled, and which specialists you saw. If you expect any changes in the coming year, such as marriage, the addition of a baby, or a major surgery, you’ll want to ensure your insurance will provide adequate coverage.