Which Health Insurance Plan Is Best For Me

We talked about some of the documents you will have to complete as a new employee in a previous post. One of the first things that your employer’s HR department will present you with is a list of insurance plans to choose from. One of the main challenges for many people is understanding the all those acronyms and insurance terminology. In this post, we’re going over the most common/popular insurance plans offered. We’ll see what the plans entail to help you determine which health insurance plan is best or you.

Terms to know

Premium

The monthly payment for insurance coverage.

The higher the premium, the higher your coverage, the less you have to pay in medical bills.

Deductible

the amount that you must pay out of your own pocket (usually per calendar year) before your health insurance begins paying towards any covered expenses.

Deductibles can significantly affect the price of your insurance. Typically, a lower deductible means the insurance will offer more coverage but higher premium. And with a higher deductible, the insurance will offer less coverage, therefore, lowering the premium

Co-pay/Co-payment

The set amount that you’ll pay for a covered medical service at the time you receive services.

Typically, there’s a copay for prescriptions as well. Depending on the plan, you may have to pay a copay every-time you visit the doctor () and for each prescription fill (). So, if you’re visiting the doctor or refilling prescriptions frequently, look for an affordable copay.

Coinsurance

The percentage of covered medical expenses that you’re required to pay after the deductible is payed.

Example: If your insurance plan has a 30% coinsurance, the insurance will cover 70% of the charges for a covered hospitalization, leaving you responsible for rest of the 30%. Usually, lower co-insurance the higher premium costs.

Primary Care Provider

The licensed healthcare professional you contact before going to a specialist

Maximum Out-of-pocket

The maximum amount of money you will pay during the covered period, which is typically a calendar year. The insurance will cover any costs above this amount. This excludes the premium and, of course, any services that is not covered by the insurance.

Pre-existing condition

any injury or illness that you may have before getting an insurance plan.

Provider Network

A group of hospital, facility, physician or other licensed healthcare professional that have contracted with the insurance company.

In-network providers typically charge less for the same service compared to non-network providers. They also accept direct payment from the insurance company

Common Plans

Health maintenance organizations (HMOs)

HMO plans are one of the more popular types of health insurance. HMO plans tend to be cheaper compared to the types of insurance, but it’s also very restrictive.

When you sign up for an HMO plan, the insurance company will provide a list of in network doctors. You’ll typical have to choose a primary care provider from the list of in network physicians. You must get a referral from you PCP in order to see other specialists.  If you see a doctor who is not in the network, you’ll may have to pay the full bill yourself

Points to note

  • Not very flexible
  • Less expensive
  • Everything goes through the Primary Care Provider
  • You have to stay in the insurance company’s network
  • Good For those who prefer lower premiums, prefer in-network services and a PCP, don’t need many specialist visits.

Preferred provider organizations (PPOs)

With a PPO plan, you have a little more flexibility than an HMO but it’s also more expensive. You can visit any health care provider in the insurance company’s network without a referral, regardless of whether or not they are specialists.

If you decide to visit a healthcare provider that is outside of the network, you will not be responsible for the entire bill like an HMO plan. However, there is a higher out-of-pocket cost if you see out-of-network doctors vs. in-network providers

Points to note

  • Flexible
  • More expensive
  • No Primary Care Provider necessary
  • You can see providers inside or outside of the insurance company’s network
  • Good For people who are prone to sickness or may need to visit a specialist frequently

Exclusive provider organizations (EPOs)

An EPO is a lot like an HMO, with the slightest bit more flexibility. With an EPO, you don’t need a referral to see a specialist. However, if you go outside of the+ insurance company’s network, you are on your own. You’ll be required to pay the entire out-of-network bill.

Points to note

  • Good for those who don’t mind limiting themselves to providers within a network in exchange for lower rates. EPOs are also good those who don’t want to go through a primary care doctor for everything.

Point-of-service (POS) plans

A POS plan is a combination of an HMO and PPO. Like an HMO, you’ll have to choose a primary care provider from the list of in network physicians. And like a PPO, you have the flexibility to go to any out-of-network provider.

Points to note

  • You can see providers inside or outside of the insurance company’s network
  • If receiving in network service, you must see your Primary Care Provider necessary
  • Good For individuals who don’t mind paying a little extra for flexibility of seeing an out-of-network provider

High-deductible health plans/Health Savings Account (HDHPs/HSAs)

An HDHP can be in the form of any of the aforementioned Healthcare plans, except it have a higher deductible than a traditional insurance plan. Also, the premium is usually lower, but you pay more health out-of-pocket before the insurance company starts to pay its share.

I want to point out that HDHPs and HSAs are not the same thing. An HSA is a medical savings account with tax advantages (The money you put in an HSA is not taxed and can be used tax-free only on eligible medical expenses). In order to have an HSA, you must be enrolled in a HDHP. For 2018, you can contribute up to $3,450 for an individual HDHP coverage and up to $6,900 for a  family HDHP. Any amount that you don’t use in you HAS is rolled over to the  next year.

Points to note

  • You can save money tax free for current and future medical expenses
  • An HSA may earn interest, which is not taxable.
  • HSA funds roll over year to year if you don’t spend them

Which Health Insurance Plan is Best?

I’m sure you know the answer to this one. It depends on you, your situation and what your comfortable with Emotionally and Financially. The Balance have made a list of the best health insurance companies for specific categories. But I will do my own analysis and share the results in a later post.

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