Health insurance is a crucial component of financial planning and healthcare management. It provides a safety net that can protect you and your family from the financial burdens of unexpected medical expenses. However, not all health insurance policies are created equal. It’s essential to understand what to look for in a health insurance policy to ensure you get the coverage you need.
Coverage Options
Qualified health insurance plans, like those in the Federally Facilitated Marketplace, otherwise known as Affordable Care Act plans or Individual/Family plans, are standardized in terms of what they cover, but the cost of the plans can differ greatly. The ten essential areas of coverage mandated by the government are, according to cms.gov:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services
- Pediatric services, including oral and vision care
In addition to knowing these coverage options, it would be wise to secure the plan’s Summary of Benefits and even compare plan details of other plans in your area. This way, you can have assurance that the plan you choose will be suitable for your needs and affordable from the plans available to you. When you compare plans, review and take note of coverages such as emergency and urgent care, primary care and specialist care physician visits, hospitalization, imaging (x-ray, MRI, c-scans, etc.), labs, rehabilitation, prescription drug coverage, immunizations, among others that you may need.
Network of Healthcare Providers
Health insurance policies often come with a network of healthcare providers, such as doctors, hospitals, imaging, labs, and clinics, with which they have negotiated a contract to accept, along with applicable copays they may charge. It’s important to choose a policy with a network that includes your preferred doctors and hospitals to maximize your coverage and minimize out-of-pocket costs.
If you have a specific primary care physician or specialist you want to continue seeing, check whether they are in the network.
Out-of-network care can be significantly more expensive, so understanding the policy’s coverage restrictions and assessing the breadth and quality of the network is crucial. Many plans will offer little or no coverage benefits outside of your network, except for emergency room visits (which are typically more expensive than a primary care physician copay or an urgent care copay). Sometimes, you may be willing to pay a higher premium for a policy with a broader, more extensive network of providers. If your area has insurance companies offering HMOs and PPOs it would be important for you to know the distinctions between the two.
HMOs are typically network-constrained, offering little to no coverage outside of their network. They require your primary physician make the referral to see a specialist, and they usually less expensive than a PPO.
A PPO splits the coverage into two basic groups: an in-network group, which has lower copays/coinsurance and limited coverage (like an HMO) but also provides its members with an out-of-network option, which is typically more expensive but broadens the options of care. Not all areas serviced by the ACA have a PPO option.
Cost and Premiums
The cost of a health insurance policy is a significant factor in your decision-making process. Health insurance premiums vary widely, and you must understand how they are calculated. According to Healthcare.gov for the Affordable Care Act plans, premiums are the monthly payments you make to maintain your coverage, and they can vary based on five factors, including:
- Your age: In general, older individuals may have higher premiums.
- Individual v Family size: It is important that children’s coverage is included in your quote and application for coverage. Children’s coverage may be diverted to state coverage.
- Your location: Healthcare costs can vary by region, impacting your premium.
- Plan category: Bronze level may have low premiums but higher deductibles. Silver level will be able to participate in cost-sharing reductions. Gold-level plans may have higher premiums but lower deductibles and other out-of-pocket costs, such as copays/coinsurance.
- Tobacco use: Generally, those who use tobacco products will have higher costs than non-tobacco applicants.
Personal note: Advance Premium Tax Subsidy may apply to reduce costs based on applicant’s income. It is important to record accurate income on your ACA quote and application. Differences in your application and actual income will likely alter your premium and benefits costs.
It is important to note that insurance companies cannot charge women and men different prices for the same plan. They also cannot take your current health or medical history into account. All plans must cover treatment for pre-existing conditions from the day coverage starts.
While it might be tempting to choose the cheapest premium available, it’s important to remember that lower premiums may come with higher out-of-pocket costs, including deductibles, copayments, and coinsurance. Striking the right balance between your premium and out-of-pocket expenses is essential to ensure you can access the healthcare you need without breaking the bank.
Deductibles and Out-of-Pocket Maximums
Deductibles and out-of-pocket maximums are crucial components of your health insurance policy. The deductible is the amount you must pay out of pocket before your insurance coverage kicks in. For example, if you have a $5,000 deductible, you must pay the first $5,000 of your medical expenses before your insurance covers any costs. Deductibles may vary based on factors already covered.
Conversely, the out-of-pocket maximum is the maximum amount you pay for covered services in a given year. Once you reach this maximum, your insurance will cover 100% of your eligible medical expenses. Understanding these two figures is essential, as they can significantly affect your financial burden.
When choosing a health insurance policy, consider your ability to cover the deductible in case of a medical emergency or illness. If you have a chronic condition that requires ongoing treatment, you should also factor in your expected annual medical expenses to assess the impact of out-of-pocket costs.
Additional Benefits and Services
Many health insurance policies offer additional benefits and services that can enhance your overall healthcare experience. These may include:
- Wellness programs: Some policies provide access to wellness programs that help you maintain a healthy lifestyle and manage chronic conditions.
- Telemedicine: With the rise of telehealth, policies that offer virtual doctor visits can be highly convenient.
- Dental and vision coverage: Some policies offer dental and vision coverage as add-ons, saving you money on routine check-ups and necessary treatments. It is best to inquire about the coverage details of these benefits to assess if they are sufficient for your situation.
- Mental health services: The importance of mental health is increasingly recognized, so check if the policy covers mental health services, including therapy and counseling.
Consider your needs and preferences when evaluating these additional benefits and services, as they can significantly enhance your healthcare experience.
Coverage for Pre-Existing Conditions
It is important to note that insurance companies cannot charge women and men different prices for the same plan. They also cannot take your current health or medical history into account. All plans must cover treatment for pre-existing conditions from the day coverage starts.
If you have a pre-existing medical condition, it’s wise to review the cost that your health insurance policy will charge to cover it. Thanks to the Affordable Care Act in the United States, insurance companies are generally required to cover pre-existing conditions. However, the specific costs of copay/copays can vary. For example, an emergency room visit copay/coinsurance varies from different insurance companies’ plans. Confirm that your policy provides the coverage you need for your particular situation.
In conclusion, finding the right health insurance policy requires careful consideration of your healthcare needs, financial situation, and personal preferences. Take your time with the decision-making process. And be sure to review all the details of a policy, including coverage options, provider networks, costs, deductibles, and additional benefits. Understanding what to look for in a health insurance policy is a good early step to securing the coverage that will protect your health and financial well-being.
References are made to CMS.gov, and Healthcare.gov .
