When open enrollment season rolls around, many people begin shopping for health insurance plans. Not only can you buy insurance if they don’t have it, but you can also switch plans if you are unhappy with your existing one.
When you begin to shop for health insurance, the entire process can seem overwhelming. Breaking things down can help to make the process easier.
If you take a step back and use a checklist, what appears to be a somewhat daunting process can be simplified. With that in mind, here are a few things to consider as you compare your health insurance plans this year.
The Premiums
It is completely natural for people to focus on the premium of the insurance plan they are considering. This is because the premiums are the total amount of money you must pay each month for the coverage.
This makes them the most obvious expense that is related to the health insurance you ultimately choose.
While you need to make sure that you find health insurance that will fit in your budget, the cheapest plan isn’t always going to be the best. If you find a plan with a lower premium, it may wind up equaling out with higher deductibles or even a restricted network of care providers.
Rather than making decisions about what insurance plan to choose based on the premium only, this should be just one factor that is considered when choosing a plan.
Your Out-of-Pocket Costs
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The majority of health insurance plans are going to come with certain out-of-pocket costs. The plan’s deductible is the amount you have to pay upfront before your insurance coverage will kick in.
There are some types of preventative care services, including some cancer screenings and immunizations that are often exempt from the deductibles.
Also, some health insurance policies will charge a copayment or coinsurance after the deductible has been met. The copayment is the flat fee for a certain service. An example would be $30 you must pay when going to the doctor.
The coinsurance you are charged is a percentage of the total cost of the care you receive. The most common type of coinsurance that is found offered by health insurance policies is the 80/20 split. This requires you to pay for up to 20 percent of the bill and the insurance policy will cover the remaining 80 percent.
Sometimes, the out-of-pocket costs will be difficult for you to decipher. A financial planner will help you navigate through all the fine print in the policy.
If you don’t have an advisor to ask, consider speaking with the human resources office at your work, or you can contact the insurer directly if you desire.
Coverage for Prescription Drugs
It isn’t enough to know that the plan you have selected has prescription drug coverage. You also need to know certain prescriptions that are actually covered.
There are some insurers that will use formularies or a list of covered drugs, that will categorize the prescriptions into different tiers. A generic prescription may have a lower copay, while the brand name drugs will cost more.
Remember, some insurers will require a patient to try out the lower-tier drugs first or to receive prior authorization before the plan will cover your more expensive medications.
Examples of drugs you may have to be pre-approved for include Humulin, which is for diabetes, or Adderall for attention deficit hyperactivity disorder.
Eligibility for a Health Savings Account
A health savings account, which is often referred to as the HSA, is an invaluable financial tool. In 2019, single individuals were allowed to make as much as $3,500 in total tax-deductible contributions to their HSA.
Those who had a family plan were allowed to contribute up to $7,000 in tax-free contributions. Those who were over the age of 55 could make an additional contribution amount of $1,000 per year.
Only those who are considered qualified for higher deductible insurance plans can contribute to the HSA. In 2019, the qualified plans were the ones that had a minimum deductible of $1,350 for an individual and $2,700 for families, along with a max out-of-pocket cost of $6,750 for an individual and $15,500 for family plans.
Keep in mind though, these higher deductible plans are right for everyone. Even though the lower premiums are appealing, they are usually only right for those who are healthy and who don’t have very big healthcare needs and won’t have these in the foreseeable future.
As you can see, there are more than a few factors to consider when it comes to choosing a healthcare plan. Keep the tips and information here in mind to ensure that the desired plan is selected that meets the needs of the individual or the family. Being informed is the best way to ensure that the right plan is found and selected.
