The most important wealth is one’s health
Your choices are limited to the plans that your employer offers if you are fortunate enough to have employer-sponsored health insurance. If your employer does not provide coverage, perhaps a group or association that you are a member of will let you purchase health insurance from them at a discounted rate.
Another choice is to see if you qualify for an upfront premium credit through your local Obamacare health insurance marketplace, which would result in lower premium costs. Even if you are not immediately eligible for the credit, purchasing your health insurance through the marketplace increases the likelihood that you will be when you submit your tax return for the year.
You will be forced to turn to purchasing a private plan if you are unable to obtain health insurance from any of these sources or do not wish to do so. The greatest number of options are available to you, but the cost is almost certainly much higher.
Decide which type of policy to buy
There are numerous fundamental types of health insurance policies, though you might not have access to all of them through your preferred source. Health Maintenance Organizations (HMOs) are a popular form of medical insurance. When you have an HMO, you are obligated to use the policy’s network of healthcare providers, and you need a recommendation from your primary care doctor to see a specialist.
Additionally widespread are Preferred Provider Organizations (PPOs). Although using network providers is less expensive, a PPO health insurance policy does not require a referral to see a specialist and does not restrict you to in-network care.
HMO/PPO hybrids known as Exclusive Provider Organizations (EPOs) are available. While you must stay within the network of the plan, you don’t need a specialist’s recommendation. Last but not least, Point of Service (POS) plans are a less popular choice that are basically the opposite of an EPO. While you are not constrained to the POS plan’s network, a referral is required in order to see a specialist.
Of the four popular plan types, an HMO or EPO typically costs less for the same level of coverage than a PPO or POS. A PPO or POS policy might be worth the extra cost, though, if network coverage is spotty in your area or you don’t feel comfortable sticking with network providers.
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High deductible versus low deductible
Given all other factors being equal, a plan’s monthly premiums will be less expensive the higher the deductible is. If you have few or no medical expenses in a given year, these plans can be very affordable. However, a high deductible means that you will be responsible for paying a significant portion of your healthcare costs before the insurance policy kicks in. Choosing a high-deductible plan will keep your insurance costs as low as possible while still protecting you in the event of a catastrophic event. If you have very low medical expenses, you probably won’t even reach the deductible of a low-deductible plan.
The best choice you can make if you choose a high-deductible plan is to enroll in one that supports Health Savings Accounts (HSA) and fund it with at least a year’s worth of deductible. A high-deductible health insurance policy’s biggest flaw is that you have to pay a significant amount of money for a major medical expense before the insurance kicks in. An HSA plan neatly covers this weakness. If you have a full year’s deductible saved up in your HSA, you can simply use that money to pay for your share of the costs while also taking advantage of the triple tax benefits that an HSA provides.
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The plan’s network and its coverage policies are two key components that determine how well a specific plan will pay for your medical expenses. Utilizing in-network healthcare providers as much as you can will lower your costs, so you’re still better off doing so even if you select a plan with out-of-network options, like a PPO. And the guidelines that a specific health insurance policy uses to determine what is covered and what isn’t, as well as how much the copays will be, can significantly affect how beneficial that policy is for you.
For instance, you should definitely purchase a health insurance plan with a formulary that includes any expensive medications you take on a regular basis. If you frequently travel, stick with insurance policies that provide effective out-of-area treatment options. Additionally, if you already have a primary care doctor, you should choose a plan that has that doctor in its network.
Finding the best deal
Try this exercise if you’re torn between two or three different policies and unable to make a decision. The annual cost of a plan is calculated by multiplying the monthly premium by 12 and then including the out-of-pocket maximum. If you had one or more major medical expenses throughout the year, the end result is the maximum amount you would have to pay for healthcare. Make this calculation for each plan you are thinking about, then contrast the results. The plan with the lowest total is probably the best deal for you.