The most valuable wealth is health
If you’re fortunate enough to have health insurance through your job, that limits your choices to those that your employer provides. In the event that your employer does not offer insurance, it’s possible that a group health insurance plan offered by a company or association to which you belong will be available.
Another choice is to see if you qualify for an upfront premium credit, which would result in lower premium costs, by visiting your neighborhood Obamacare health insurance marketplace. Even if you don’t immediately qualify, purchasing your health insurance through the marketplace means you might when you submit your tax return for the year.
You’ll have to resort to purchasing a private plan if you can’t or won’t obtain health insurance from any of these options. You will have the most options, but it will probably cost much more.
Decide which type of policy to buy
Although you might not have access to all of these options through your preferred source, health insurance policies come in a variety of fundamental types. Health Maintenance Organizations (HMOs) are a very popular kind of health insurance plan. In an HMO, you are obligated to seek medical care from specialists who are part of the policy’s network and must obtain a referral from your primary care physician in order to see a specialist.
Additionally widespread are Preferred Provider Organizations (PPOs). Although a PPO health insurance policy has a network, you are not required to use only in-network providers and you don’t require a referral to see a specialist.
HMO/PPO hybrids known as Exclusive Provider Organizations (EPOs) are available. You must stay within the network of the plan, but you are not required to get recommendations for specialists. Another less popular option that is essentially the opposite of an EPO is point-of-service (POS) plans. You are not constrained to the POS plan’s network, but you will need a recommendation to see a specialist.
A PPO or POS with the same level of coverage will typically cost more than an HMO or EPO, the other two popular plan types. It might be worth spending a little extra money to get a PPO or POS policy, though, if network coverage is spotty in your area or you don’t feel comfortable restricting yourself to 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. A high-deductible plan keeps your insurance costs as low as possible while still providing you with protection in the event of a catastrophic event because you are likely to not exceed the deductible, even under a low-deductible plan, if you have very low medical expenses.
Choosing a Health Savings Account (HSA)-enabled plan and funding it with at least the amount of a year’s deductible is your best option if you decide to take the high-deductible route. 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 worth of deductibles 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 network and coverage policies of a particular plan have a significant impact on how well it will pay for your medical costs. You’re still better off using in-network healthcare providers as much as you can because doing so will cut your costs, even if you select a plan with out-of-network options, like a PPO. And the guidelines that a particular 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 options that have access to quality out-of-area care. 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 how much you would ultimately spend on health care. Make this calculation for each plan you are thinking about, then contrast the results. You’re probably getting the best deal with the plan with the lowest total.