Health Insurance: Choosing the Plan That's Right for You
You may be buying insurance or choosing one that your company offers. Either way, you will need to know how much insurance you can afford, what amount you can pay out of pocket, and what services you need.
Common Points Among Plans
Most health plans will only cover the products and services they say are needed. This includes preventive care, medicine, and surgery. They usually don't cover cosmetic or other optional surgery, but this can sometimes be challenged. Most insurers will also not pay for experimental treatments.
Almost all plans require that patients pay part of the bill. This is called a co-payment. There is often a cap on how much you will need to pay in a year. But keep in mind that one injury or a severe or chronic illness can be costly.
The Types of Plans
There are so many health plans. It can be hard to pick one. Most of them fall into three types:
Indemnity or Fee-for-Service Plans
These plans let you pick any doctor or hospital you like. The insurer pays a percentage of what they consider usual and customary charges. If you choose a provider who charges more than the company’s limit, then you pay the rest.
You usually have to pay a deductible. For example, the first $300 of medical costs per year before the plan starts paying. There is also a yearly maximum amount you may need to pay for medical care.
Managed Care Plans
Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are managed care plans. They are often less expensive than fee-for-service plans, but they have a limited choice of doctors and hospitals. However, more and more providers are taking part in these plans and this increases choice.
Managed care plans may only pay for doctors, labs, clinics, and hospitals in theirs network. A co-payment is usually needed for each visit. The amount encourages members to use less expensive services. For example, the co-payment for a visit to a doctor’s office is less than a visit to the emergency room. Some plans require that you select a primary care doctor. This person will need to give you a referral before the plan will pay for you to see a specialist. Some will pay a percentage of visits to specialists outside the network, but the aim is to remain in network.
Health Savings Accounts (HSAs)
A health savings account (HSA) is a tax-exempt account that pays you back for certain medical expenses.
The account includes discounts, routine care, and co-payments. It depends on which package your employer offers. Unused money may roll over to the following year. It may revert to a traditional managed care with caps on out-of-pocket expenses if the fund is used up and after a deductible is met.
Questions to Ask
It is hard to know what type of care you will need in the future. But there are questions you can ask yourself to find the best plan:
- Are the deductibles and annual maximum payments within your reach? How much will your employer pay toward the coverage?
- Will you be able to afford the plan if your income changes?
- Do you want to make decisions about the doctors you see? Do you want to leave that choice to your plan and primary care doctor?
- What kinds of referrals do you need to access care, including emergency room treatment and surgery?
- Does the plan cover treatment for chronic health problems?
- Are your current doctors in the plan? If not, how much will you have to pay to see them?
- Would you want to be admitted to a certain hospital? Will the plan allow this?
- Does the plan have information on the quality of its doctors and hospitals? If not, can your employer help you get this?
- How wide is the choice of doctors in the plan? How many are accepting new patients?
- Will you have any changes in your life that will change your needs, such as a marriage, new baby, or retirement? Is the plan flexible enough to meet those changes?
- Are the services what your family needs? Look carefully at the benefits for routine well-child care, dental and vision care, and cancer screenings. Mental health and substance use disorder coverage varies widely among plans.
- Does the plan cover other healthcare, such as acupuncture or chiropractic therapy?
Agency for Healthcare Research and Quality
US Department of Health and Human Services
The College of Family Physicians of Canada
Glossary. Agency for Healthcare Research and Quality website. Available at: http://archive.ahrq.gov/consumer/insuranceqa/qaglossary.htm. Accessed October 15, 2021.
Health insurance and Obamacare terms. Health Insurance Resource Center website. Available at: https://www.healthinsurance.org/glossary. Accessed October 15, 2021.
Health savings accounts (HSAs). US Department of the Treasury website. Available at: https://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx. Accessed October 15, 2021.
Publication 969. Internal Revenue Service website. Available at: https://www.irs.gov/publications/p969#en_US_2012_publink1000204081. Accessed October 15, 2021.
Questions and answers about health insurance. Agency for Healthcare Research and Quality website. Available at: https://archive.ahrq.gov/consumer/insuranceqa. Accessed October 15, 2021.
Last reviewed October 2021 by EBSCO Medical Review Board Last Updated: 10/15/2021