5 Important Factors to Consider When Determining the Right Health Insurance Plan for You

We're coming up to the time of year where employers have open enrollment for benefits, including health insurance. We're also getting closer to the end of the year where you may need to renew or select a new health insurance plan if you pay for your own through the Affordable Care Act (ACA) or your state's health insurance marketplace. Having insurance coverage, either an individually-acquired one or one paid through your employer is imperative for your overall health security. However, even more important is getting the right health insurance plan to ensure that you're well covered and able to pay for it. 

There are many health insurance vendors in the market, and all are competing to get you under their umbrella. So, why is it so important to purchase the right insurance plan? And if you already have one, how can you tell if it’s the right one? Here are some important considerations to make when determining the right health insurance plan for you and your family.

1. Coverage

One of the single biggest benefits to having health insurance is that it gives you an extensive coverage and pays a huge chunk of your expenses when you need it. Generally, great health insurance coverage should include all essential benefits which include doctor visits, hospitalizations, outpatient treatments, tests, medications, preventative care practices like mammograms and immunizations, pediatric care, rehabilitation, substance abuse and mental health care, and such. It’s important to know exactly what your plan covers so that you don’t get the shock of your life upon realizing something you are suffering from is excluded from the policy. One way to approach this question is to look at the deductible and the annual maximum out-of-pocket. This will tell you essentially the minimum and maximum that you'd be required to pay under most circumstances should you have medical expenses throughout a single year. You should also check if there is a lifetime maximum benefit amount.

2. Affordable Monthly Premiums

A good health insurance plan is one which you can affordably pay the set premiums without putting much strain on yourself. When it comes to the ACA Companies often categorize health insurance plans affordability as bronze, silver, gold, and platinum. These plans only show how you and your provider share costs, but they have nothing to do with the quality of care. Your employer may offer a variety of health insurance options that don't fall under the ACA categories, and they'll have varying monthly premiums that you pay on top of what the employer pays. Those plans may have much wider varying coverage options, so you'll need to compare the benefits of each plan against the premium amount.

3. Out-Of-Pocket Expenses

Having the right insurance coverage will ensure that your out-of-pocket expenses are not a burden to you. You should look at the amount of your deductible each year and determine if it’s affordable. The deductible is the amount that you have to pay out of your pockets before the insurance can start paying for the rest of the expenses. 

Some insurance plans will need you to pay the deductible amount before they can cover office visits while others will require you to make co-payments for office visits, and this will not count towards the deductibles. It's important to take a look at your copay and coinsurance (amount you are accountable for after the insurance pays its part) costs. Those with high sharing ratios like 80/20 or 90/10 are best, because that means the insurance company pays 80% or 90% of the medical expenses (after the deductible, if any), and then you pay %20% or 10%.

4. Network Coverage

Even the most comprehensive insurance plan in the nation is not the best if it can’t help you find a healthcare professional that accepts it. Some plans, like HMO's, have a specific network of healthcare professionals to choose from, where you'll pay less. Others, like PPO's, may allow you to see any doctor you want, but you'll more to see those doctors if they aren't in-network. Most plans provide online tools to help you search for hospitals and physicians to see if they are in the defined network. You can also contact the hospital or doctor directly to find out if they accept the insurance plans you are considering.

5. HSA or FSA options

Some health insurance plans allow you to have an Health Savings Account (HSA) or Flexible Spending Account (FSA). These can offer excellent advantages for saving on your annual medical expenses. If it's an employer health insurance plan, your employer may put money in the accounts for your that you can use for paying medical expenses, and those expenses can go toward your deductible. Some allow you to add funds from your paycheck to the accounts your self on a pre-tax basis, and then use those funds to pay for qualified medical expenses without ever paying taxes on those funds. Whether or not the insurance plan allows you to have an HSA or FSA should be an important consideration. You can learn more about HSAs and FSAs in the previous Escient Financial Insights articles HSAs and Tax-Free Distributions and How to Invest in Your Health in 2022. Note that these articles are older and have contribution limits that are now higher, but otherwise the information in the articles is still relevant. New HSA contribution amounts for 2024 can be found in the previous Escient Financial Insights article You'll Be Able to Contribute More to Your HSA in 2024.

Don’t just buy any health insurance plan out there. Do some due diligence to find the one with the most benefits and is perfect for you and your situation. If you need help determining the premium your could afford, as well as the deductible and maximum out-of-pocket, Escient Financial can help you analyze your expenses and make the right choice. Go ahead and...