Picking the right health insurance plan can be really daunting. Especially if you work for a large firm that has several healthcare options. Just like with basically all of the articles from The Money Muscle, each decision is going to be based on your specific circumstances. So I cannot tell you what to do without knowing you. However, I can give you a guide to use to help you know how to pick the right health insurance plan. It’s the same step-by-step guide that I use myself.
Step 1: Gather Your Options
So you just got a new job. Congratulations! Now you have to choose from the big list of benefits that that company offers. The one that is the most confusing (IMO) is picking the right health insurance plan.
The first step is to simply gather your options. You should be able to get that from your HR department or through an online portal of some kind. Have ALL of your options in front of you first. Then we will start to whittle the choices down.
Step 2: Eliminate Plans That Do Not Cover Something You Need
Believe it or not, just because you have health insurance, doesn’t mean that you will have your healthcare expenses covered if you were to need them.
I have seen insurance coverages not cover things like chemotherapy.
Seriously.
Even with the implementation of the Affordable Care Act, there are still carve outs of coverage that insurance companies have made over the years.
So if there is a certain condition (or conditions) that you have and you want to make sure it is covered, read the fine print and make sure that it is covered. I know that the fine print sucks. But read it anyway. Or call the insurance company and tell them that you are interested in one of their plans and ask if your condition is covered under that plan.
Any plan that does not cover your condition(s), throw out. You do not want to pick that plan.
And while we are on the topic, if you have a doctor that you really like, make sure that that doctor is in-network as well. You can find this in a couple different places.
First, you can go to the website of the doctor and see if they take the insurance that you are considering getting. You could also call his/her office and ask the same thing.
And you can also go to the insurance company’s website to verify that that doctor is in-network.
The last thing that you would want to do is pick an insurance plan and not be able to go see your doctor or have your condition treated satisfactorily.
So at this point, you may have whittled your list down a little bit.
So we move on to step 3 of how to pick the right health insurance plan.
Step 3: Compare HMO, PPO, EPO, and POS Plans
I know that those letters seem like a bunch of mumbo-jumbo. But they are fairly important.
The main difference between these types of plans are choosing which healthcare providers are in-network and asking your primary care physician for a referral if you want to see a specialist.
Rather than Listing each of these out individually, here is a really good chart that Nerd Wallet put together explaining the differences.
It is easy to get lost in the weeds when trying to choose between an HMO, PPO, EPO, and POS plan. To try not to get too bogged down.
The important thing up to this point is that you have eliminated the plans that do not include coverage for any condition(s) that you want covered as well as the plans that do not list any doctors that you like as in-network providers.
In my experience, choosing between an HMO, PPO, EPO, and POS plan is less important than simply eliminating the plans that give you less value than others.
Which leads into step 4. The money part of the equation.
Step 4: Finding a Plan that Fits Your Budget AND Health Concerns
I have seen it time and time again. Someone gets hired at a new job and they simply choose the cheapest healthcare plan available.
Please, don’t do that!
You might very well wind up with the cheapest plan because that is the right one for you, but don’t base your decision solely on what the premiums are.
You need to consider several factors:
- Your premiums (the amount you pay each paycheck)
- Your deductible (the amount you have to pay before the insurance company will start paying)
- Your max out of pocket expenses (the maximum amount you will pay until the insurance company pays all of your medical costs)
- If the plan offers an HSA
Yes, there are other numbers to consider, but these are the most important.
If you are unsure of what an HSA is and how it works, check out the article in the hyperlink above.
You will have to pay money for health insurance. There is really no getting around it. But you don’t want to pay too much money for coverage that you don’t need. And likewise, you don’t want to pay too much for coverage that you could pay less for.
This is a general rule of thumb. But if you are young and healthy, you will probably want to consider the plan with the lower premiums and higher deductible (that includes an HSA).
This is because you will be less likely to rack up big medical bills. If you did rack up big medical bills, it would be some type of an unforeseen accident or illness. So pay less money each paycheck and take on the risk that if something bad happens to you, you will have to fork out more money in a higher deductible and higher max out of pocket.
This is also a general rule of thumb. If you are someone who has medical issues and is in the hospital regularly or is in need of regular medical attention, consider choosing the plan with the lower deductible and higher premiums.
If you are consistently using your medical insurance because of your medical problems you will likely be better off paying more for the coverage premiums but forking out less dollars in your deductible and max out of pocket expenses.
Final Thoughts
Figuring out how to pick the right health insurance plan can be daunting. And it is a decision that is EXTREMELY case specific. Your situation is not the same as mine, and mine is not the same as the next person’s.
But hopefully this gives you a guide on how to start to pick the right one.
You can do this!
I am here for you!
Until next time!
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