Open enrollment is no picnic, and having to choose the right health insurance for you and your family is like trying to create your own crystal ball. How much coverage will you need? Will anyone be chronically ill next year? Choose too little coverage, and you end up with sky high medical bills. Choose too much and you pay all year for something you don’t need.
“Quick, predict the future and fill out these impossible forms about it, now!” Sounds like fun, right? Luckily, there is a little bit of relief available. Experts in the industry are able to predict how much coverage you will need based on statistical data from your family. While it’s not exactly fortune telling, it’s as close as you’re going to get.
Know Your Options
The first step is to understand how and where you’re getting your insurance from. For most, it’s through your employee benefit program. If not, you’ll need to use the government insurance marketplace. Each state has a unique insurance marketplace is offered through the Affordable Care Act. You can find yours by going to HealthCare.gov and entering your ZIP code. You’ll be given options for your state’s exchange or the federal marketplace to purchase health insurance.
Know your Needs
Once you know what your options are, consider the health needs of you and your family. HMOs, PPOs, EPOs, and POS plans won’t make any sense unless you know what you’re looking for. Make a list of prescriptions taken on a daily basis and doctors you see regularly. Look at what you’ve spent on doctors and hospitals in the past. Look for trends and consider possible upcoming expenses like pregnancies, surgeries, or special needs. Is it more important to you to save money every month or to have more coverage for large expenses? Understanding your own needs first will help you make the best insurance decisions later.
Know your Doctors
The alphabet soup of insurance plans basically provide you different options for how you choose your doctors. Every insurance plan has a “network.” These doctors will always be less expensive than doctors outside your network. If you want to see a specific doctor or use a specific hospital, check them against your insurance network. If they are not in network, you have a tough choice between choosing a new doctor, choosing new insurance, or choosing higher medical bills.
For those who see a lot of specialist doctors, you’ll want a PPO or EPO, these plans do not require you to have a referral to a specialist. An HMO or POS plan will require you to see a primary doctor first, and then get a referral to a specialist.
Know your budget
The last thing you need is a shocking medical bill that could bankrupt your family. Understand clearly the costs you are responsible for before signing up for any plan.
- Premium: This is the monthly fee for insurance coverage
- Co-Payment: This is what you can expect to pay for basic services like emergency room care, doctors visit, etc.
- Deductible: This is what you are required to pay for major medical expenses before insurance coverage kicks in. Sometimes wellness and preventative care are covered without requiring a deductible payment.
- Out of Pocket Maximum: This is the maximum out of pocket expenses you will pay in any given year.
A simple equation can quickly compare real costs of each plan. First, multiply each plan’s monthly premium by 12, then add the out-of-pocket maximum. The total represents how much you could pay in total if you suffered a medical crisis this year. Making the choice depends a lot on the health of your family, your need for ongoing medical care, and whether you have the personal finances to cover a high deductible cost.
Health insurance is complicated, so it’s not surprising that roughly 80% of workers chose health plans that cost more over the course of the year than their alternatives would have. Knowing your options, your needs, your doctor, and your budget is the best way to make an informed decision and avoid being on a plan that doesn’t meet your needs.