Shopping for health insurance

6 things to consider as you explore policies and coverage.

’Tis the season for open enrollment. And if it’s your time to shop for health insurance, you may be wondering where to begin. It’s a big decision because making the right choices during elections can help protect you from unexpected expenses.

Finding the right health insurance coverage can really boil down to a handful of basics. So if you can simplify the process, you may eliminate some stress. Here are six things to consider as you research and compare health insurance plans.

1. Learn health insurance lingo

Don’t let all the health insurance jargon confuse you. Here’s a short list of terms that can keep you in the driver’s seat while you research your next plan. 

An open enrollment period is the specific time each year when people can sign up for new health plans. Keep in mind, these periods can vary from plan to plan. 

  • Companies with employee plans may have different open enrollment periods. Think about adding the dates to your calendar, so you won’t get stuck without insurance. 
  • Planning to get health coverage through a federal or state marketplace? The open enrollment window for federal coverage in 2020 is November 1 through December 15.
  • There’s one exception: You could be approved to enroll outside of open enrollment periods if you experience qualifying life events, like getting married or having a baby. Be sure to check with your provider—or with your company’s human resources team—for details.

A premium is the cost of your insurance. Typically, you make premium payments each month. And if you’re enrolled through your work, your premium will likely come out of your paycheck. Premiums are due even when you don’t need any health care services.

A deductible is the amount you’ll have to spend for covered health services before your insurance plan starts helping you pay. 

Copayments, sometimes called copays, and coinsurance are the payments you’ll make toward covered medical services once you’ve reached your deductible.

Out-of-pocket costs are your expenses for medical care (aside from monthly premiums) that aren’t reimbursed by insurance. They include deductibles and copays, plus both covered and uncovered services.

2. Learn where to shop for health insurance

Generally, people get insurance through an employer program, a government program or a private insurance marketplace. 

With job-based insurance, you’ll choose your coverage from a short list of plans your company picks for you and your co-workers.

If you aren’t covered through work or a private program, the federal Health Insurance Marketplace may be for you. You might also hear it called the health insurance exchange. It’s the marketplace that was established by the Affordable Care Act (ACA), or “Obamacare.”

In recent years, some states have started their own insurance marketplaces. 

For 2020 coverage, California, Colorado, Connecticut, Idaho, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont and Washington have their own exchanges. Washington, D.C., also has its own. You can learn more at each state’s health insurance site.

3. Explore different types of health insurance

Each type of insurance plan helps you manage your health care costs in a slightly different way. Some plans let you choose almost any doctor, while others may restrict your choices or charge more for doctors outside their network. Here are a few common health plans you may encounter.

Exclusive Provider Organization (EPO)

With an EPO plan, you’ll use doctors or other care providers from a prescribed network, except in an emergency. Your care will be coordinated by a primary care physician (PCP), who will refer you to any specialists you need.

Health Maintenance Organization (HMO)

HMO plans tend to focus on prevention and wellness. They usually limit coverage to in-network providers. That means limited or no coverage for out-of-network care, except in an emergency. If you use a doctor or visit an office outside the plan’s network, you may have to pay the full amount yourself. Members typically need referrals from their primary care doctor to see specialists.

Point of Service (POS)

POS plans allow you to get care from both in- and out-of-network providers, though you’ll likely pay higher out-of-pocket costs if you see someone outside the plan’s network. Enrollees typically need referrals from their primary care doctor to see specialists.

Preferred Provider Organization (PPO)

A PPO plan also allows you to get care from both in- and out-of-network providers. And like a POS plan, you’ll likely pay higher out-of-pocket costs if you see someone outside the plan’s network. However, unlike a POS plan, you can typically visit any doctor without needing a referral.

High Deductible Health Plan (HDHP) with a Health Savings Account (HSA)

Like the name indicates, HDHP plans are those with higher deductibles than those of traditional insurance plans. An HDHP may be combined with an HSA to allow you to pay for qualified services with pretax dollars. Think of an HSA as a sort of bank account. But there’s a lot more to it, so be sure to do your research.

Weighing premiums versus deductibles

Putting the acronyms aside for a sec, you may notice some trade-offs as you explore policies. Generally, the higher the deductible, the lower your monthly premium. The opposite may also be true: The lower a plan’s deductible, the higher the premium each month. Consider your situation when deciding what’s right for you. 

Take people in good health, for example. They might choose from plans with lower premiums and higher deductibles, because they believe they’re less likely to use the insurance. On the other hand, a plan with higher premiums and a lower deductible may make sense for someone who anticipates needing more care throughout the year.

4. Compare plan provider networks

What’s a provider network? Just a fancy name for the group of people or “providers” who can treat you, depending on your plan. Think medical doctors, psychologists and physical therapists, plus places like hospitals, urgent care clinics and pharmacies. 

In general, you may be able to control your costs by using preferred providers. The key is finding a plan that includes the providers you need. So, do a little homework when you research plans. 

Start by making a list of the providers you and your family use. Then check your list against the provider directories for each plan you’re considering. If you’re still not sure, try calling your doctors directly to see if they’re included in the networks you’re exploring.

5. Weigh health insurance plan costs

Out-of-pocket costs are your personal costs for health care services. This includes things like the copays you’re charged for office visits, deductibles for medical services and anything you owe when you pick up prescriptions. 

Most plans have a yearly cap, sometimes called an out-of-pocket maximum. Reach that max, and your insurance company will cover 100% of allowed expenses for the rest of the year. Keep in mind, though, the maximum doesn't include monthly premiums or services your plan doesn’t cover. 

A plan’s summary of benefits can help give you a snapshot of the out-of-pocket costs you might expect to pay. 

Sure, it’s impossible to know exactly how much you’ll spend each year on out-of-pocket costs. But you can make some guesses. Think about any medical conditions you have and the kinds of services and medications you’ve used in the past. You can also try a little forecasting. Planning a pregnancy or scheduled surgery? Make sure to check out-of-pocket costs for those too.

6. Picking a plan that fits your needs

Services may vary from plan to plan, so it’s a good idea to research the nitty-gritty details. How much do the plans cover for hospitalizations, mental health care and maternity services? What about physical therapy? How much would your medications cost? 

Once you’ve narrowed it down to a couple of plans, you can check their summaries of benefits to see which ones fit your needs. 

There’s a lot to consider, but health insurance shopping doesn’t have to be overwhelming. Take the time to understand key terms and concepts. And let your past care and future plans drive your research. If you still have questions, contact or your employer’s HR department.

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