I have gotten pretty good at understanding health insurance. I started learning about it when I would help my mom choose a plan during her company’s open enrollment. I’m comfortable with picking out my household’s insurance now because of that practice.
Let’s dive into some basics!
Health Insurance Plan (What to Look For)
The first things I ask myself when looking at health insurance plans are…
- Can I afford the plan (the cost per month)?
- Is the cost of the plan worth it (what are the benefits)?
Can You Afford the Plan?
This is simple. Can you pay the bill each month? Only look at plans that you know you can afford.
Is the Cost of the Plan Worth It?
It’s important to understand what you are signing up for.
Health Insurance Deductible
There are usually two types:
- Individual – the amount of money that you have to pay (out of your own personal bank account) before the insurance company will start helping you (with your medical bills).
- Family – the amount of money that everyone in your household (everyone on your plan, even children) will have to pay (out of your personal bank account) before the insurance company will start helping you (with your medical bills).
Lower deductibles are great if you know that you’ll have a lot of medical bills. Unfortunately, insurance plans with lower deductibles tend to cost more per month.
I typically look at the insurance plans that I can afford and choose the one with the lowest deductibles.
Copay vs. Coinsurance
These are super important. I prefer an insurance plan with co-pays over coinsurance.
A copay is a set price. If your plan says that a visit to your primary care doctor is a $35 copay. When you have that visit, you only need to pay $35 (out of your personal bank account).
Coinsurance is a set percentage. If your plan says that a visit to your primary care doctor is 30% coinsurance, you have to pay 30% of the medical bills (out of your personal bank account). If the bill comes out to be $300, you owe $90 for that one visit! There could be additional fees as well.
It’s crucial to note that you may have to “meet” your deductible before you can pay coinsurance. For example, if you have an individual deductible of $2,000, you may have to pay the above $300 (out of your personal bank account). You would then have to pay other medical bills (out of your personal bank account) until you’ve paid $2,000 in medical bills. After that, the insurance company would allow you to pay 30% of your future medical bills.
| Deductible (Individual/Family) | Primary Care |
|---|---|
| $2,000/$4,000 | $30 copay |
| Deductible (Individual/Family) | Primary Care |
|---|---|
| $2,000/$4,000 | 30% coinsurance (after deductible) |
Other Definitions
Premium
This is a fancy way of saying “your specific plan”.
Network
This is your health insurance company (including the doctors and facilities that are covered by them). When a doctor or hospital is “in-network” that means that they accept your insurance. If they are “out-of-network” you may have to pay a lot of money out of your personal bank account.
Provider
These are your doctors, specialists, dentists, etc.
Conclusion
This is not a comprehensive guide to health insurance plans, but it will help you start to understand how to pick the right one!
