6 Factors to Consider When Picking a Health Insurance Company

Choosing a health insurance company can be a daunting task. Here are 6 things to consider when picking a health insurance company.

Do words like “monthly premium” and “deductible” intimidate you? You’re not alone.

You already know this: the health insurance landscape is tricky to navigate. But choosing how, where, and from whom you get health care is also incredibly important. Whether you’re comparing plan options offered by your employer or buying insurance through the federal marketplace, here is an outline of the most important factors to consider when choosing a health insurance company. Our checklist can help you select the right plan for you and your family.

Before you begin, find your marketplace.

If you, your spouse, or parent (if you’re under 26) gets health insurance through their job, you won’t need to use the government insurance exchanges.

If you are self-employed, or your job doesn’t offer employee health insurance, you can access a list of available healthcare plans by visiting your state’s Affordable Care Act/Obamacare marketplace, if available, or the federal marketplace by going to HealthCare.gov and entering your ZIP code. To access information about your state’s federal health insurance exchange, or to learn about applying for Medicaid where you live, visit this state-by-state guide on Healthcare.com.

Are these my only options?

No, but healthcare plans offered to you through your employer and the federal marketplace are usually the most affordable options. Still, there are alternatives. Some professional memberships, including the American Bar Association and Freelancer’s Union offer a limited number of health insurance plans. Healthcare startups such as Oscar and Bright Health are another option for consumers.

1. Who needs coverage?

Consider whether you are seeking individual coverage, coverage for you and a spouse, or coverage for you and your kids. Ask yourself: are you pregnant or expecting to become pregnant within the next year? If you’re planning on starting a family, there are a few additional questions you need to ask yourself when selecting your healthcare coverage.

2. Determine which type of insurance plan — HMO, PPO, EPO, or POS — is best for you.

Basically, the type of insurance plan you pick determines how many providers will be covered under your plan and whether you’ll need a referral from your Primary Care Doctor (PCP) before seeing a specialist (eg. dermatologist, cardiologist, radiologist). From HMO to POS, Here’s a glossary to help you decipher this alphabet soup.

Information via WebMD

3. Compare health plan networks to learn which doctors are covered by each insurance plan option.

If you love your internist or OB/GYN and would like to continue seeing them, make sure they are in the provider directories for the plan you’re considering. You can also ask your doctor if he or she accepts a particular health insurance plan.

You may want to consider a plan that includes a large network of doctors – you’ll have more choices this way. Choosing a plan with a larger network is especially critical if you live in a rural community, as you’ll be more likely to find a local doctor who takes your plan.

4. Compare Out-of-Pocket Costs

Understanding health insurance lingo will be useful here. A few vocabulary words to know:

  • Premium: The cost of your monthly health insurance bill.
  • Deductible: The amount you must spend on medical care and prescriptions before your insurer pays anything.
  • Out-of-Pocket Maximum: The most you will be required to pay for healthcare services over the course of a year. After you spend this amount, your health insurance company will begin to subsidize the cost of your medical care.
  • Copay: A fixed fee that a health insurer requires the patient to pay upon incurring a medical expense (such as  a routine office visit or filling a prescription at the pharmacy).

A plan that pays a higher percentage of your medical costs, but has a higher monthly premium, is better if:

  • You go to the doctor frequently.
  • You take brand-name prescription medications on a regular basis. (Note: check that your drugs are covered under the health plan’s formulary, or you may face very steep costs)
  • You are pregnant or have small children.
  • You will undergo a surgery in the coming year.
  • You require treatment for a chronic condition such as diabetes, asthma, clinical depression, or cancer.

A plan with higher out-of-pocket costs and a lower monthly premium is a better choice if:

  • You can’t afford the higher monthly premiums for a plan with lower out-of-pocket costs.
  • You are in good health, you are male and/or rarely see a doctor.

5. Read the fine print.

Once you’ve narrowed down your options, make sure your selected plan covers all of your needs. Refer to each plan’s “Summary Of Benefits” and check the list of services that are covered. Some plans may include better coverage for services like physical therapy, oral surgery, or mental health care, while others might charge lower copays for prescription drugs or ER visits.

6. Address any lingering questions you may have.

If you cannot find reliable information about a particular plan on the web, call the customer service line of the insurers you’re considering. You may want to ask:

  • Is a particular medication you currently take covered under the plan?
  • Which birth control options are covered under this plan?
  • Which prenatal care and maternity services are covered?
  • What happens if I get sick when traveling outside the United States?
  • How do I begin the process of signing up, when does my coverage start to kick in, and what documents will I need?

Keep in mind that selecting healthcare coverage shouldn’t send you into a stress-induced panic.


Image: Alejandro De La Cruz / Flickr

The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.

Erica Block: Erica Block is an Editorial Fellow at HealthCare.com, where she gets to combine her interest in healthcare policy with her penchant for creating online content. When she isn't reading or writing, Erica can be found wandering around Brooklyn, playing softball, or listening to podcasts. She counts music, rescue dogs, and lumberjack sports among her greatest passions. Follow Erica on Twitter: @EricaDaleBlock

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