Choosing the right health insurance plan for your needs can be a challenge, especially if you’ve never done it before. There are lots of industry terms to interpret, different levels of coverage, and an endless array of complex options.
If you’re feeling intimidated by the process, it’s best to keep things simple. Every plan is different, but all options should include 4 key coverage areas. Prioritizing the basics first can help you find a plan that will cover you when you need it.
How the U.S. Health Insurance System Works
So, how does health insurance work in the United States, anyway? Basically, you, the consumer, pay a set fee, known as a “premium” every month. This is determined by the amount of risk involved with insuring people in the same demographics. Insurance companies collect premiums to pay for medical expenses and their own operating costs and profits.
Types of Health Insurance Plans
The two main types of health insurance plans: individual and group plans. Individual plans are purchased through a health insurer or a health insurance marketplace. Group plans are usually sponsored by employers.
Health plans also differ in terms of their “network,” or the providers who offer services to the insurer’s members. PPO and HMO plans are the most common network types.
PPO (Preferred Provider Organization) plans are generally the most expensive but provide more flexibility as they have larger networks and will cover care that is outside the network. HMO (Health Maintenance Organization) plans have smaller networks, don’t cover out-of-network care, and require referrals for specialist visits. However, they are more affordable than PPO plans.
Important Insurance Terms and Concepts
You’ll see lots of different insurance terms when shopping for a health plan. Here are some you should be aware of before you choose coverage:
- Premium—the amount you pay every month for your coverage.
- Deductible—the amount you pay for your own care before the insurance plan will cover any medical costs.
- Copayment—a set fee you pay for doctors’ visits.
- Coinsurance—what you pay out of the total cost of covered care.
- Network—the providers who work with your insurance plan.
- Out-of-pocket maximum—the most you will pay each year for covered services.
If you don’t understand a term while shopping for health plans, look it up before proceeding. It’s important for you to know how your plan work and what it covers so that you choose a plan you can afford that still suits your needs.
Essential Health Coverages
When choosing a plan, make sure these 4 key services are covered. All plans offered by the federal marketplace are required to cover these and more.
Many people who buy insurance are young and healthy. However, accidents and unexpected illnesses happen! Emergency services are extremely expensive and add up quickly. Choosing a plan with emergency coverage is very important.
Make sure to read the fine print and see how much you’ll be responsible for paying in case of an emergency. Which emergency services are covered and what is the coinsurance?
Everyone will need a prescription at some point. While many medicines are fairly inexpensive, others can run several hundred dollars or even thousands every month. Each plan has its own policies for what medications are covered, so again, you may need to read the coverage options carefully.
Blood tests, mammograms, and other lab services are key for diagnosing and preventing health problems. These lab services are often necessary for routine care, prevention, and early detection of disease. Any insurance plan should cover these basic services.
It is always easier to prevent health problems than it is to treat them. Preventative healthcare services include checkups with primary care providers and routine screenings. Since it is always easier and cheaper to address problems before they progress, insurance companies should be covering at least the most basic preventative care. Preventative services are key for helping people stay healthy and comfortable in their daily lives.
Remember: Consider the Possibilities
If you don’t have any health problems now, then you probably don’t need the most comprehensive health plan. With that said, unexpected health problems or accidents can come up at any time. Make sure that you have at least these four basic services covered, plus anything else that relates to your specific health needs!