When selecting insurance coverage, you may find the wealth of options overwhelming.  HMO, PPO, or Fee-for-Service?  What about coinsurance, deductibles, and all the charges that come in addition to your monthly premium?  If you’re healthy now, should you still get broad coverage, or wait until you need all of those services?  What would make your monthly premium increase?

 The Department of Health and Human Services (DHHS) has a strategy to help you make an informed decision about health insurance.  On their consumer health insurance website (www.ahrq.gov/consumer/insuranc.htm), they offer a basic worksheet you can use as a template to detail what you really need by comparing various policies.  First, the DHHS suggests you select at least 3 policies to compare.  From there, there is a list of services, documentation and insurance management issues, and expenses you can use to evaluate each policy.

Within the list of services (e.g.: hospital care, surgery, well-baby and maternity care, mammograms, immunizations, etc.), there may be some that are not relevant to your health situation. You may be male, do not intend to have children yet, or already have separate dental coverage with another carrier.  With that in mind, only compare the services you will really need.  For instance, maybe you are especially active in high-risk sports, and want extensive hospital care, X-ray, and prescription drug coverage in the event that you are injured. 

As for documentation and insurance management, ask yourself if you mind maintaining receipts  and filling out forms in order to get reimbursed for medical services you pay for up front, or if you don’t want to deal with paperwork and don’t mind having fewer choices in doctors.  Maybe you don’t want limitations on seeing specialists and want to choose your primary care physician.  Use your answers when comparing the three policies as they could be different types of health insurance; one may be an HMO, while the other two are PPOs (see “Understanding Types of Insurance”).

Finally, when comparing cost, there is more than your monthly premium to consider.  As a rule of thumb, assume that the lower your monthly premium, the more likely it is that you will have more out-of-pocket costs, or higher limits on additional expenses.

Just what are these costs?  They include:

• Covered Expenses:  The services your insurance company is willing to pay for in entirety, as a percentage in coinsurance, or after your copayment.  Alternatively, any service that is not covered would mean you would shoulder 100% of the cost yourself.
• Coinsurance:  For certain covered services, you split the costs with your insurance company. Coinsurance is usually expressed as a percentage; for instance, your coinsurance may be 70%--you insurance company pays 70% of the cost, while you pay 30%.
• Copayment: The fee you pay for medical visits, prescription drugs, etc.  You may have a $35 copayment for doctor’s visits, but only a $10 copay for medication.
• Deductible:  A set annual amount that you must pay in expenses (whether through coinsurance, copayment, or other health services costs) before your insurance company pays 100% of expenses. 

Please see the other budgeting-help.com articles about health insurance to ensure you get the best insurance plan for your medical needs.

References

United States Department of Health & Human Services. Checkup on Health Insurance Choices

Author, Unknown. Types of Insurance