The health insurance plan you choose will have an enormous impact on both your medical future and your financial future. Healthcare expenses are so high these days that few people can afford them without the help of insurance, but insurance policies themselves aren't exactly cheap. Understanding how your available health insurance plans work means you'll be able to choose the best one for your specific needs.
How much your healthcare will cost
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All health insurance plans charge a monthly premium (although if you're really lucky, your employer will pay it for you). However, the premium is far from the only expense you'll have related to your health insurance or medical care. First, nearly all health insurance policies have a deductible: the amount of medical expenses you'll have to pay yourself before your insurance policy will start helping out. Second, health insurance policies have co-pays for most expenses. A co-pay is the part of the expense you'll have to pay yourself even after you met your deductible for the year and may be expressed as a dollar amount or as a percentage of the expense. In some cases, a plan with a high monthly premium but low co-pays on the services you use most often will work out to be cheaper for you in the long run. Review the plan's summary to see what the co-pays are for various treatments, especially the ones you're likely to be using during the next year.
What prescriptions are in the formulary
If your health insurance offers prescription drug coverage, it will also have a formulary -- a list of the drugs that the plan covers, and how much you'll be stuck paying for specific drugs. If you regularly take prescriptions, you should definitely check the plan formulary before you sign up to confirm that your prescriptions will be covered at an affordable level.
Most formularies are laid out in tiers, with drugs in the lower numbered tears being the cheapest. Ideally, any prescriptions you take regularly will be in Tier 1 or Tier 2 of your chosen plan's formulary.
How the network works
Most health insurance plans have an associated network of healthcare providers, but the requirements for using that network will vary based on the type of plan. HMOs require you to stick to the plan network except in emergencies. PPOs give you much more freedom; using a provider listed in the network means you'll pay less, but you do have the option of going outside the network without giving up insurance coverage on those expenses.
If you have an HMO, you will definitely want to confirm that your favorite medical providers are in-network. A PPO gives you somewhat more flexibility, but you could still end up racking up some serious costs if you habitually use out-of-network providers, so try to stick with plans that include most if not all of your doctors in the network.
How the plan is rated
After going through all the above features and narrowing down your options, you may still have more than one health insurance plan in the running. In that case, take a look at the plan ratings to see what other enrollees think of it. All things being equal, you're probably better off with a highly rated plan than a less highly rated one. However, if one plan stands out as the best option but has a low rating, don't let the rating scare you off. You may have to fight with customer service sometimes to get the coverage you're entitled to, but that's still better than picking a highly rated plan that simply won't provide you with the coverage you need.
Once you've chosen a plan, even if you love it, you need to review your plan every year during open enrollment and compare it to the other options. Plans can change; the coverage that worked perfectly for you last year may no longer be a good choice, if your favorite prescription disappears from the formulary or the premiums go up suddenly. Spending a few minutes reviewing the options every year can save you from a whole lot of physical and financial pain later.
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