Open enrollment is your once-a-year opportunity to choose the right health insurance plan for your family’s changing needs. Every year—and especially now with the continued threat of COVID-19—it’s a good idea to re-evaluate your health insurance options for the year ahead.
I know comparing health plans can make people break out in hives. If you’re asking, “What health insurance should I get?” don’t sweat! Helping people understand how to choose health insurance is one of my super powers. I’m going to teach you a simple process to confidently choose the right health insurance plan every year.
Yah that’s right—at the end of this article you’re gonna feel confident about shopping for health insurance! Let’s get started.
First, think about your health care needs
The purpose of major-medical insurance is to cover the cost of the health care you may need in the year ahead. Just like going to the grocery store without a list is a bad idea, you shouldn’t choose a health plan before you’ve thought about what you might need it to cover. Thinking about your family’s health care needs will help you hone in on the type of plan you want before you start looking at your options.
- generally in good health? In that case, you likely need preventive care like an annual physical, well woman exam, and/or routine preventive screenings like a mammogram or colonoscopy. You’ll also want a plan with an out-of-pocket maximum that limits your financial exposure in the unlikely event of a catastrophic injury or illness.
- managing a chronic condition? In addition to routine preventive care and catastrophic coverage, you’ll want a plan that limits costs related to the provider visits, prescriptions, or tests required to manage your chronic condition. You’ll want to pay attention to out-of-pocket costs like the deductible and copays for each health plan you’re considering.
- preparing for a planned procedure? Maybe you know you’re going to have a baby or need a joint replacement in the year ahead. These procedures can cost thousands of dollars, and you’ll want a plan that lowers your overall out-of-pocket expenses—including what you pay toward your deductible, copays, and coinsurance, which can be quite costly.
Next, understand your costs.
Health insurance costs are a balance between deductible vs premium. If you pay more every month (aka a higher insurance premium), you’ll generally pay less out-of-pocket if you’re sick or injured.
The opposite is also true. A lower monthly premium generally comes with higher out-of-pocket costs if you need health care during the year.
Whether you get your health insurance at work or buy it yourself, you’ll likely have an option with a lower monthly premium and one with a higher premium. Don’t make the mistake of choosing the plan with the lowest monthly premium without understanding what your cost-sharing responsibilities will be if you get sick or injured.
Make sure you understand how your out-of-pocket costs work.
If you’re asking, “What is a deductible?” you’re not alone! Your deductible is the dollar amount of your medical bills you’re responsible for paying before your insurance starts to cover the cost. Some plans have copays or other benefits that you can use before you meet your deductible. These are sometimes listed as “before deductible” or “first dollar” benefits. Some plans also have a separate pharmacy deductible, so look out for that.
Copays are a flat fee you pay for health care services like provider visits, prescription drugs, lab tests, or imaging. Pay attention to whether you’ll pay a copay before you meet your deductible or only after your deductible is met.
Coinsurance means you’re responsible for paying a percentage of the cost of your care. The percentages may seem low, like 20%, but it can add up to a lot of money on an expensive procedure.
Your out-of-pocket maximum is the maximum you could be responsible to pay in a given year. It adds up all the money you contribute to covered health care services during the year. That includes money you paid toward your deductible, copays, and coinsurance. Once your spending hits the health plan’s maximum, your cost-sharing responsibility is met and the health plan will cover future costs in full until the end of the plan year.
Think about these costs as it relates to your savings and available borrowing power. Could you handle an unexpected bill for your full deductible amount? What about your full out-of-pocket maximum? Think about how medical bills of that size could impact your plans and financial goals.
How to know which type of health insurance plan is best for you.
I don’t know your situation, but people in certain situations often gravitate toward certain types of health insurance plans. I’ll explain those different situations below and why different types of health plans are usually a better fit.
Generally healthy people often choose lower premiums and higher deductibles.
Why? Healthy people don’t expect to utilize much health care beyond routine preventive care, which is typically covered in full with no cost-sharing. They are taking a calculated risk that they won’t have to pay dollars toward their deductible if they have a healthy year. Yet the plan is there to limit their financial exposure in the unlikely event of a catastrophic health issue. They often put the money they save on premiums into a Health Savings Account (HSA) to help pay medical bills in the future.
People with chronic conditions typically choose plans with modest deductibles and low copays.
People who are managing chronic conditions know they will need a certain number of physician visits, tests, and prescription drugs over the course of the year. They’ll choose a plan that balances their monthly premiums against what they pay out of pocket when they get care. They pay special attention to whether their doctors are “in network” and their medications are in the formulary to keep their costs as low as possible.
People with a planned procedure typically choose the lowest deductible plan.
Why? People with an upcoming procedure know that they are likely to hit their out-of-pocket maximum during the plan year. In this situation, add together the annual cost of the monthly premium plus the full out-of-pocket max to see your all-in cost. Evaluate all your plan options this way, and you may find that the plan with the most expensive premium is the least expensive overall.
Now, supplement your health insurance with extra coverage & savings
For a lot of folks, the least expensive health insurance plan with a high deductible is the only option they can afford. If that’s you, a supplemental health insurance plan can help you prepare for the out of pocket expenses that might come your way.
Supplemental health insurance from Brella pays a cash benefit if you’re diagnosed with over 13,000+ moderate to catastrophic conditions from pneumonia and concussions to appendicitis and cancer. A speedy claims process and extra financial support hitting your bank account when you’re sick or injured can go a long way toward giving you peace of mind.
Those with a high deductible look to Brella for help with medical bills if they’re diagnosed with a covered condition. But even people with low deductible plans appreciate a cash benefit to help with extra expenses health insurance doesn’t cover such as transportation or childcare. After all, there are lots of costs that come up when you’re sick or injured. Learn how to estimate your costs to avoid surprises. If you’re interested in Brella, learn more about our plan and talk to your employer.
Now go forth and enroll!
With a clear idea of the health care you expect, the costs you’re taking on, the type of health insurance plan that’s best for you, and how to supplement your coverage, you know how to shop for health insurance with confidence during this next open enrollment.