Choosing health insurance is an important decision for everyone that requires careful consideration. As an overview:
- Most people receive health insurance through the benefits provided by the employer.
- Those who are self-employed may have to buy individual health insurance.
- With different options depending on your individual circumstances, choosing health insurance can often be an overwhelming process. Here’s how to choose the right plan for you and your family:
1. Choose your plan type.
HMO (Health Maintenance Organization) plans are the least expensive, offering lower monthly premiums and lower medical costs. The designated primary care physician (PCP) acts as a gatekeeper and determines when you can see a specialist. Thus, the disadvantage is that HMO plans are the most restrictive.
PPO (Preferred Provider Organization) plans to charge a higher premium in exchange for more flexibility in choosing suppliers. You do not need a referral to turn to any specialist, and you can use non-network doctors. However, you will incur higher costs and you may have to file a separate insurance claim. For more information on HMO and PPO plans, click here.
Service Point (POS) provides the benefits of HMO and PPO plans. You choose which service, HMO or PPO, to use every time you see a doctor. When you go to a primary care physician (PCP), you don’t have deductibles, and preventative care is included, and he can refer you to a specialist. You also have the opportunity to see the provider outside the network but at a higher cost. If you like managing your plan on a case by case basis and want to follow strict rules, you may find the POS plan attractive.
2. To determine which plan best suits your financial situation, consider how the following costs can affect your budget:
An additional charge may be required each time you visit a provider.
Co-insurance payments refer to the amount that the insured must pay for certain services, for example, 20 percent of hospital visits.
The deductible requires you to pay a certain amount before insurance coverage takes effect.
Politicians have limitations out of their pocket, and they can vary greatly. The least expensive plans will have the highest restrictions, so don’t be fooled by lower premiums. You could end up paying a big medical bill.
3. Check the availability of your favorite doctors.
Ideally, your preferred providers are involved in your plan, especially your primary care provider. If you regularly visit specialists, make sure that those who are in the chosen plan are conveniently located.
4. Remember that the structure of the plan may vary.
Some plans may have primary, secondary, and offline levels. Using providers at the primary level will be the most cost-effective.
5. Use preferential medical bills, if any.
There are three main types of medical expense accounts: Health Care Reimbursement Account (HRA), Flex Expense Account (FSA), and Health Savings Account (HSA).
The Health Care Reimbursement Account (HRA) is an employer-funded health care account. Some plans may include HRAs to help cover employee personal expenses on a tax-free basis.
Many pricing plans offer a Flex Spending Account (FSA) account option — an option that can be viewed when choosing an annual allowance. In 2018, you can finance up to $ 2,650 before taxes to pay expenses from your pocket, which should be exhausted by March next year. Over time, this leads to significant tax savings.
Finally, if you have a High-deductible Health Insurance Plan (HDHP), you can replenish your Health Savings Account (HSA) with up to $ 3,450 ($ 6,900 for a family) in 2018. Those 55 years of age and older can contribute an additional $ 1,000 per year. You can also do a one-time IRA renewal on your health savings account to the limit of contributions. All contributions reduce your taxable income.
If you retire before the age of 65, you can still top up your savings account. For example, you can finance HSA from your pension, which will reduce your taxable income.