In this era of the Affordable Care Act (ACA), we’re free to purchase our own health insurance without being tied to a large employer. While the costs might vary, the health care plans’ availability makes health insurance possible for those who couldn’t previously afford it. While the ACA has made insurance available to all, the various options can make it confusing to choose the plan that’s best for you and your family.
Caution is required in choosing a health plan. Prices vary with different levels of coverage and picking the least expensive monthly amount could leave you with large bills from health care providers due to high deductibles and coinsurance. The many health plan options that show a reduced monthly premium payment but a high deductible amount need to be carefully analyzed. These plans can include hidden costs or unrealistic payment requirements, leaving you vulnerable to debt while you just want to recover from a serious illness or injury.
Let’s lay out the basic terminology involved in selecting a plan:
Deductible — The amount you pay for covered health care services before your insurance plan starts to make payments toward your health care costs.
Copayment — A fixed amount paid at the time of a doctor visit or medical service by the patient. This payment is generally not considered part of the insurance policy deductible.
Coinsurance — After you’ve paid your deductible, you share the cost of medical services with your insurance by paying a percentage (for example, 20%) of the cost until you’ve reached the total payment required by your insurance policy.
Out-of-Pocket Maximum — The total amount of money the patient must pay each year in copays, deductibles, and coinsurance before her/his insurance plan will cover all the costs of her / his medical care.
And some other things you need to consider when selecting a plan:
Medical Conditions — Do you or someone in your family have a medical condition that requires regular doctor appointments or prescriptions?
Budget — How much can you afford to pay monthly and yearly for your medical care?
Risk Assessment — Are you comfortable taking the risk of a large deductible and coinsurance amount?
For more on these and other health care related terms, visit the Healthcare.gov glossary.
With these points in mind, you’re ready to do an in-depth study of how much coverage you can get for the least amount of money. You’ll find this terminology handy when:
- Exploring your state’s health insurance
- Checking the federal health exchange
- Reviewing what your employer is offering
Certain policies often appear the least expensive because they have the lowest monthly premiums. Underneath, the same exact plan could have you on the hook for thousands of dollars if they come with a high deductible. A plan with a high deductible and coinsurance amount could leave you reeling (financially) after a surprise medical event.
One last pro tip: Always look at the total OUT OF POCKET (OOP) expense listed on the chart of policies.
The OOP number will give you the worst case scenario of how much you might have to pay for a medical emergency. You must decide how much of your hard earned cash you are willing to part with.
My advice – BEWARE THE HIGH DEDUCTIBLE!