Understand health insurance cost basics
When shopping for and choosing the best health insurance policy for you, you’ll want to consider a few important things. Understanding the basics can help you choose the plan that provides the right coverage at a price that works for your budget.
Keep your overall financial situation in mind; your budget is one of the most limiting factors when evaluating which plan you can afford and what makes the most sense. However, you also want to calculate how much you can afford to pay out of pocket in a year. Be sure to do the math on how much each plan will cost you for upcoming care.
Here are some basic factors to keep in mind when estimating your health insurance costs.
Premiums and deductibles
Your premium is how much you pay annually for your policy, often broken into monthly payments. Your deductible is the amount of care expenses you need to cover out of pocket each year before your insurance company will kick in to cover the rest.[5]
The higher your deductible, the lower your premiums will typically be. However, if you want to pay less out of pocket for your medical care throughout the year, you can choose a low deductible and take on a higher premium instead. Plans have their own deductibles, copays, and cost-share options.
What benefits do you value in your plan?
How you use your policy and what you want out of your coverage will likely be unique, and you should take this into account when shopping for the perfect plan for you.
Exclusive provider organizations (EPOs) only allow you to see providers in their networks, including hospital visits, unless it’s an emergency. If you want to see another doctor or specialist, you’ll pay for it yourself.
Health maintenance organizations (HMOs) also only allow you to see doctors and care providers in their defined networks, except in emergency situations. These providers have contracts with the insurer, so prices are set — as are the insurer’s cost-share and reimbursement levels. If you want to see a provider outside of this network, expect to pay entirely out of pocket.
Point-of-service (POS) plans offer discounted care if you use doctors or facilities in the contracted network. If you need to see a specialist, you need a referral from your primary care physician.
Preferred provider organizations (PPOs) are the most flexible option, allowing you to choose whichever doctors, specialists, or facilities you want. You’ll still pay less when you use in-network providers, but you’ll usually still get coverage when seeing providers outside of that network — it’ll just cost more.[2]
High-deductible health plans (HDHPs) are plans with lower monthly premiums, but higher deductibles of at least $1,400 for individuals and $2,700 for families. They’re usually paired with a health savings account funded with tax-free money.
Read More: What is a PPO and How Does It Work?