If you are lucky enough to have health insurance provided by your employer, your options narrow to the plans your employer offers. If you do not have insurance through your work, perhaps the organization or association to which you belong will allow you to purchase health insurance through them at a group rate.
Another option is to check with your Obamacare health insurance marketplace to see if you are eligible for a prepayment credit that will allow you to reduce your premium costs. Even if you are not eligible for the credit right away, buying health insurance at the marketplace means you can qualify for it by filing your annual tax return.
If you are unable or unable to obtain health insurance from these sources, you will need to opt out of purchasing a private plan. This will give you the widest range of choices, but will likely be much more expensive.
Decide what type of policy to buy
There are various basic types of health insurance policies, although you cannot access all of these options through the source of your choice. Healthcare organizations (HMOs) are a very common type of health insurance policy. When using an HMO, you must contact health care providers through this policy network, and you must obtain a referral from a primary care physician to see a specialist.
Preferred provider organizations (WTOs) are also quite common. The WTO health insurance policy has a network, but you are not limited to online healthcare – although it is cheaper to use network providers – and you do not need referral to see the professionals.
Exclusive Service Providers Organizations (EPOs) are a hybrid of HMO and WTO. You must adhere to the plan network, but do not need specialist referrals. Finally, Service of Service (POS) plans are a less common option, which is essentially the opposite of EPO. Not only are you a POS plan network, you need a referral to see a specialist.
Of the four common plan types, HMOs or EPOs are generally cheaper than PPOs or POSs with the same coverage. However, if your area has poor network coverage or you are uncomfortable limiting yourself to network providers, it may be worth paying a little more to get a WTO or POS policy.
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High deductible versus low deductible
All things being equal, the higher the plan deductible, the lower the monthly premiums. A high deductible will mean you will have to pay a lot of health care costs yourself before your insurance policy goes into effect, but if you have little or no health care costs in a given year, these plans can be a bargain. Very low medical costs mean that you are unlikely to go beyond the deductible, even the small deductible plan, so getting a large deductible plan will keep your insurance costs as low as possible while protecting you in the event of something catastrophic.
If you decide to go the very deductible route, it is best to purchase a Health Savings Account (HSA) plan and fund it with at least one that is equal to the deductible per year. The HSA plan neatly covers the biggest weakness of a deductible health insurance policy – namely, that you should accumulate a lot of money on high medical expenses before insurance takes over. If you have an all-year deductible with your HSA, you can simply use that money to fund a portion of your expenses while enjoying the triple tax advantage that HSA offers.
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There are two main factors that affect how a particular plan will cover your medical costs: the plan network and its coverage policies. Even if you opt for a plan with non-network capabilities, such as the WTO, it is still better to make the most of your health network providers as doing so will reduce costs. The rules by which a particular health insurance policy decides what is covered and what is not and how much you will be paid for can make a huge difference in how much benefit you get from a particular policy.
For example, if there are fairly expensive medications you take every day, you will definitely want to get a health insurance policy that states that medication on its prescription. If you travel a lot, stick to plans that offer good off-site treatment options. And if you already have a primary care physician, you will definitely want to choose a plan that includes your physician.
Find the best deal
If you are stuck with two or three different strategies and can’t decide which one to try, try this exercise. Multiply the monthly premium by 12 to get the annual cost of the plan, then add the maximum amount to the plan. The result is what you could spend on health care if you had one or more major medical expenses a year. Make this calculation for each plan you plan, then compare the results. The plan with the lowest number is probably the best solution for you.