Having the right health insurance plan can save you thousands of dollars, keeping you from having to have bare minimum coverage when you’re sick. Many individuals working for an employer can sign up for a health insurance plan through that employer. However, there are many individuals who don’t have an employer-based option. These are the people who find their own plans through unions and membership associations.
The self-employed will choose an independent individual or family plan. Unfortunately, those left on their own may be lost as to how they can save as much as possible on their health insurance. They end up paying hundreds per month, depending on their family size, and they may not be getting the best possible care.
So what you do first is you find what fits you and your family most. There are several options and they are HMO, PPO, and POS.
HMO
You have probably heard about HMOs. They are Health Maintenance Organizations and their plans require the insured to choose a primary care physician that is in their network. The plan covers the care that the in-network doctor recommends. The co-pays tend to be low and this means fewer medical bills later own. The downfall is that seeing a specialist requires your primary care physician to make a referral and the referral can take a while, especially when trying to get you in to see a specialist that is within the network.
PPO
The PPO, or Preferred Provider Organization, has plans that cover some costs associated with seeing an out-of-network doctor. Statistically, consumers choose this plan because they have more flexibility as to which doctor they can see and they have access to more specialists. Nonetheless, there may be more paperwork involved and more unreimbursed medical expenses when seeing out-of-network doctors. The good thing is that the websites for these insurance companies have online tools that help you find network doctors.
POS
This plan, known as the Point of Service plan, is a combination of an HMO and PPO and it is a popular type of plan since insured individuals can choose doctors inside or outside of the network. The HMP portion has you designate a doctor as your primary care physician. However, that doctor can give referrals to see other doctors regardless of whether or not they are in the network. This results in less paperwork and the plan is rather simple. If you don’t want to choose a doctor within the network as your primary care physician, you can. This gives you more freedom like the PPO. Of course, the premiums are going to be higher than an HMO and lower than a PPO, making it a plan that is not the cheapest.
How Much Can You Pay?
You have to ask yourself how much you can pay. The first step is to compare the deductible options. The deductible is very important because it is the amount of your medical expenses that you will be responsible for paying before any costs will be covered by the plan. Even if you have low premiums, a high deductible can be quite difficult to manage if you reach a point where you require a lot of care you did not expect to have to receive.
On the flipside, the high-deductible plans that have high co-pays take less of your money each month, but the payments are higher when you visit your doctor. It is best to find some kind of balance along your comfort level on each of these. You need a deductible that you can pay, otherwise your insurance will probably never cover anything unless you receive care over that deductible amount. This is where a plan with a lower deductible and higher premium may work.
For example, you are young and you may go to the doctor twice per year. Because you have a $5,000 deductible with a $60 per month premium, you will benefit. Of course, two visits a year are not going to equal $5,000, which means you will have to pay for those visits on top of your appointment. However, this is economically feasible for you because paying $120 per month for a plan with a $2,500 deductible is just going to cost you more. Two visits are still not going to equal $2,500. Now, if an emergency occurs or something that causes the $5,000 deductible to be met, then you still benefit because you only paid $60 per month in premiums and are still saving on your $50,000 in medical bills.
If you are someone who is of poor health and you require a lot of doctor’s visits, the higher monthly premium with the lower deductible will benefit you more, especially since the per-visit fees are lower on these plans.
Offset Costs
There are ways that you can offset your costs. The first is to take the medical expenses that aren’t covered and claim them on your taxes. There are tax savings for unreimbursed medical expenses.
You can also open a Flexible Spending Account. You can make a pre-tax contribution to your FSA, which can be used to cover the expenses that your health care plan does not. The downfall to this is that the money that is contributed to the account expires at the end of the year, so that means you’ll lose income if you don’t spend it on health care. Nonetheless, there are tax savings for contributing to an FSA account, so that’s another way to save.
The Health Savings Account is similar to an FSA. A HSA allows you to deposit pre-tax income into the account that is spent specifically on health care. This account doesn’t have an expiration date like a FSA, so the savings can be rolled over at the end of each year. In the end, you can use that money after retirement. The HSA is more designed for individuals who are healthy and want to pay lower premiums on health insurance while banking what they don’t spend for medical treatment. The catch is that you can only enroll in a HAS if you are paying a high deductible on your regular health insurance plan. Other criteria must also be met, which is determined by the IRS.
Understand Your Options
Just make sure you understand your options. Enrolling in a plan without understanding them can cost you a lot of money. Before signing up, determine which doctors are in the network. You also want to consider all options so you are not playing table games with your health. You also need to know that you can change your health plan as your life changes. You do not have to stick to the same plan for the rest of your life.