Those changes make it even more important to shop around, but comparing the cost structures of different plans can be difficult. In some cases, the best way to sort through it all may be to consult someone in your human resources department. People shopping through the insurance exchanges can find someone in their area who can help them compare different plans.
But whether you’re getting help or figuring it out on your own, you’ll increase your chances of landing in the right plan if you ask yourself these main questions.
1. How often do you get sick?
Knowing how often you may need to go to the doctor can help determine how much you should shell out for health insurance. Every insurance plan requires you to pay a premium, or the amount that you need to pay each month up front, if you want to be covered. If you don’t see yourself going to the doctor that often, then you may want to look for a plan with a low premium. These plans have lower monthly costs, but they require you to pay in full for many doctor’s visits and prescriptions until you reach a certain threshold, known as a deductible. Once you hit that deductible, then full coverage kicks in. But you may want to read on for some caveats.
If you know you’ll be visiting the doctor often or needing more care, you may be better off choosing a plan with bigger monthly premiums that will cover a larger share of your medical bills. With those plans, you may only need to pay a small fee, known as a co-payment, when you go to the doctor or fill a prescription. “In a sense you’re paying in advance, knowing that you’re going to need more care,” says Steve Wojcik, vice president of public policy at the National Business Group on Health, a group that represents large employers.
2. How much cash do you have in the bank?
While plans with low premiums might seem appealing for people with few health issues, the decision can also depend on your budget.
If you have several hundred or thousand dollars in cash, you might not have an issue with a high-deductible plan, which may require you to pay for health services out of pocket until your deductible is met. Plus, if it turns out you don’t have many health issues, you would reap the savings of the lower monthly premiums. However, if your budget is tight and you expect you’ll be using your health insurance a decent amount next year, a plan with bigger premiums may make more sense. Take, for example, people who are planning for a baby or those treating a chronic condition. Paying more every month can help you avoid price shocks that might cause you to fall behind on other bills, says George Lane, a principal at Mercer, a benefits consulting firm.
3. Will you be able to see your doctor?
Do you and the kids already have doctors you know and trust? Call their offices to see whether they’ll be covered by the plan you’re considering. Generally speaking, insurance companies charge higher fees to consumers who see doctors who aren’t in the plan’s network. Some plans won’t cover any part of the bill for consumers who go outside of the network. Those extra costs may be manageable for occasional visits, but the fees can add up over time. So before you sign up for a plan, make sure the doctors in the network will meet your health needs, says Cynthia Cox, associate director of health reform and private insurance for the Kaiser Family Foundation.
Likewise, you should think about how much flexibility you need when it comes to choosing a doctor. Health maintenance organization plans, known usually as HMOs, tend to be less expensive but have fewer choices when it comes to doctors. Consumers in those plans may need referrals from their primary care doctors before they can see a specialist and may not be covered if they want to see a doctor who is not in the network. People who want to be able to choose their own specialists without having to run it by their primary care doctor may want to go with a preferred provider organization plan, or a PPO, which will likely offer more options.
4. Will your drugs be covered?
Just as you did with your doctor, find out if the medications you need will be covered, Cox says. If it isn’t, you may be on the hook for the full cost of the drug. If you have a high-deductible plan, you may need to pay for your prescription in full each month until you’ve paid your deductible. For some medications, that can lead to a monthly bill of a few hundred dollars or more — and that’s in addition to your monthly premium. Review the list of covered medications, since those can change often, and factor those costs into your decision-making process.
5. What else can you do to lower your costs?
Once you’ve decided on a plan, you should consider other tools that can help you reduce the expenses you’ll be paying out of pocket. For instance, people with high-deductible plans may have the option of opening a health savings account or a health reimbursement account, which can be funded with pretax dollars and used to pay for certain health-care expenses tax-free. While some plans can be a little difficult to use, a family contributing the maximum $6,750 may earn about $2,000 or more in tax savings each year, depending on their tax bracket. Money that isn’t used can be rolled over to pay for health costs in future years, Lane says.
People who don’t have high-deductible plans may be able to set up a flexible spending account. Those are also funded with pretax dollars, but they have a smaller contribution limit and need to be used in full each year.
In addition to tax benefits, your plan may offer other programs to help you save on health costs. Many plans are rolling out better price-comparison tools that can make it easier to see how much one procedure, such as an MRI, might cost at one hospital vs. another, Lane says. More employers are also covering telemedicine services, such as those that let consumers consult with a doctor over the phone or through a video chat. At about $40 a visit, it can be an appealing option for people who want the convenience of seeing a doctor remotely, Wojcik says. (For people with high deductibles, it can also be less expensive than seeing a doctor in person.)