Choosing the best health insurance plan for you is no easy task. With all the different options out there, it can become confusing as you try to compare them. There are some notable differences to consider, however. Whether you get health insurance from an employer or through a healthcare exchange can make a big difference in cost. Other things like plan type and out-of-pocket costs also need to be taken into consideration. You also have medical savings accounts to look into when evaluating which health insurance plan you’ll choose. This article guides you through these important factors.
Employer-sponsored Plans vs. Marketplace Plans
If you’re like the majority of Americans, you receive health insurance through your employer. The advantage of this is that your premiums are likely subsidized. Employers often pay a sizable portion of employees’ health insurance premiums. The disadvantage of this is that your options for health insurance plans are likely limited. Employers tend to offer only a few options to choose from – sometimes just two.
If you do not have access to an employer-sponsored health insurance plan, you’ll have to purchase one on the healthcare exchange. The federal healthcare exchange is currently located at healthcare.gov. On this website, you’ll answer a variety of questions to determine your eligibility for enrollment. Currently, open enrollment only occurs during certain months of the year. You can qualify for a special enrollment period under certain circumstances – such as moving to a new state or having a baby. Some states have state-based healthcare exchanges. Visit cms.gov to see if your state is one of them. When you purchase health insurance through the government, you may be eligible for premium subsidies based on your income.
The third avenue to purchase a health insurance plan is directly from the insurer. This is also called the private exchange. If you don’t have an employer-sponsored health insurance plan and know you won’t qualify for income-based help from the government, this may be something worth looking into for the expanded options. Visit nahu.org, the official website for the National Association of Health Underwriters, to find an agent who can help you navigate the private exchange.
HMO vs. PPO
Now that you know where you can purchase a health insurance plan, let’s explore the two main types of health insurance plans that insurers offer. HMO stands for Health Maintenance Organization. When you have an HMO plan, you must stay in-network for your medical care unless it’s a qualified emergency. You also need a referral from your primary care doctor to see a specialist. HMO plans usually come with lower monthly premiums than PPO plans.
PPO stands for Preferred Provider Organization. When you have a PPO plan, in-network medical care is less expensive than out-of-network care. But out-of-network care is still covered at a higher cost to you, unlike HMO plans which don’t cover out-of-network care at all. You also don’t need a referral from your primary care doctor to see a specialist. For these reasons, PPO plans tend to come with higher monthly premiums than HMO plans.
Out-of-pocket Costs
How much you pay out-of-pocket is arguably the most important factor to consider when choosing a health insurance plan. Between premiums, deductibles, copays, and coinsurance, the costs easily add up. So you’ll want to carefully read the entire description of the health insurance plans you’re considering before you enroll.
Generally speaking, the higher your monthly premium, the lower your out-of-pocket costs will be. If you visit doctors often, have expensive prescription medications, have a chronic condition, or are planning a major surgery, you’ll probably benefit from a health insurance plan with a higher monthly premium that pays a larger portion of your medical costs. If you rarely visit doctors and have excellent health, getting a health insurance plan with a lower monthly premium may make sense since you won’t need much medical care.
FSA vs. HSA
One way to offset out-of-pocket costs is to participate in an savings account for medical expenses. There are two types: Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs). Both accounts have tax benefits. They typically come with a debit card for you to use funds at the time of paying for your medical expenses. You’ll also be able to submit eligible expenses for reimbursement if a debit card isn’t provided or if you don’t use the debit card.
There are some key differences between FSAs and HSAs though. Flexible Spending Accounts are linked to employer-sponsored health insurance plans. This means that you must have health insurance through an employer to qualify for an FSA. On the other hand, you can use an HSA with exchange-purchased health insurance plans. But, to qualify for an HSA, you must have a high-deductible health insurance plan.
Here’s a table that highlights some of the other differences between FSAs and HSAs:
| Flexible Spending Account | Health Savings Account | |
|---|---|---|
| (FSA) | (HSA) | |
| 2017 contribution limit | $2,600 | $3,400 for individual; $6,750 for family |
| Rollover terms | "Use it or lose it," with two possible exceptions | Unused funds roll over from year-to-year |
| Tax benefits | Contributions are tax deductible; growth is tax-free; withdrawals are untaxed | Contributions are pre-tax; withdrawals are untaxed |
Final Thoughts
As you can see, there’s a lot to consider when it comes to choosing a health insurance plan. The more information you have readily available about your medical care, the simpler the process of deciding will be. This way, you can easily do things like rule out plans that don’t include your doctors as in-network and determine how high of a deductible you’re comfortable with. More often than not, it’s better to have comprehensive coverage and not need all of it than to have limited coverage and need more. After all, insurance is meant to cover you in the event of the unexpected.
Which health insurance fits your lifestyle better? Share with us below!
