Health insurance may be one of the most critical annual purchases, as it impacts your physical, mental, and financial well-being. Unfortunately, selecting a health insurance plan can feel overwhelming. With so many options, it can also be easy to make a mistake when selecting coverage.
This article explores seven common missteps related to selecting a health insurance plan. Once armed with this information, it’ll be easier to avoid these mistakes and choose the best plan coverage for yourself and your family.
Mistakes People Make When Choosing A Health Insurance Plan
1. Rushing Through Enrollment Options
Many people rush into buying their health insurance or rely solely on recommendations from friends, family, and coworkers. Others may re-enroll with last year’s choices. But health insurance provides personal coverage, so it’s important to research and find what will work best for your health needs and budget.
When it comes time to enroll in a plan, compare different policies and understand their coverages and associated costs (e.g., premiums). One of the best ways to ensure the policy is right for your health needs is to consider your medical requirements and spending in the next year.
Don’t forget to confirm in-network coverage to ensure your preferred doctor, clinic, and pharmacy are connected in the new plan. Then, you can find the most suitable plan and coverage in an effort to simplify your health care and make it more affordable.
2. Overlooking Policy Documents Of The Health Plan
Another common mistake is skipping through or not thoroughly reading the policy’s terms and conditions. However, carefully reading a policy is the best way to know what to expect from the health plan and what the plan expects of you.
As such, read the fine print on each plan you consider before enrollment. Reviewing the policy’s inclusions and exclusions will help you make an informed decision and potentially avoid surprise bills later on.
Read Also: HRA vs HSA vs FSA
3. Misunderstanding Costs When Choosing Health Insurance
A cost-sharing charge is an amount you must pay for a medical item or service covered by the health insurance plan. Plans typically have a deductible, copays, and coinsurance. Here’s what those terms mean:
- The deductible is the amount you pay out of pocket before your health insurance starts to cover costs.
- A copay is a flat fee you pay upfront for doctor visits, prescriptions, and other health care services.
- Coinsurance is the percentage you pay for covered health services after you’ve met your deductible.
When shopping for a plan from health insurance companies, keep in mind that the deductible is tied to the premium. As such, a low-deductible plan may seem attractive, but it generally comes with a higher premium, and vice versa.
Consider keeping your deductible to no more than 5% of your gross annual income. When shopping for a plan, look closely to see when you’ll have a copay and how much it will cost for various services.
4. Not Taking Advantage of Additional Benefits Offered
Many medical carriers in the health insurance marketplace provide additional benefits for employees and their families. They can be very valuable to mental, physical, and emotional health and should be taken advantage of.
These types of additional benefits could be wellness tracking apps, concierge medical services, healthy food choices, support for specific diseases (i.e, diabetes), mental health services and tools, emotional well-being resources, disease management, and more.
Be sure to take the time to learn about these additional benefits and, where possible, take advantage of them better to improve your mental, physical, and financial well-being.
Read Also: Employee Benefits Strategies
5. Selecting Insufficient Coverage
People may hold back on purchasing certain coverage to pay a lower premium. While that may seem advantageous in the short term, you’ll be on the hook for out-of-pocket costs when facing a medical emergency. This mistake may have physical, mental, and financial health consequences.
When selecting a plan, ensure that the policy provides adequate health coverage for your medical needs and other essential expenses. The right health insurance can help you take care of yourself and ensure financial security.
6. Not Understanding Types of Health Insurance Plans (HMO, PPO, EPO, POS)
Choosing a health insurance plan without knowing the basics can lead to costly surprises. The types of health plans, like HMO, PPO, EPO, and POS, determine your flexibility, cost, and even the doctors you can visit.
- HMO (Health Maintenance Organization): You must select a primary care physician. This doctor controls referrals to specialists. Out-of-network services typically receive no coverage, except in emergencies. HMO plans often cost less but limit flexibility.
- PPO (Preferred Provider Organization): You get more freedom. No referrals are required for specialists, and you can see out-of-network providers, although at a higher cost. Premiums and deductibles tend to run higher compared to HMO plans.
- EPO (Exclusive Provider Organization): These plans offer lower premiums, similar to HMOs, but without the need for referrals. However, they restrict you to a network; out-of-network care receives no coverage unless there is an emergency.
- POS (Point of Service): A blend of HMO and PPO. You need a primary care physician for referrals, but you can step out of the network at higher costs.
7. Focusing Solely on Premium Costs
Many people fall into the trap of choosing the cheapest premium without considering the broader implications. Low monthly payments may sound appealing, but the real cost often lies in deductibles, copayments, and out-of-pocket maximums.
Consider this:
- Plan A: Premium $200 per month, Deductible $5,000, Out-of-Pocket Max $7,500
- Plan B: Premium $350 per month, Deductible $1,500, Out-of-Pocket Max $3,000
At first glance, Plan A appears to be the cheaper option. However, if you end up in the hospital, Plan A could leave you paying $7,500 out of pocket before your insurance helps. Plan B, although pricier each month, shields you sooner and saves you money in emergencies.
Premiums only tell part of the story. You must look beyond them. Calculate what you would pay for typical healthcare use in a year, including doctor visits, prescriptions, and worst-case emergencies.
Summary
Health insurance is an essential investment for you and your family. By avoiding common mistakes while buying health insurance, you’ll be better informed to enroll in a plan and other coverages.
As healthcare costs continue to rise, it’s more important than ever to carefully review available policies, consider your options and health needs, and, ultimately, select the best plan to protect your health and finances.
Choosing the right health insurance is only one piece of protecting your well-being. Ensuring your employees have the right support and benefits matters just as much.
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