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HEALTH INSURANCE 101
Choosing Health Insurance - the Right Way
When thinking about health insurance, what "bothers or bends" you? What "breaks" you?
Specific to health insurance and the "what bothers or bends you" category, ask yourself these questions:
How do I want my health plan to work for as I take care of myself?
- How many times a year do I actually see a doctor? What does my health plan require I pay a doctor as I take care of myself?
- Do I take prescription drugs on a regular basis? What is my health plan's prescription drug coverage?
- Do I require any special health insurance benefits specific to my health?
In the "what breaks you" category, he or she understands:
- The health insurance plan that pays for everything doesn't exist.
- The most important feature of any health insurance plan is limiting the policyholder's financial responsibility to an amount they can afford should a catastrophic illness or injury occur. This is called the "annual out-of-pocket maximum." Nine of ten people with health insurance do not know their "total annual financial risk."
- Most don't know a "qualified" health savings account plan will have one of the lowest annual out of pocket maximums available from all health plans.
- The odds a catastrophic health event will occur. He or she knows most people will not "total" $500 a year in health care expenses so having a higher deductible while paying more affordable premiums can be a smart strategy.
- Does having a health insurance policy with a lifetime dollar limit matter to you?
- How do I want my health insurance plan to work should I become seriously sick or injured? Is having the freedom to choose my own doctors and hospitals important to me?
- Can I afford the health insurance plan I choose today as rate increases occur "down the road?" Plan for your health insurance monthly premiums to double every five or six years.
- If I can't afford my health plan in the future, can I easily change it?
Health Insurance - PPO_HMO
When it comes to health insurance, most choose a Preferred Provider Organization (PPO) type health plan. PPOs give you the flexibility to choose from thousands of doctors and hundreds of hospitals. You pay a monthly premium and when you use your health plan, you'll pay towards a deductible and a lower percentage of the medical bill. No health plan covers 100% of everything so you will have some outlay of cash.
Your other option is to choose a Health Maintenance Organization (HMO) type health plan. Typically these plans require you to choose a primary care doctor (PCP). You must get approval from your PCP before seeing a specialist. HMO plans typically have lower or no deductibles to satisfy. Many HMOs now have limited doctor participation.
Some important thoughts:
Most PPO health plans offer higher deductibles thus lowering health insurance premiums. This should be an important part of your thought process as you can expect health insurance premiums to double every five or six years.
Remember, the health plan you choose today could be what you are stuck with in the future. If your health changes, it could be impossible to change your health plan in the future.
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