In tough economic times, our tendency is to do without. We'll find innovative ways to pinch pennies and make sacrifices. One expense that may end up on the chopping block is your health insurance. You might be tempted to think that if you eat right, exercise and drive safely you'll be able to save a little cash.
However, if you take a closer look at the news, you'll see that health insurance is one thing that should remain in your budget no matter how bad things get. While the stories in the papers and on television have highlighted people who have lost their jobs and then their homes, researchers have determined that the true cause of financial heartbreak often comes down to an illness or injury. According to one 2008 study, researchers found that half of all foreclosures they studied were due to medical problems [source: Robertson et al.]. From insurmountable medical bills to jobs lost because of an inability to perform them, an unexpected health crisis can cause untold devastation. Carrying health insurance can provide peace of mind and protect you against the unexpected.
Figuring out the best insurance plan for you and your family, though, can be difficult. We've got five questions you should ask that will help you find the best option for you.
What are my options?
Before you can pick which plan is best for you, you'll need to know which plans you're eligible for. A new tool from the government makes this step easier than it's ever been before. If you go to HealthCare.gov, you can plug in a few details about your age, location and health status and get a list of public and private options to consider. For example, if you have a pre-existing condition, you may be eligible for the new Pre-Existing Condition Insurance Program that's being run by some state governments (the federal government runs the program in some states). If you've lost your job, you can learn more about COBRA, while if you report that you have children, you'll be reminded of the Children's Health Insurance Program, or CHIP.
If you'd like to buy a plan from a private insurer, the Web site lists the companies that are operating in your area and provides links to their Web sites. For example, Asheville, N.C., has 11 companies operating in the area, collectively offering a total of 31 plans. Which one is right for you? Keep reading for some questions to consider about each option.
What benefits are provided?
When it comes to health insurance, you tend to get what you pay for. Expensive health insurance plans come with lots of benefits that are fully covered, whereas budget plans offer only select services that may require out-of-pocket costs if you actually use them. Before picking the cheapest plan, you'll want to make sure that it includes the benefits that you need.
Consider what services you need when you and the members of your family are well; such a list might include an annual physical, a Pap smear, a well-baby visit, allergy shots and a handful of prescription drugs. Obviously, you'll want a plan that will help you pay for such basics, but you'll need to take into account the unexpected. Check how a given plan would cover emergency room visits, ambulances, medical testing, hospitalization and surgery. Will you be left in the cold if a medical crisis occurs? You'll also want to check how often you can use a given benefit. Are you limited to a handful of mental health or physical therapy appointments, and if so, will that be enough?
If you're on a budget, you'll have to prioritize the benefits you'll use and the ones you may need. But even if you're considering a plan with all the bells and whistles, don't forget to ask the next question on our list.
What doctors can I see?
One of the ways that insurance companies try to control costs is by contracting with certain doctors. If there's a specific doctor you want to see, then you'll want to check if a given plan will allow you to see him or her without any additional costs.
Plans are often distinguished by your ability to see different doctors. For example, with a health maintenance organization, or HMO, you're required to choose a primary care physician from a list of given doctors. If you want to see a specialist, you'll need that primary care doctor's authorization to do so. With a preferred provider organization (PPO), you can elect to see specialists without your regular physician's approval, but unless you want to pay additional fees, you'll want to select a specialist that's within that PPO's network of contacts.
Insurance plans may also only cover care that's provided at certain hospitals, so if there's one in your neighborhood, you'll want to check that you can go there instead of the one across town.
How much will I pay?
This question has been lurking behind most of the questions on this list. You can only consider doctors and benefits for so long before you start to wonder, "How much is this going to cost me?"
Let's talk about a few of the terms that are important to know:
- The premium is the payment you make in exchange for your insurance.
- The deductible is the amount you must pay out of your own pocket for health care each year before the insurance company takes over the costs.
- A co-pay is a fixed payment you'll make each time you see a doctor.
- Coinsurance is a payment based on the percentage of costs of a doctor's visit or a hospital stay; for example, if your plan has 70/30 coinsurance, you'll pay 30 percent of the medical bills while your insurance company would pay 70 percent of them (after you meet your deductible).
- The out-of-pocket limit is the maximum amount you would have to pay in a given year, minus the premiums -- in other words, the combination of the deductible, the co-pays and coinsurance. Be wary of a plan that doesn't have such a limit.
You'll want to keep an eye on the kinds of co-pays and coinsurance agreements you're signing up for, but the key issue is balancing your premium and your deductible. The higher the deductible, the lower the premium. But don't just agree to a high deductible in order to get a break on those monthly premiums; if you had an accident or got sick, then the out-of-pocket costs might prove insurmountable. If you have a young family, which requires many doctor's visits, or if you're middle-aged and worrying about your health, then higher premiums may be worth the trade-off of a low deductible. Younger people, however, may only see a doctor once or twice a year, so they could save a little money by selecting a high deductible and hoping for a trauma-free year.
Is this a company I can trust with my health?
So you've found a plan you like at a price you can afford. Before you sign on the dotted line, do another check to make sure that this is a company that's good in real life, and not just good on paper. Check the insurer's rating with the Better Business Bureau or at A.M. Best, a financial service rating industry. Ask friends and neighbors if they've had any experience with the company, and scan customer reviews online. Though no company has completely pleased all of its customers, pay heed if you notice any recurring problems in bad reviews. And though you've probably spent a good deal of time on the company's Web site looking at its insurance plans, look at other areas of the site. Is there a phone line, e-mail address or an online chat function for addressing questions and concerns? Does the site provide instructions and assistance with common tasks, such as finding an in-network doctor or filing a claim? If you don't like the insurer before you sign the deal, you probably won't like it any better once you start receiving care.
Need more information on health insurance? See the links on the next page.
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- Bankrate.com. "Shopping for health insurance work sheet." 2007. (July 22, 2010)http://www.bankrate.com/brm/news/Financial_Literacy/pdf/Aug07_work_sheet_health_a1.pdf
- Bittner, Sylvia. "How to shop for health insurance." Michigan Farm Bureau. (July 22, 2010)http://www.michfb.com/files/benefits/health_insurance/3.%20How%20to%20shop%20for%20health%20insurance.pdf
- Blue Cross Blue Shield of Illinois. "How to Shop for Health Insurance." (July 22, 2010)http://www.bcbsil.com/getting_started/how_to_shop/index.html
- Cohen, Elizabeth. "How to shop for health insurance." CNN. March 12, 2009. (July 22, 2010)http://www.cnn.com/2009/HEALTH/03/12/choosing.private.insurance/index.html
- Dratch, Dana. "Buying Private Health Insurance." Bankrate.com. Dec. 30, 2008. (July 22, 2010)http://www.bankrate.com/finance/insurance/buying-private-health-insurance-1.aspx
- Ehrenfeld, Temma. "How to Shop for Health Insurance." CBS MoneyWatch. June 29, 2010. (July 22, 2010)http://moneywatch.bnet.com/saving-money/article/buy-health-insurance-how-to-shop-for-a-plan/439890/
- HealthCare.gov Web site. U.S. Department of Health and Human Services. (July 22, 2010)http://www.healthcare.gov/
- Konrad, Walecia. "When Choosing Health Care, Know What You'll Owe." New York Times. July 9, 2010. (July 22, 2010)http://www.nytimes.com/2010/07/10/health/10patient.html
- Robertson, Christopher Tarver, Richard Egelhof and Michael Hoke. "Get Sick, Get Out: The Medical Causes of Home Mortgage Foreclosures." Health Matrix. 2008. (July 28, 2010)http://law.case.edu/student_life/organizations/healthmatrix/files/Robertson%20Final%20Article.pdf
- U.S. News and World Report. "Smart Tips for Buying Health Insurance Online." Feb. 24, 2009. (July 22, 2010)http://health.usnews.com/health-news/articles/2009/02/24/smart-tips-for-buying-health-insurance-online.html
- Wall Street Journal. "How to Shop for Health Insurance." (July 22, 2010)http://guides.wsj.com/personal-finance/insurance/how-to-shop-for-health-insurance/