How to Choose the Right Family Health Insurance Plan
Health care costs are continuing to rise. This puts a strain on your family’s finances.
When it’s time to choose health insurance for your family to cover their health care services, it’s easy to get overwhelmed.
You may have several options to choose from. The plans can be complex and challenging to understand, too.
Each family’s situation is different.
Here’s a guide to help you through the process of choosing health insurance for families.
Know When You Can Buy Health Insurance
The first step is knowing when you can buy or change your health insurance policy.
For most people, you get one chance each year to buy health insurance or change health insurance policies.
This is during open enrollment. Open enrollment usually occurs toward the end of a year to make changes for the health insurance plan your family will use for the following year.
Qualifying life events
However, some events may allow you to buy or change health insurance plans at other times. These are called qualifying life events.
These events allow a special enrollment period to sign up or change your insurance.
You can learn more about qualifying life events here to see if you are eligible to sign up for health insurance at a time other than open enrollment.
Determine the Types of Health Insurance Available to You
Once you know it’s time to choose a health insurance plan, you have to determine what options you have to choose from.
The type of plan you choose can result in very different health insurance coverage.
Most families get insurance through employers. Employers often provide health insurance as a benefit of working for the company.
The best part:
Many companies cover part or all of the monthly premiums, too.
This may result in employer-sponsored health insurance plans having lower premiums than plans you can purchase using other options.
Healthcare marketplace plans
Some states run their own healthcare marketplaces. If yours does, check your state’s website to see what plans are available.
Other states do not run their marketplaces. In those cases, you can view available marketplace plans on Healthcare.gov.
These plans may qualify for a tax credit to help lower the cost. The tax credit is based on your family size and your income.
Health insurance brokers
Health insurance brokers may be able to sell marketplace plans or non-marketplace plans.
Non-marketplace plans do not have to conform to the Affordable Care Act standards.
For example, they may not cover the same preventative services a marketplace plan would.
Make sure you understand how they’re different before considering one.
The benefit of using a broker is their knowledge about health insurance and the plans they sell.
Yes, they can help you find a plan that makes sense for your family but get paid a commission to do so.
As with any commission-based transaction, make sure what you purchase is as advertised by the salesperson before buying.
Government health insurance programs
Some families may qualify for health insurance through government programs.
Medicare may cover individuals age 65 or older or people with disabilities but doesn’t cover families.
Medicaid may cover low-income families. Children’s Health Insurance Programs (CHIPs) may cover eligible children in families that make too much money to qualify for Medicaid.
Investigate the Plans
Once you know your health insurance options, it’s time to dig into the plans’ details.
Your goal is to find a plan that fits your family’s healthcare needs while spending as little money as possible on medical expenses over the course of a year.
Premiums are the costs you pay to have health insurance.
For employer-based plans, you likely pay a per paycheck premium for coverage.
Your employer may pay part of the premium, resulting in you receiving a discounted payment amount.
For marketplace plans, you usually pay a monthly premium.
Tax credits may subsidize these premiums. If your income is too high, you’ll have to pay the entire premium yourself.
The regular premiums may seem like the most significant factor to consider for a health insurance plan.
They need to be considered along with the following factors.
If you decide solely based on premiums, you may end up paying more out of pocket expenses over a year.
A network is the group of medical providers the plan has negotiated contracted rates with.
Many health insurance plans make it cheaper to see in-network providers.
If you visit an out-of-network provider, the plan may not cover the visit.
Alternatively, the plan may require you to pay a much higher cost for a visit.
Check the network a plan offers to see if the providers you use are included.
If they are, the plan may be a good fit. If they aren’t, decide if you’re willing to switch providers or pay the higher costs.
A deductible is an amount you’ll have to pay out of pocket before your health insurance coverage kicks in.
Your deductible resets each plan year. This typically starts on January 1st.
Deductibles can vary wildly. In general, high deductible plans result in lower premiums.
Low deductible plans require insurance companies to pay out more, so they generally charge higher premiums.
Certain preventive services may qualify for coverage before you reach the deductible, especially in the marketplace and employer-sponsored insurance plans.
Some high deductible plans may qualify for a tax-advantaged health savings account (HSA).
These accounts could help lower your tax bill and pay for medical expenses with tax-free money.
Copays or coinsurance
Copays and coinsurance are amounts you’re required to pay for services after you meet your deductible.
Copays are a flat dollar amount per visit. You may have several copays depending on the type of service.
Here’s an example:
- General doctor visit: $25
- Specialist visit: $100
- Emergency room visit: $250
Coinsurance works like copays but on a percentage basis. Here’s an example.
- General doctor visit: 10%
- Specialist visit: 20%
- Emergency room visit: 35%
Copays and coinsurance can add a lot of costs to your healthcare expenses.
Prescription drug coverage
Prescription drugs are an essential piece of coverage for many families.
Prescriptions may have a separate deductible you have to fulfill. They generally have copays or coinsurance depending on the category of drug you take.
- Generic drugs
- Preferred brand drugs
- Non-preferred brand drugs
- Specialty drugs
Some plans may not cover all prescription drugs, either.
If prescriptions are a regular part of your life, it’s essential to check to see how much your prescriptions would cost under any health insurance plan.
Plans usually have an out-of-pocket maximum limit.
Once you’ve paid this amount out of pocket, the health insurance plan should cover your other costs for the year entirely.
Non-marketplace plans may have different rules, though.
Out-of-pocket maximums can be extremely high.
For instance, $7,000 or more isn’t uncommon.
To make matters worse, the premiums you pay are not counted toward your out-of-pocket maximum.
Compare the Plans
Once you have evaluated the factors above for each plan you’re considering, it’s time to compare plans.
Ideally, you’d look at plans based on how much they’d cost you over a year for all costs.
This isn’t exactly possible, though. You have no idea what medical expenses you’ll incur next year.
The best you can do is predict based on what you know. Start by looking at how many medical services you generally use in a year.
Look forward to the next year
Next, consider any factors that have changed that may result in more or fewer services getting used.
For example, someone that knows they’ll need shoulder surgery next year should take that into consideration.
Similarly, someone may have had to go through rigorous physical therapy in the last year. If they no longer need it, they shouldn’t consider that for the following year’s plan.
Use your best estimate of services you’ll need and compare that to how each plan works.
Figure out which likely results in the lowest cost for your family over the upcoming year.
Family financial situation
You need to take your family’s finances into account, too.
Families with large financial reserves may choose a plan with a lower premium and higher deductibles or coinsurance.
The lower premiums could be worth it if they have few medical costs throughout the year. Even if they end up needing more services, they can afford to pay for them.
Families with fewer reserves may opt for a plan with higher premiums but lower costs throughout the year.
Ultimately, you should do what fits your family’s medical and budgetary needs.
Consider Consulting an Expert
Insurance companies don’t make understanding health insurance easy. It’s incredibly complex, which can get frustrating.
Instead of getting frustrated, consult experts for help. If you’re considering a workplace plan, talk to your human resources department.
For any questions they can’t answer, call the health insurance company that offers your workplace’s plans.
People considering marketplace plans or non-marketplace plans may want to consult an insurance broker.
While the broker gets paid to sell you a health insurance plan, they should thoroughly understand what they’re selling.
Ask lots of questions and have the broker show you where things are in the policy you’re considering.
Brokers may be able to save you a lot of money based on your family’s needs with their knowledge of plans from multiple insurance companies.