Many people that come to me for advice are confused by health insurance and do not know how to choose a health insurance plan for themselves. Typically the person has been employed and the employer chose the health insurance for his employees. When a person has to make the choice himself, it seems like a big decision that could have bad consequences if he chooses the wrong plan. Following are three points to keep in mind when you choose a plan.
1. What is your budget? Most health insurance decisions are made by the monthly premium a person thinks he can afford. If you do not have insurance, how much will it cost?
a. I received a call one day from a man who said that he needed insurance because he just spent $25,000 on an emergency room visit and now he needs surgery. Unfortunately, that’s like asking for car insurance after a car accident.
2. How often do you use medical services? What prescriptions, if any do you use? Every health insurance plan has limitations on different services.
a. For instance many plans now have a limit on the number of doctor visits per year that are covered prior to meeting the deductible. Reviewing your use of medical services the prior year can help you decide the type of plan to purchase. After all, you do not want to pay for services that you really do not need.
3. Finally, how much can you afford if the worst case scenario happened and you had an accident or a serious illness? Health insurance plans have a “Maximum Out of Pocket” limit per year. That means that once you spend the “Maximum Out of Pocket” amount, the insurance company will pay the expenses for the remainder of that calendar year.
a. That happened to my husband this year when he had surgery. He reached his “Maximum Out of Pocket” limit. Even with this limitation, we discovered that there are some expenses that we were responsible to continue to pay. Therefore it is a good idea to understand your policy so you do not get surprised.
In conclusion, you can make the best decision about the health insurance plan by looking at your budget, but also look at the consequences of not having insurance. Then understand what benefits you need for yourself and for your family. And finally look at how much you can afford if the worst case scenario happened and you had major medical expenses. How much can you afford to pay for a monthly premium? How much can you afford to pay for a deductible before your plan begins paying expenses? And finally how much can you afford to pay for a major medical expense in a given year? Having answers to these questions can lead you to a good decision about the health insurance you need.
