A Brief Guide to Choosing a Health Plan

No matter what, a health plan that covers preventative and emergency care alike is an important — if sometimes underrated — piece of your overall financial strategy. Medical treatment is not cheap, and even relatively common procedures or prescription drugs can be expensive for many without coverage. Without insurance, an individual or family with hefty medical bills may need to dip into savings, unexpectedly adjust their budget or face other fiscal consequences.

So, identifying the plan that best fits you and your family’s needs is a decision that can resonate in multiple ways. Here’s a quick guide on choosing a health plan.

Understanding Your Options

• Deductibles: Employers may offer multiple health plan tiers, with the most immediately noticeable difference being the deductible, or the amount the insured person owes before the policy’s coverage begins. High-deductible plans typically have lower premiums and, if the option exists, may be a good choice for someone who anticipates few health issues and/or wants lower monthly payments. A low-deductible plan, on the other hand, has a higher premium but might be well-suited for someone who has pre-existing conditions and expects make use of the policy more often or who has multiple family members being covered.
  
  
• Co-pays: A co-pay plan includes a form of cost-sharing in which the insured pays for a portion of services or treatments, with that amount normally contributing to their deductible. For example, a typical physical or sick visit may include a $25 co-pay, whereas a specialist appointment might have a $50 co-pay — and the insurer covers the rest. Prescription drugs can have co-pays, as well. If you visit a doctor frequently and have the opportunity to select a co-pay plan, it may be your best option, especially because specialist visits can be pricey.
  
  
• PPOs: A preferred provider organization plan, or PPO, is one in which your insurer has preferred providers. The insured generally will pay less if they use “in-network” providers, such as certain physicians or pharmacies. You may need to change providers to ensure you’re getting the most from your policy.
  
  
• Drug coverage: Prescription drug coverage sometimes is a separate cost, or the insurer may have a list of covered medications, so it is important to understand what is and isn’t covered for someone who requires a certain medication.
  
  
• Health Savings Accounts: A health savings account, or HSA, is often available to those enrolled in a high-deductible health plan. It is a powerful, tax-friendly savings account in which someone can deposit nontaxable funds, via their regular paycheck or on their own, with the intent to pay for qualified medical expenses like doctor appointments or prescription costs. Importantly, HSA funds can be carried over from year to year.

As we age, our risk of costly medical complications increases, so if you plan to retire early, make sure you have health insurance in place. If you retire before you are eligible for Medicare — a health insurance system offered by the federal government when you turn 65 — or if you know you won’t have retiree health insurance, you may need to purchase coverage independently. Researching your options now may help secure coverage and save money later on.

If your employer provides retiree insurance, it’s an option to consider, but if you don’t have that possibility, you may be able to continue coverage with your current plan — for a limited time — through benefits created by 1985’s Consolidated Omnibus Budget Reconciliation Act, or COBRA. Once COBRA benefits end, you may have the option of converting from a group policy to an individual policy, or you can look into securing coverage through your state or the federal health care exchange or elsewhere.

You still may need supplemental insurance, or “Medigap” coverage, when your Medicare coverage begins but doesn’t fully cover your needs. There are a number of insurance companies that are authorized to provide this type of coverage, varying from state to state.

Take care

As with most insurance, in a perfect world, you won’t be using the policy every day. However, policies tend to welcome and may even reward you for performing preventative care, such as regular primary care checkups and engaging in healthy behaviors.

Beneficial habits mean you may not have to pay for a costlier insurance policy, and quite simply, they can create a better, healthier quality of life. No matter the status of your personal health, however, having an insurance plan is a vital piece to your financial health, too.