Written by Maria Pippidis, Extension Educator in Family Financial Management, University of Delaware Cooperative Extension
You know Health insurance is important. You also know it can be expensive. Purchasing health insurance based on premium alone can be a mistake; especially if you have health concerns. You want to be able to access the care you need to keep yourself healthy.
Health insurance is designed to help you access health care and also protect you against a major health care expense. Like other insurances, it helps protect you against financial ruin if you become ill or have a chronic condition like heart disease, diabetes or ongoing pain.
To choose the right insurance plan, you need to consider how you use health care services and which health care services you need. Health insurance plans are designed to cover several kinds of health care services:
1. Preventive and wellness services
2. Lab tests
4. Prescription drugs
5. Outpatient care
6. Maternity and newborn care
7. Mental and behavioral health treatment
8. Pediatric care
9. Services and devices for injuries, disabilities or chronic conditions
10. Emergency room services
Depending on the plan you have, preventative services are covered by the cost of the premium. That means there would be no additional cost or copayment for the visit or for lab work. This varies depending on if you are under 65 and have a plan from the Health Insurance Marketplace or an employer-based plan or if you are over 65 and have Medicare and a Medicare Supplement Plan.
Total out-of-pocket costs include premiums but also the annual deductible, copayments and coinsurance costs associated with using your health insurance plan. So, how you use health services will influence your total out-of-pocket costs. The more doctor, hospital or lab visits you have the more your total copayment and coinsurance costs will be for the year. Usually, the lower the premium the higher these costs are, but it depends on the plan.
There is a My Smart Choice Health Insurance workbook. This book provides information that can help you inventory how you use health care services and choose a health insurance plan.
We’ve provided a worksheet where you can inventory how often you and your family members use different health care services. Knowing how often helps you estimate your out-of-pocket costs.
Every person or family is different, so your number of visits will be different from others. Many people have annual visits and possibly follow up visits for a number of doctors. You will want to include these in your inventory. Be sure to include visits to the urgent care or emergency department as well.
You can use a calendar to remember how often you’ve used different doctors and health care services, or you can contact the doctor’s office to get the information.
Once you know how often and what kind of health care services you use, you are better able to choose a plan that best meets your health care needs. As you review information about the plans, be sure to pick a plan that includes the services you use. Remember, not all plans are the same in terms of what services and how much of the costs they cover. If you have a special health problem, contact the health insurance company for more details about what the plan covers. The summary of benefits and coverage documents as well as the plan’s detailed documentation will provide more details.
Insurance is designed to share the costs with you. Usually the lower the premium, the higher the deductible, copayment or coinsurance amounts. If you and your family use health care services a lot, it may be better to choose a plan that has lower deductibles, copayments or coinsurance. Because almost every time you visit the doctor, there will be a copayment, you’ll want to pick a plan that has lower copayment amounts. Because the deductible will need to be paid before insurance starts to pay, you’ll want a lower deductible.
No matter which plan you choose, it is important to set money aside to cover these expenses. You want to be able to go to the doctor when you need to so that you can stay healthy. Having the money set aside makes this an easy choice.
Developing a spending plan or budget, that includes savings for health care costs, helps you to be prepared financially and to reduce your stress about how you will pay for health care services.
For more information about choosing and using your health insurance plan go to our Insure website.