Determine what is available in your area. Health insurance is generally sold in one of several ways. A low- or no-deductible plan, sometimes referred to as a “Cadillac plan,” is simply an expensive health insurance plan.
The expense is often, but not always, driven by the fact that there are no deductibles (or low deductibles), and there are low co-payment amounts. On the other end of the spectrum are high-deductible plans. These plans cover catastrophic health conditions but have deductibles that are several thousand dollars per year to encourage the insured to make careful choices about when to use their health insurance. Between these two extremes are a variety of plans like health maintenance organizations (HMO) and preferred provider organizations (PPO) that have varying degrees of flexibility in terms of premiums and deductibles.
Assess your needs. The expensive, low-deductible plans are ideal for individuals who do not want to pay extra out-of-pocket costs every time they visit a doctor. These plans are also good for individuals who use their health insurance plan frequently. HMO plans are used more for preventative maintenance, as they focus on making sure that health problems are caught before they become serious. Premiums tend to be lower, and your coverage is restricted to the doctors in the HMO network. PPO plans offer increased flexibility but typically come with higher premiums than HMOs.
High-deductible plans offer the lowest premiums and maximum flexibility in how you pay for your health care. But they are generally for individuals who do not use their health plans frequently because the deductibles are costly and you usually need to save up money to cover the expense. This can be done using a special savings account called a health savings account, or HSA, to pay for your deductible and other non-covered health care costs.
Compare the exclusions. Some states have rules on what the insurance company can exclude. These terms and conditions may exclude pre-existing conditions, permanently or temporarily. Some states mandate that your previous coverage can be used as a credit for your new health insurance plan’s exclusion period.
For example, you were covered for 12 months before applying for your new health plan, you didn’t have a break in coverage during this time and your new health insurance plan has an exclusion period of 12 months. Your old plan may credit your new plan with 12 months’ worth of coverage to cover the exclusion period. This means that if you have any pre-existing health conditions, like an injury or an existing illness, the insurance company would cover that condition. Not all states mandate that insurance companies credit existing coverage toward new coverage, so make sure you analyze your plan’s terms for this specific provision.
Examine your health plan’s coverage for dependents. Many states provide coverage for dependents but have different rules for how the policy will cover newborn babies or adopted children. For example, some states mandate that your insurance company automatically cover newborns and newly adopted children for a set period of time, usually 30 or 31 days. But the conditions of this coverage can vary. Some insurance companies require you to apply to put the child on the policy during this 30-day window or the child will not have coverage afterward, while other companies simply request that you change your coverage after the 30-day window is over.
Get quotes. Call several health insurance companies and request a health plan summary sheet once you’ve determined your needs and what’s available in your area.
Compare health insurance costs. Make sure you can afford the health insurance plan that you want. Balance the cost of the plan with the benefits you’ll get from it. The cost will often be determined by how often you envision using the plan, but you may have to be prepared to choose a plan that offers only some of the benefits you want rather than go without coverage if you cannot afford your ideal plan.