Health insurance policies – and their premiums – vary widely. But you have more control over your costs and coverage than you might think.
Last week was the second anniversary of the Patient Protection and Affordable Care Act – “health care reform” to its supporters, “Obamacare” to its detractors. This week, the Supreme Court will hear arguments about the law and may strike none, part, or all of it.
That makes this a good time to give your health insurance a check-up. If the cost of your coverage is entirely borne by your employer, you should still understand your policy. And if you cover the cost yourself, you’re already aware of the bite it takes from your budget – learning what you’re paying for and how it works allows you to make decisions that can lower the cost.
In the video below, Money Talks News founder Stacy Johnson offers some tips on shopping for health insurance. Check it out, and then read on for more details…
As you heard in the video, prices for insurance can vary widely. Fortunately, you have some control. Here are the key factors you need to know to manage the cost of your coverage…
This is your out-of-pocket expense before your insurance kicks in. As with car insurance, the higher your deductible, the lower your rate. If you have few regular medical expenses and are in good health, choosing a plan with a higher deductible may be a good option.
On the other hand, if you can’t afford to cover a big deductible, you might get sick and not seek the care you need. That can lead to bigger problems – medical and financial – down the road. You can learn more about the pros and cons of high-deductible plans, and the health savings accounts they’re often paired with, in Is High Deductible Health Insurance Healthy?
“Networks” are simply agreements between the insurer and care providers. Doctors and facilities that are “in-network” (partnered with your insurer) will cost less than those outside the network. This makes it important to find a plan that includes care from people and places you trust in your area. Just because a network sounds large doesn’t mean it includes the doctors and specialists who matter most to you.
Not sure where to go? You might find a social network for your health network, which can also be a good place for advice and recommendations if you have to switch doctors.
In Health Care Reform = Free Preventive Care? Not Exactly, Stacy explained how his supposedly free physical resulted in a bill for more than $730. Fortunately, his discounts reduced that to about $100. When comparing plans, compare negotiated rates for common expenses like office visits and lab work. (And know what preventive services are covered under the law, so you don’t have to go through what Stacy did.) Some plans may also offer discounts for things that help you get healthy – like weight loss or quit-smoking programs.
The higher your deductible, the more important it is to find the lowest negotiated rates.
4. Co-pays and stop loss
Co-pays, or coinsurance, are expenses you share with the insurer. So if you have an 80/20 co-pay, your insurer covers 80 percent of the tab and you pick up 20 percent. When the total amount you’ve paid meets your stop loss, your insurer picks up the entire bill. The higher the stop loss, also called an out-of-pocket maximum, the lower the rate will be.
“Covered expenses” is a key phrase. Your insurance coverage only applies to what the insurer decides it does. Nobody knows what disease they may face later in life, but it could be disastrous to pay your insurance premium for years only to find out your expensive illness isn’t covered. Policies with more exclusions may be cheaper, but they might not be worth it. Make sure you understand what’s included (and excluded) from your coverage.
Smaller, less-known insurers might charge lower rates, but it’s important to check out their financial health. If they go under, you could too. Aim for companies that are rated at least ‘A’ by A.M. Best (where A++ is the best possible) or Standard and Poor’s (where AAA is best). It’s a good idea to stick with companies you can count on in the long run.
A few years ago, Stacy found that his insurer of seven years was offering new customers a policy exactly like his for half the price. When he called to find out why, they couldn’t provide a reasonable explanation, nor would they do an interview for Money Talks News. As you might imagine, Stacy is no longer a customer.
If you’re hunting for a new policy, start with our insurance shopping tool and with HealthCare.gov. For more on how coverage has been changing since health care reform passed, check out Health Care Reform: 8 Positive Changes and 4 Reasons Your Health Insurance Needs a Check-up – Stat.
And here’s the primary rule for health insurance, as well as any other kind you might consider: Make sure your new policy is in effect before you drop the old one. Never, ever be uninsured, even for a day.