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How to Shop for Health Insurance

Unless your employer covers it, health insurance is a major expense. So it's important to make sure you're getting the best deal. Using the simple tool above, you can do it seconds.

And if you think shopping isn't important, here's a true story...

In 2007, money expert and Money Talks News founder Stacy Johnson shot a story on health insurance.

To show how easy it is to get a quote online, Stacy entered his personal information into the website of his then-current provider, a company he'd been with for 7 years. Result? A quote for $346.50 a month. Says Stacy, "problem was, I wasn't paying $346. Thanks to annual increases, I was paying $743 a month. In other words, they were selling my exact policy to new customers exactly like me for less than half the price!"

After he shot the story, he called the company. "They refused to lower my payments and refused to discuss why they charged new customers just like me half as much. They justified their pricing simply by saying premiums increase over time. So I used an insurance search tool like the one above, got the same policy from a different company and saved more than $4,000 a year."

That shows how important shopping is. But before you start, understand a few insurance terms. They'll help you compare policies and pricing...

Deductible

The quickest way to lower the cost of your health insurance – as well as other kinds of insurance – is to raise the amount you're willing to self-insure.

That's what a deductible is: money you're willing to pay out of pocket before your insurance kicks in.

As Stacy says...

"When it comes to big deductibles, I'm the poster boy. My health policy features a $5,000 deductible, which means I have to spend $5,000 of my money over the course of the calendar year before the insurance company has to spend a dime. Since it would probably require a health catastrophe for that to occur, this type of coverage is often known as catastrophic coverage. Is it right for you? That depends on things like how often you go to the doctor and how much money you have in savings. Just remember, low deductibles mean higher premiums. High deductibles mean lower premiums.

Co-pay

The co-pay is simply the percentage of how much of each bill you pay. For example, an 80/20 co-pay means the insurance company will pay 80 percent of a bill, and you'll pay 20 percent.

Obviously, the more you're willing to pay, the lower the cost. But don't forget that if the bill gets big, so does the co-pay. If you have major surgery and rack up a $100,000 bill, your share is $20,000 – that's a big chunk of change.

Stacy's take...

"As far as I'm concerned, I'm good with a high deductible, because I know exactly what my maximum out-of-pocket expense will be, and I keep that amount set aside in a special health savings account. But I'm not fond of the idea of owing 20% of an open-ended obligation. So I'm for a big deductible, but not co-pays."

Network

You may have heard the term out-of-network. But what's it mean?

A network is a group of the doctors that a health insurance company agrees to work with. The doctors in the network typically agree to discount their services - that can really make a difference if you have a high deductible. So it's critical you go to doctors in your network, which means it's critical the doctors you want are in the network. All insurance companies will show you who's in their networks so you can see if your current doctor participates. Or, you can simply call your doctor and ask if they accept that brand of insurance.

The most common network these days is called a PPO (Preferred Provider Organization): A large network of doctors, hospitals, and pharmacies. Go to a doctor outside the PPO, and you'll pay a lot more.

Exclusions

This is just a fancy term for what an insurance company doesn't cover. Simple, but critical. Don't ever buy any health insurance policy without fully understanding what a policy will and won't cover. Common exclusions include cosmetic surgery and fertility treatments, but anything could be theoretically be excluded.

As Stacy says...

"Before you sign on any dotted line, you need to carefully go through the exclusions. Are childbirth expenses covered? Drug and/or alcohol addiction therapy? Every policy has exclusions, but some will have more than others. If during your shopping you encounter one insurance policy that's much cheaper than the others, this may be the reason why. Be careful."

Bottom line: Shop smart

It's a good idea to comparison shop all your insurance policies – car, home, health and life - at least every other year. Insurance companies know most people don't take the time or have the basic knowledge it takes to shop around, so they're free to raise prices without fear they'll lose customers.

Don't be one of those people. Become more knowledgeable about insurance by visiting our insurance pages, then use our shopping tools to make sure you're getting the best value!