Photo (cc) by 401(K) 2013
Health insurance costs continue to rise, according to recent news reports, with insurers in many states proposing double-digit increases for 2016.
Costs vary widely from insurer to insurer and plan to plan. It is easy to get tripped up by the confusion and end up paying more than is really necessary.
Fortunately, a little homework can help you make the grade the next time you choose a policy. Following are 10 costly mistakes to avoid if you want to get health insurance at the best possible price.
1. Focusing only on the premium and deductible
Many people who shop for coverage simply focus on the premium and deductible. But there are other costs to consider as well.
Unfortunately, I learned this lesson the hard way when I had unexpected surgery. Under my policy, surgical procedures were covered at 80 percent, leaving me responsible for the other 20 percent.
I never really gave that fact much thought until an emergency arose, resulting in a $12,000 hospital bill. My portion of $2,400 was a tough pill to swallow — especially considering I had not yet met my $500 deductible.
To learn more about some less well-known costs, read “These 9 Health Insurance Terms Confuse You … and Everybody Else.”
2. Failing to read the fine print
William Byron, vice president of customer service operations for Geisinger Health Plan, told U.S. News & World Report that the top mistake individuals make is not calling their insurance provider’s customer service team when they have questions regarding their coverage.
“The most common issues, including not having a prior authorization to see a specialist or visiting an out-of-network provider, can cost an individual more or may not be covered at all. Individuals should talk with the experts provided by their insurance company.”
Failing to ask questions about things you don’t understand will only cost you more in the long run.
As Byron noted, factors that can affect your out-of-pocket costs include whether you choose in-network or out-of-network providers, and whether or not your plan requires you to get prior authorization for certain services and procedures.
3. Not shopping around
It takes energy and a bit of patience to explore your options, but doing so can save you hundreds or thousands of dollars. Circumstances change and so do providers’ pricing structures, so loyalty to your current insurer may not always be your best bet.
4. Signing up for COBRA
The federal government mandates under COBRA that continuation of coverage be offered for up to 18 months to many employees who separate from their companies.
On the surface, this sounds great, as you get to keep the same coverage you had while working for the company. But when you were an employee, the company picked up a large part of the premium cost. As an ex-employee choosing the COBRA option, you are on the hook for the full amount.
For many people, a much better deal may be available by purchasing a policy through the state or federal health insurance exchanges created under the Affordable Care Act or buying coverage directly from an insurer.
5. Getting too much insurance
Do you really need all of the coverage for which you signed up? For instance, a platinum level plan under Obamacare will cover on average 90 percent of your medical costs, but the premiums are pricey.
If you don’t go to the doctor often and have no chronic health issues, maybe a cheaper gold, silver or bronze plan would make more financial sense.
6. Assuming one size fits all
Everyone’s needs and medical conditions are different. The policy that works for your co-worker or friend may not work for you. Figure out your health care needs, compare plans and doctors, and choose the coverage that makes sense for you.
7. Skipping coverage because you’re ‘healthy’
Deciding not to purchase health insurance is a true roll of the dice. If you suddenly fall ill and desperately need coverage to avoid exorbitant medical bills, you likely will be out of luck once the enrollment period has closed.
However, it’s important to note that some people may be able to buy insurance outside of the enrollment period if they experience certain life events, such as the birth of a child, job relocation, adoption or marriage. The federal government has more on these exceptions at the Health.gov website.