How to Compare Health Insurance Plans

Before you start comparing health insurance plans you should know the 3 basic factors that determine health insurance rates:

1.    Your age. Premiums increase as you grow older, but the benchmark is age 65. This is the age where a person is eligible to receive Medicare from the Federal government.

2.    Where you live. Federal and state laws regulate insurance and differences exist between states. Medical care costs depend on the geographic area where you reside, so insurance premium rates can vary for different locations even within the same state.

3.    Your health and habits. Some insurance carriers will not accept applicants with pre-existing conditions. But they differ on what type of disease, occupation, or other conditions are not acceptable. Some conditions, such as kidney failure that require dialysis, are eligible to receive Medicare.

Check if your employer provides group health insurance for company personnel. If yes, check if it extends to members of your family. You can save money by identifying the extent of your group coverage, and getting additional health insurance only for those areas that you lack. If you are self-employed or have your own business, you should get private individual health insurance because expenses due to unexpected illnesses, or other medical emergencies, can be a huge financial drain on anyone.

The common types of private health insurance include:

•    HMO. Health Maintenance Organizations are known for affordability. HMO coverage means your medical needs should be attended to by a network of hospitals and physicians under the HMO organization in your health plan.  

•    PPO. Preferred Provider Organizations are also a form of managed health care similar to HMO. But PPO’s are flexible because you can get partial coverage for health services outside their network.

•    POS. Point-of-Service means you need a primary doctor for your coverage. It’s somewhat similar to PPO since you can also avail of partial coverage outside its network.  

•    FFS. Fee-for-Service is a traditional form of health insurance coverage. It’s much more comprehensive because you have options to choose where you get your medical needs attended to. It’s also more expensive than the other forms of coverage.

In general, a health insurance policy that costs less in terms of monthly premiums means paying a larger share of the medical expenses.
Aside from premium rates, the other costs of health insurance coverage you should be aware of are:

•    Co-Insurance. This is a portion of the total amount you may be required to provide. It can be anywhere from 10% to 80%. For example, if a medical procedure costs $500 and your co-insurance is 10%, then you need to pay $50. The insurance will cover the rest.

•    Deductible. This is an amount set by the insurance company. You will need to pay this amount before the company assumes responsibility for further medical costs. It’s generally computed on an annual basis.

•    Co-Payment. This is an amount that you may be required to pay for visits to a doctor, or for a prescription. It’s a charge that you and the insurance company agree upon prior to buying your plan.

Finally, keep in mind that this is just a guide to help your research on health insurance. More importantly, it’s a guide to help you ask the right questions when comparing plans. To get the best answers you need the help of an expert.

Consult with a licensed, knowledgeable health insurance financial professional before buying your plan.