Health Insurance: What To Look for in a Plan To Save Money

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Health insurance can be expensive if you don’t know what you’re buying or how to shop for the most affordable plan. Since the passage of the Affordable Care Act (ACA), which was designed to make healthcare affordable for every American, there are more options — but it can be confusing to figure out which is right for you.

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Here, we break down the different kinds of insurance plans and what to look for to save money.

Buying From the Marketplace

ACA healthcare plans are available through your state’s individual marketplace, and are ranked by benefit levels known as bronze, silver, gold and platinum, according to WebMD. The bronze plans offer the least, most basic coverage (covering about 60% of your average medical costs), and the platinum plans offer the most (covering about 90% of your average medical costs).

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Some people under the age of 30 can qualify for high-deductible, “catastrophic” plans, which are for people who don’t anticipate having many healthcare needs. These plans have to cover your first three primary care visits and offer preventative care free, regardless of whether you’ve met your deductible.

Types of Plans

Types of healthcare plans primarily fall into the following categories:

  • Health Maintenance Organizations (HMOs): HMOs provide all health services through a network of healthcare providers and facilities, with limited options to choose.
  • Preferred Provider Organizations(PPOs): You have slightly more freedom to choose your healthcare providers and don’t need referrals to see specialists.
  • Exclusive Provider Organizations (EPOs): Similar to a PPO but cheaper. You must choose from a specific network of providers.
  • Point of Service Plans: These are a blend of an HMO and a PPO. You can see in-network and out-of-network providers (though you’ll pay more for the latter).
  • High Deductible Healthcare Plans (HDHPs), which may be linked to Health Savings Accounts (HSAs): You pay more out-of-pocket up front, but once the deductible is paid, they cover 100% of your costs.

Understand Your Needs

The first step in finding the right health insurance plan is to understand your own needs, according to Linda Chavez, founder and CEO of Seniors Life Insurance Finder. “What kind of coverage do you need? How often will you be using it? Knowing what you need and having realistic expectations will help narrow down the choices.”

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Make Sure Your Providers Are Covered

The cheapest health insurance might not meet all your needs, so Chavez urges you to consider the provider options available to you. “Do you prefer to use a specific hospital, doctor or healthcare professional? Do you want coverage that provides access to a wide range of providers? Make sure that the plan you choose meets your needs in this regard,” she said.

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Look for Discounts

Many health insurance companies offer discounts to members who are willing to pay a certain amount for their coverage on an annual basis, Chavez pointed out. “If you are able to commit to this payment option, it can save you money in the long run.”

Understand Deductibles

A plan may seem great in its monthly payments — until you look at your deductible. “It’s important to understand the deductible associated with each plan you are considering,” Chavez said. “A higher deductible means that you will pay more money out of pocket for any medical expenses, but it can also mean lower monthly premiums. Consider what level of deductible is most appropriate for your needs and budget.”

Check Your Prescription Benefits

Knowing how to get the most out of your prescription benefits may also help you manage costs, according to Shawn Wagoner, co-founder and chief revenue officer at Surest, a UnitedHealthcare company. “For example, check into discounts and lower-cost alternatives, including generics, which may be available. You may also be able to fill your prescriptions at a network pharmacy or with home delivery by mail — two more money-saving options.”

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Anticipate Next Year’s Health Expenses

It can also help to get ahead of any healthcare expenses you know are coming up, Wagoner said. “If you’re expecting a significant health event in the next year, such as surgery or the birth of a child, compare the differences in plan designs for that specific situation, including any out-of-pocket costs.”

Consider a Plan With Virtual Care Services

Don’t forget plans that include virtual care services, which more and more people have begun to take advantage of since the pandemic.

“If you’re busy or just prefer connecting with a doctor from the convenience of your home, consider choosing a plan that includes 24/7 virtual care,” Wagoner said. “You may have access to virtual wellness visits, urgent care and chronic condition management, offering greater convenience and reducing out-of-pocket expenses.”  

Weigh the Benefits of Employer-Sponsored vs. Individual Plans

Employer-sponsored plans can have the advantage of the employer contributing to the cost, but individual plans may have more options and flexibility, according to Jose Rodriguez, owner of The Credit Dude.

“It’s important to weigh the pros and cons of each plan and choose the one that best meets your needs while also being cost-effective,” he said. “Keep in mind that it’s not always the cheapest option that will be the best for you, but rather the one that fits your needs in terms of coverage and provider access.”

Buy When You’re Healthy

Buying your health insurance plan when you’re healthy could save you a great deal of money in the long term, said Adam Wood, co-founder of RevenueGeeks.

“Insurance premiums are determined based on a risk assessment. Applicants who, based on their medical history, face a greater risk of incurring medical expenses and are subject to higher premiums and/or coverage limitations. Compare it to auto insurance, where costs increase after an accident. If you wait to apply for health insurance until you have health problems and ‘need’ it, you will have fewer plan options at a greater cost, and a significant percentage of your existing medical expenses will likely not be covered.”

Look Into HSAs 

“Opening a Health Savings Account (HSA) to save money for potential healthcare bills is a wonderful method to control healthcare spending,” said Carl Jensen, a personal finance expert and the founder of Compare Banks. “It is a tax-advantaged plan that enables you to save money to cover future qualified medical costs such as copayments and premiums for health insurance as well as over-the-counter drugs and out-of-pocket costs. The availability of credits throughout the year enables you to plan for medical costs and save money to use when the requirement emerges.”

Consider a Critical Illness Rider

Nancy Mitchell, a registered nurse and a contributing writer at Assisted Living, warns that it’s important to look at adding a critical illness rider if you anticipate expensive healthcare costs. “A critical illness rider will allow you to receive a lump sum for the diagnosis you’re facing unexpectedly — whether that’s a heart attack, stroke, cancer or the like. Of course, a rider may increase your premiums, but it’s an investment worth making because critical ailments are usually expensive to treat and manage.”

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About the Author

Jordan Rosenfeld is a freelance writer and author of nine books. She holds a B.A. from Sonoma State University and an MFA from Bennington College. Her articles and essays about finances and other topics has appeared in a wide range of publications and clients, including The Atlantic, The Billfold, Good Magazine, GoBanking Rates, Daily Worth, Quartz, Medical Economics, The New York Times, Ozy, Paypal, The Washington Post and for numerous business clients. As someone who had to learn many of her lessons about money the hard way, she enjoys writing about personal finance to empower and educate people on how to make the most of what they have and live a better quality of life.

 
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