The key to getting the right type and amount of insurance coverage is education. Yes, there are plenty of websites with calculators that can help assist you in determining how much coverage you need, but the only way to be sure of the result is to learn everything you can and then make your own informed decisions. Even if you seek help from a professional, you should at least understand the terminology as well as the basics so that you know that you are getting the right product at the right price.
What types of health insurance are available?
Health insurance plans generally fall into one of two categories: indemnity plans (also known as reimbursement plans) and managed care plans such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point of service (POS) plans.
- An indemnity plan allows you to choose your own doctors and pays for your medical expenses--totally, in part, or up to a specified amount per day for a specified number of days.
- Managed care plans generally provide broader coverage, but they all involve an arrangement between the insurer and a selected network of health-care providers (doctors, hospitals, etc.). For example, an HMO will require that a primary care physician in the network coordinate all of your care and refer you to specialists in the network.
No matter which type of health insurance you buy, you'll need to make sure it offers the right kinds of coverage.
What should be covered?
A good health insurance policy contains several types of coverage.
- Hospital expense insurance pays your room, board, and incidental services costs if you're hospitalized.
- Surgical expense insurance covers surgeons' fees and related costs associated with surgery.
- Physicians' expense insurance pays for visits to a doctor's office or for a doctor's hospital visits.
- Major medical insurance offers extremely broad coverage with a very high maximum benefit that's designed to protect you against losses from catastrophic illness or injury.
What might be covered?
When comparing health plans, check to see if they provide additional benefits that you may need, including:
- Prescription drugs
- Preventive care
- Mental health benefits
- Maternity care
- Vision care
What will it cost?
In addition to the monthly premium expense, you will usually have other out-of-pocket costs. These costs can really add up, especially if you have children or other family members who visit the doctor frequently. Check to see if the health insurance plan you're considering requires you to pay any or all of the following:
- Co-payment: The amount you'll have to pay each time you visit a health insurance provider (generally required by HMOs and PPOs).
- Deductible: The amount you'll have to pay toward your medical expenses (usually annually) before the insurance company begins to pay claims. This will not apply to all of your expenses, however, but you should anticipate that you will end up paying most if not all of your deductible. You might also have two different amounts, one for each family member and also a family maximum deductible.
- Coinsurance: The percentage of your medical costs you'll have to pay after you reach any deductibles that apply. This could be as little as 10%, or as much as 50%, depending on the type of medical service being provided.
Step 3 - Determine Your Insurance Needs