Have you ever gotten what you thought was a great deal on a vehicle, only to find that some other factor (like maintenance or gas mileage) ended up practically negating the initial low cost?
The same can happen when buying health insurance. If the only thing you take into consideration when you purchase a policy is the premium you’ll pay each month, then you may be in for quite a shock when the rubber meets the proverbial road.
Instead of focusing solely on your monthly payment, a better option is to think of your insurance in terms of what you can expect to pay on an annual basis. Here are a few factors to consider…
- Deductible – This is the amount you are responsible for paying out of pocket before your insurance ever kicks in. You might exhaust it slowly with a few routine visits. Or you could end up having to fork over the entire amount if you’re hit with a major injury or illness early in the year.
- Copayments and coinsurance – This is what you pay (either a percentage or a specific dollar amount) for covered expenses after your deductible is met. Costs/percentages will vary, depending on the service or expense.
- Premiums – While not the sole determining factor, monthly premiums still need to be considered when choosing the best policy for your budget.
- Discounts and free services – While all policies are required to provide the same basic coverages, they differ in some of the “extra” perks they offer. It’s important to understand what discounts or other services your insurer may provide, particularly if you have any ongoing medical conditions.
Once you’ve determined what you’ll pay for each of these categories, add them up to find your estimated annual health insurance cost. Divide that out over the 12 months of the year, and now you have a more accurate monthly cost to help you when comparing policies.
Costs are going to vary for each individual but, as a general rule, the less you plan to use your coverage the better off you are choosing a policy with low premiums and higher out-of-pocket costs. Those who expect to use more care might want to consider a plan with a higher premium. Even though you’ll pay more up front, you may end up saving money by paying less out of your pocket for the care you receive.
If you need help determining which plan to choose, contact us. We have a number of tools that can help you estimate your health care costs and make an informed decision.