When selecting their health insurance plan, every consumer purchasing from the marketplace or through their employer will need to decide on what will work best for them. The first decision is whether they want to pay more for their monthly premiums and have a lower copay and deductible, or pick one because its monthly cost is cheaper. Knowing how each person, and any family members they are covering, will use the insurance will make the decision easier to make.
When to Choose a Plan with a Low Premium
Plans that cost less per month will require the person or family to pay more for their share of all their medical expenses. This includes prescriptions, doctor visits and any procedures and equipment they may need. The deductible (the amount that the member must pay out-of-pocket before insurance begins paying more) will be higher as well. The following examples are when this type of insurance is usually the right choice:
- Those who are young, healthy and require only an annual wellness exam.
- People who have enough in savings to cover the cost of their deductible if an emergency or unexpected illness occurs.
- A spouse has insurance coverage through their employer, and it is used to cover any children.
- When children are already covered by a government-funded plan.
When to Choose a Higher Premium Plan
Some high premium plans offer very low deductibles and copays. They often cost much more per month that the lowest premium plan and this can make them seem unacceptable to some shoppers, especially those who have a lower income. However, the benefits they offer may make them more affordable to some people, despite their higher monthly cost, such as:
- Anyone receiving regular medical care for a life-threatening or chronic illness. Someone with cancer or diabetes, for example.
- If planning to have a baby within the next 12 months. Pregnancy, childbirth and postnatal care can be very expensive. Meeting the deductible quickly can be a benefit for many families, particularly if any complications arise.
- When paying for a monthly prescription or multiple prescriptions. Even though the out-of-pocket costs may make it easy to reach the deductible quickly with a low-premium plan, people with lower incomes may find the prescription unaffordable if they must pay the majority of the cost on their own for several months.
- If paying a high deductible would cause a severe financial hardship.
Since there is such a variety in what the actual costs are for each plan, how much the employer covers and what type of tax credits someone may receive through the marketplace, there is no simple way to state exactly who should purchase what plan. Mid-range plans and health savings accounts are additional factors that can further complicate the scenario. By determining what the likely medical bills would be over the following year and the ability to cover emergencies, most people will at least have a starting point for calculating what their final annual expenses would be under each plan. This makes selecting the most beneficial one a little easier.
For more information, visit David Paulson Agency Inc.