Navigating health insurance can be tricky, especially if you’re new to the process. Misunderstanding different plans or ignoring critical details can cost you dearly.
This blog post highlights five common mistakes new insurance customers might make when shopping for health insurance.
Not Understanding Different Types of Health Insurance Plans
You might find health insurance plans confusing, but understanding the differences is crucial. Health Maintenance Organization (HMO) plans require you to choose a primary care physician (PCP) and get referrals to see specialists. These plans often have lower premiums but less flexibility.
Preferred Provider Organization (PPO) plans offer more freedom to see any provider, but they come with higher premiums and out-of-pocket costs.
Exclusive Provider Organization (EPO) plans mix aspects of both, with lower premiums and no referrals, but they do have a mandatory network.
Point of Service (POS) plans combine features of HMO and PPO, requiring referrals with partial out-of-network coverage. Knowing these differences helps you pick the best plan for your lifestyle.
Additionally, catastrophic plans cover emergencies for young, healthy individuals who rarely need medical care. They offer low monthly premiums but high deductibles, meaning you'll cover routine medical costs until you meet the deductible. This system might seem cost-effective, but the financial risk must be considered. If you need significant care, you’ll pay substantial out-of-pocket expenses. Moreover, these plans often offer limited preventive care and regular check-ups, which are essential for long-term health. Think carefully before opting for a catastrophic plan.
Ignoring Total Costs Beyond Premiums
You might focus on the monthly premium and overlook other significant costs. Deductibles, co-pays, and co-insurance impact the overall affordability of your plan.
A deductible is what you pay before your insurance starts covering expenses. Co-pays are fixed amounts for specific services, like doctor visits or prescriptions. Co-insurance is a cost-sharing percentage after meeting your deductible. These costs can add up quickly, especially with frequent medical care. Understanding these terms helps you grasp the full picture of healthcare expenses.
The out-of-pocket maximum is the most you'll pay for covered services in a policy period, usually a year. Once you reach this limit, your insurance covers 100% of the covered benefits. This system provides financial protection during major medical events. However, not all expenses count towards this maximum, such as premiums and non-covered services. Additionally, out-of-network charges and prescription costs can add to your expenses. Be aware of these potential costs to avoid unexpected financial burdens.
Overlooking Network Restrictions
Don’t overlook network restrictions. Health insurance plans usually have a network of preferred providers. Using these in-network providers means lower out-of-pocket costs. Seeing out-of-network providers can lead to higher expenses or no coverage. Check which providers are in your plan’s network and ensure your preferred doctors and hospitals are covered. Doing so saves you from unexpected costs and ensures you get the care you need.
Moreover, some health plans have regional networks, meaning they only cover services within a specific area. If you move or travel outside this area, you may face higher out-of-pocket costs or limited coverage.
Failing to Consider Continued Health Needs
You must consider your personal health needs, like chronic conditions or regular medications. Some plans offer better coverage for specific conditions or medications, but others have high out-of-pocket costs. For example, if you have diabetes, make sure your plan covers necessary treatments and medications.
Also, check if your plan covers mental health services, as they are essential for overall well-being. Ensuring your plan provides adequate coverage for your needs prevents unexpected costs and guarantees care.
Account for preventive care services, too. Such services include check-ups, vaccinations, and screenings. These treatments are vital for maintaining long-term health. Preventive care can detect health issues early, making them easier and less expensive to treat. It also helps you avoid serious health problems.
Many plans cover these services at no additional cost, but it's important to check if your plan includes them.
Not Utilizing Available Resources and Assistance
Health insurance marketplaces, like the federal Health Insurance Marketplace or state-based exchanges, are valuable for comparing plans and finding the best options. These marketplaces let you compare different plans based on coverage, costs, and more. They also provide information on subsidies and financial assistance, lowering your premiums and out-of-pocket costs. Utilizing these resources can help you make an informed decision and find a plan that fits your needs and budget.
Employer-sponsored health insurance also offers significant benefits, such as lower premiums and better coverage options. However, review these plans carefully. Some might have limited networks or higher out-of-pocket costs for certain services. If you change jobs, you may lose your coverage and need a new plan.
Insurance Specialists, Inc. is here to help young people find a health plan that works for them. You can meet with our team by contacting us online or calling us at (888) 451-0883.