What NOT to Do When Choosing a Health Insurance Plan

Financial Planning

Did you know that nearly one in five people said they didn’t feel confident about their health plan choice last year? Were you one of these five?

There are plenty of guides on how to choose a health plan: what to look for and terms to understand. But few people talk about the bad ways to choose a plan.

Watch out for these common traps:

Choosing a Plan Only Based Off the Lowest Premium

This is often the top deciding factor for consumers, and it’s easy to see why: The premium is front and center and a guaranteed expense; you know you’ll have to pay this much on an ongoing basis.

But a low premium always comes at a cost, so be very aware of what you are trading off to save some money each month.

Is it provider choice? Or a high deductible?

The trade may very well be worth it, but know what you are buying.

Overlooking Urgent Care Options in Favor of Emergency Coverage

For some reason, this is an area that many people zoom in on, perhaps because it’s the quintessential health insurance case—what if you find yourself in a major medical emergency?

The odds are, when most people use an emergency room, they do so because they are out of other options for urgent care.

Choosing a plan that has benefits such as after-hours and urgent care clinics or nurse advice lines can help keep you out of emergency rooms and lower your costs.

Also keep in mind that many plans waive emergency room costs if you are admitted to the hospital, so this means that if you really need the hospital, it will be covered.

Selecting a High-Deductible Plan When You Have No Savings

High deductible health plans are a great way to reduce your premium and lower your overall costs.

The danger is when people sign up for a high deductible plan (those with a deductible of $1,250 or more for an individual, $2,500 for a family) when they have little or no means to pay for the deductible if necessary.

You should be able to save enough in the plan’s HSA to meet the deductible in a year at most (ideally, faster).

Also take note of whether your employer also contributes to your HSA. If your employer doesn’t help fund the HSA, the plan is suddenly much less valuable.

Choosing the Same Plan Your Co-Worker Has

A lot of people choose their health plan based on what their co-worker or neighbor has. This isn’t necessarily a bad idea, as long as it wasn’t just a blind (or lazy!) grab.

It’s actually a very smart and convenient method, because your co-workers are often pretty familiar with the very same options you are trying to decide between.

Just be sure you are choosing a plan because the amount of risk feels right for you, it covers the benefits you value the most, and your providers accept the plan.

Tomer Shoval is the CEO and Co-Founder of Simplee, a free online personal health care expense management tool. Connect with him on twitterfacebook or email.



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