If there’s one thing we know to be true about life, it’s that occasionally, things CAN and WILL go wrong. In the off-chance that your unfortunate situation involves a trip to the hospital or some other type of medical care (we hope it doesn’t!), you’ll be so thankful that you have health insurance coverage. According to a study done by the John Hopkins School of Medicine, a trip to the Emergency Room can cost anywhere from $150-$3,000 without insurance, depending on the nature of the visit.
Yikes. Seeing as how many Americans already have enough trouble finding ways to save enough money to start investing or pay off their other debts, we’re guessing a $3,000 medical bill wouldn’t be a welcome surprise to the budget.
It goes without saying that health insurance is incredibly important so make sure you 1) sign up for the correct plan, and 2) know what is covered or included in your health insurance plan. It’s probably a good idea to find out now before you have to find out the hard way later on.
When it comes to securing health insurance, most individuals are able to do so through their employer. However, if you’re self-employed (or your company doesn’t offer this benefit), you can still sign up to be added to a spouse’s health plan or seek your own coverage by contacting www.healthcare.gov to learn more. Note* be sure to double-check the dates for open enrollment (typically early November) and find out what is offered in your home state.
If you are eligible to participate in an employer-sponsored health insurance plan, you’ll likely find that you have a few options for coverage:
- Fee-For-Service Plans
- Health Maintenance Organizations (HMOs)
- Preferred-Provider Organizations (PPOs)
- Point-of-service Plans (POS)
Fee-For-Service Plans
These plans are hardly used anymore due to their expensive nature, but if you do have this option available to you, it could be beneficial to consider it.
How it works: you can be treated by a “family doctor” (regardless of what program or group they’re a part of) and can go see a specialist at any time without needing a referral. Once you have paid your deductible (which, as a reminder, is the amount of out-of-pocket spending you have to do before your insurance “kicks in”), the insurance provider will typically pay up to 80% of the remaining balance (up to a certain point).
Why it’s great: Flexibility. Freedom to choose providers. Most choices.
Why it’s not so great: Expensive, extremely high premiums (which is the amount of money you are required to pay monthly for this coverage) and limited availability (very few companies offer this type of program to employees).
Health Maintenance Organizations (HMOs)
To make things simple: think of an HMO as a group of healthcare providers that have joined to create a group in order to provide care to paying members.
How it works: You must choose a primary-care physician from the list of doctors in the organized group and this one is the one you must see first no matter your medical issue. So, if you need to see a particular type of doctor, you must schedule an appointment with your primary-care doc first in order to get a referral to see the type of doctor you need within that group.
Why it’s great: Fairly affordable. Low co-pays (the amount you must pay out of pocket for medical visits, appointments, prescriptions, etc.), and cheaper prescriptions.
Why it’s not so great: The inability to see a particular doctor quickly (without first meeting with your primary-care physician) can be frustrating. Additionally, if you choose to visit with a doctor outside of the group’s network, you’re on the hook for the expense as it is highly unlikely it will be covered.
Preferred-Provider Organizations (PPOs)
Similar to an HMO, a PPO is a group of doctors, medical practices, and hospitals that have banded together to create a slightly larger “network”.
Why it’s great: You can still select a primary-care doctor, but you don’t need to schedule an appointment with them first to receive a referral before visiting with any other doctor in network. Should you decide to visit a doctor outside of the PPO network, generally speaking, the PPO will help cover some of the cost to see the outside physician/specialist.
Why it’s not so great: With such great benefits come higher premiums, co-pays, and deductibles.
Point-of-service Plans (POS)
Think of these plans as a sort of hybrid between HMOs and PPOs.
Why it’s great: More choices! You can choose to see a doctor in network (the cheaper option) or outside of your network (but you’d have to pay a deductible).
Why it’s not so great: Actually, these are pretty great options. If you desire flexibility and the choice between physicians and who you visit with, then this plan is worth considering.
So…which one should I pick?
Ultimately, you’ll want to choose a health care plan that you can reasonably afford and that meets your needs for the foreseeable future. For instance, if you plan to start a family in the near future, you’ll want to choose a plan that offers top-notch maternity coverage (so be sure to contact your company’s benefits department to better understand your options). On the other hand, if you know you routinely pay for prescriptions or have a specific affinity for a specialist or your current physician, you’ll want to consider those facts as well. Be honest with yourself and your needs. Are you comfortable being assigned a doctor within your network or do you want to have the ability to seek an outside provider? Do you need a lower deductible or are you best off lowering your monthly premium payments in exchange for a high deductible?
Regardless of what option you choose, make sure you know what is provided, know what your out-of-pocket liability is, and how much this new plan will cost you.
For more on ways to plan for your health expenses, be sure to check out our article detailing Health Savings Accounts here!
If you have questions on what medical plan is best for you and your family, consider contacting your benefit’s department to truly understand your options, or visit any of the resources listed below:
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