It’s time for annual health insurance enrollment and the choices you make now will impact your healthcare costs throughout 2018. But choosing the right health insurance can be a daunting task. HMOs, PPOs, deductibles, premiums, coinsurance—with so many options, each with their own fine print, it can be difficult to determine which plan is best for you.
A 2016 Aflac Open Enrollment Survey shows that 57% of people spent less than 30 minutes exploring their choices during their last open enrollment. Worse, a whopping 93% choose the same benefits year after year with little research. Blindly choosing a health plan can result in paying for more coverage than you need, or not buying enough coverage and getting stuck with expensive medical bills. As national healthcare costs continue to rise, it’s as critical as ever to choose a plan that meets your health and financial needs.
Here are a few quick tips to help you narrow down your options and find a plan that allows you to maintain the health coverage you need at a total cost that fits into your family budget.
Understanding your health and financial needs for the year can help you prioritize the benefits that are most important to you. For example, if you’re young, healthy, and not expecting any surgeries, you might consider a high deductible plan with low monthly premiums. On the other hand, if you’re expecting to have a baby in the upcoming year or planning a surgery, you may want a plan with a lower deductible.
When you consider your health needs for the year, here are some things to keep in mind:
A common method for comparing insurance plans is to look at the monthly cost (premium) and the amount you have to spend before insurance kicks in (deductible). To truly compare plans, however, you should dig a little deeper. Within each plan you’ll have co-payments, coinsurance, and out-of-pocket maximums. Try to examine these items with your annual health needs in mind to get a more accurate picture of your total healthcare costs. The plan with the lowest premium isn’t always the most cost efficient overall.
Staying in-network is one of the most effective ways to save on healthcare costs. Before you select an insurance plan, check if your primary care physician is in the plan’s network. If he or she is not, you’ll need to decide if you’d be willing to switch providers or find a plan with more flexibility. Also check to see which hospitals, pharmacies, and urgent care locations are in-network. Keep in mind that plans that allow more network flexibility, such as a PPO, can be more expensive. A narrow network plan will usually cost less but you must stay in-network to maximize your benefits.
If you regularly take certain medications, check the plan’s list of covered prescription drugs (known as the formulary). Each plan has a unique formulary of covered prescriptions, which is usually organized by tiers that explain your financial obligation for the medications. By selecting a plan that covers your regular medications, you can save money at the pharmacy. Ask your prescribing provider if the pharmacy can substitute the generic version of your medication, as it will cost less. And many plans now offer a discount for 90-day supplies by mail.
Health savings accounts (HSA) and flexible spending accounts (FSA) allow youto use pretax dollars for future medical costs. Generally, an HSA is available for individuals and families enrolled in high deductible plans. The plan lets you designate a certain amount of your paycheck to be funneled into the savings account pretax. The funds can then be used for any qualifying medical expense, from surgery to prescriptions to eyeglasses, and even over the counter medications. The funds also roll over year-to-year. An FSA essentially works the same way but is reserved for individuals and families enrolled in plans with a lower deductible. The key difference between the two is that you can’t contribute as much to an FSA ($2,500/year maximum) and the funds must be used by the end of the plan year or your forfeit the balance.