When it's time to choose your health insurance policy, you may feel overwhelmed by all of the information and materials you must sift through before you can make your
choice. The tips below will help you understand most health insurance options, so you can choose the best policy for you and your family.
Health Insurance Terminology. Some of the most common terms you may encounter while shopping for a health insurance policy include:
Premium - The amount you and/or your employer pay for your health insurance each month.
Deductible - The amount you need to pay toward your own healthcare expenses before your insurance benefits begin.
Out-of-pocket maximum - The maximum amount of money you will have to pay toward your healthcare expenses during the year. This limit includes your deductible, copays and coinsurance. However, it doesn't include your premiums.
Benefit year - A period of 12 months in which your health insurance benefits apply. At the end of this year, all of your deductibles and out-of-pocket maximums reset. This period isn't necessarily the same as a calendar year.
Copayment - A flat fee you must pay for certain medical services.
Coinsurance - The portion of healthcare expenses you owe after meeting your deductible. Coinsurance is usually calculated as a percentage.
Network - A group of doctors, hospitals and other facilities that have a contract with insurance companies to provide healthcare services at a discounted rate.
Health Maintenance Organization (HMO) - A health insurance structure that requires you to use specific healthcare providers.
Preferred Provider Organization (PPO) - A health insurance plan that allows you to receive services from both in-network and out-of-network providers. However, the plan pays more for in-network services.
Health Savings Account (HSA) - A savings account that allows you to put away pre-tax dollars that you can use to pay for your healthcare expenses. HSAs are often paired with high-deductible plans.
Rider - An option that allows you to expand your coverage for an additional premium.
Exclusion or limitation - Any condition or treatment that isn't covered by your insurance policy.
Tips for Comparing Options
A variety of different health insurance policies are available to meet the needs of different individuals and families. To find the policy that's best for you, you need to compare all of your options carefully.
- Consider costs versus benefits. Although it may be tempting to choose the policy with the lowest premium, this isn't necessarily the best decision. Policies with lower premiums typically provide less coverage than policies with higher premiums. Your goal should be to find a policy that provides the coverage you need while remaining affordable.
- Evaluate networks before choosing a policy. Different policies may have different providers in their HMO or PPO networks. Explore these networks to make sure that the providers you trust are included.
- Consult a professional if necessary. Understanding all of the complexities of health insurance can be difficult. If you aren't sure which policy you should select, consider talking to an agent who can help you understand how each policy will affect you and your family, both medically and financially.
