Choosing health insurance is a complex proposition. Deductibles, co-payments, co-insurance, HMO, PPO, HSA…how do you even compare plans given the variables? This post is not for those that have a few options through their work that are only a few hundred dollars per month and low deductibles. This is for the millions of other individuals that must weigh the complex options that all seem horribly complex and costly.
Let’s start with the costs. For all plans there will be a monthly premium. That is the amount you pay no matter if you use the plan or not. Then there is the deductible. That is the amount you pay before the insurance even starts paying for anything. The there is co-insurance. This is how much you get to “participate” in the costs, usually as a percentage. There may be a max co-insurance so that is to be weighed with the deductible and premium. Generally, the higher the deductible and co-insurance, the lower the premium.
The way I look at things like health insurance is weighing the highest possible cost you would likely ever have to pay vs. your overall health and likelihood to use the insurance at all. If you are healthy and younger you may choose a higher deductible to reduce your premium. However, if you have a chronic issue or know you have upcoming health costs then a lower deductible may make sense. I recommend you look at the total, most likely cost for you and your family for a given year when comparing plans. For most of us, there aren’t that many options left so you may even consider thinking outside the box. Perhaps a health cost sharing program that isn’t truly insurance makes sense for your family. If you compare them to insurance, be sure to read the fine print on what they cover and when. They may not cover certain procedures or illnesses and could have time period of coverage minimum requirements for things.
Despite the generally high cost, health insurance is a necessary item for most people. An unexpected illness or chronic issue can be very costly and could lead you quickly into bankruptcy. This is not something most can self-insure against. Once you are financially independent you may be able to carry a policy that is low in premium and high in deductible though to help offset your minimum mandatory expenses. You may also consider consulting with a trusted insurance advisor to help you weigh the options.