The process of choosing a new medical plan for yourself or your family can feel like a daunting process, even for people who are well-versed in what the name of every plan feature means. It can be especially daunting if you read all of the fine print of your potential new policies before you begin narrowing down your options. While you should always read the fine print of any insurance policy before you officially enroll in it, narrowing down your options to just a few policies that offer the benefits most important to you before looking into every single detail of the plan can save you lots of time in the end. After narrowing down your policy options to those that have monthly fees you can afford, here are two important features to take note of and why.
1. Your Deductible
If you are new to choosing your own healthcare policy after your employer may have given you only one option for many years, then you may be under the false impression that all healthcare policy deductibles are relatively similar. That couldn't be further from the truth, and deductibles can range from $0 to $5,000 or even $10,000.
You have likely encountered the term deductible when choosing your auto insurance policies, and healthcare plan deductibles operate in a similar fashion: your health insurance company will not cover any medical costs you incur until you have paid the full deductible out-of-pocket. Some will cover check-ups at the doctor's office before you meet the deductible (although you will still have to pay the co-pay), but others do not.
What deductible is right for you? You must choose a policy with a monthly fee that fits into your budget, because if you cannot pay for your policy every month, then your insurance company will cancel your policy, and then whether the deductible is too high or two low won't even matter anymore. So first narrow down policies based on monthly rates you can afford, then see which of those policies have the lowest deductibles and good coinsurance rates.
2. The Coinsurance Rate
Be careful not to overlook a policy's coinsurance rate, even if it offers a low deductible and a low copay. Many people confuse copays and coinsurance rates, but copays are the flat fee you will typically have to pay out-of-pocket for each visit to the doctor's office or other medical facility. However, a copay does not cover the cost of any health tests or procedures above and beyond simple preventative care, so in the end, a good coinsurance rate could be considered more important for you than a low co-pay.
A coinsurance rate is actually the percentage of the cost of a medical procedure that you pay out-of-pocket, so a low coinsurance rate is better than a higher one. For example, if a policy's coinsurance rate is 20 percent, then you pay 20 percent of the cost of the procedure and your insurance company covers the additional 80 percent of the cost. (This is the average coinsurance rate in the US.)
Since consumers can become confused about whether a lower or higher coinsurance rate is better when this rate is expressed as a simple number (it can be easy to forget whether the number is the percentage the insurance company pays or that you pay), many list it in a percentage-to-percentage format, such as 20/80 and then make sure to explain exactly what the numbers mean to consumers.
If you are new to choosing your own health insurance policy or are just switching policies after many years, it can be all-too-easy to choose your policy based on the monthly fee and copay alone. However, it is also important to consider the deductible and coinsurance rate. These two features are very important to look for in a new insurance policy you are considering, and by eliminating plans that fit into your budget that have sky-high deductibles and/or high coinsurance rates before looking into the many other details of the plans, you can save time during the often-daunting process of choosing a new medical plan.
For more information and options, talk with an insurance company, such as Health Benefit Options.