How to Buy Health Insurance
Health insurance in the US has undergone a massive overhaul. Before President Barack Obama’s Affordable Care Act of 2010 (also called “Obamacare” and ACA), health insurance was not standardized. Every insurer offered different benefits and prices, as they saw fit.
Also, before the ACA, health insurance companies had the ability to decline your application if you had pre-existing conditions, including pregnancy.
That’s all changed now. As you move forward in your mission to buy health insurance, know that:
- You can no longer be denied health insurance coverage for a pre-existing condition.
- All health insurance providers must offer the same basic packages.
- However, insurers have the freedom to set the prices for those packages.
This article will help you understand the process of buying health insurance. We’ll cover important steps you should take, the different types of health insurance on the market, and special considerations. Before we get any further, know that if you have a favorite doctor, you should talk to them before switching insurance.
Talk to Your Doctor Before You Buy Health Insurance
There are different types of health insurance, and hundreds of regional networks. Your preferred physician might only work with one or two insurers. If you want to keep a relationship with your favorite doctor, hospital or medical team, call them before you change health insurance plans.
Insurance Terms to Know
Preparing to buy health insurance, there are a few words you should know:
- Premium – the monthly bill you’ll pay for health insurance.
- Co-pay – a small payment you’ll pay to providers, ranging anywhere from $5 to $50. You’ll also pay a co-pay for most prescription drugs.
- Deductible – a total, yearly amount that you will need to pay before insurance pays for part of your care.
Now, let’s think about the different types of insurance.
Different Types of Health Insurance
The most common types of health insurance are HMO, PPO, POS and EPO.
|Health Maintenance Organization (HMO)|
|Preferred Provider Organization (PPO)|
|Point of Service Plan (POS)|
|Exclusive Provider Organization (EPO)|
Now, let’s consider the four tiers of health insurance. They’re named after precious metals: Bronze, Silver, Gold and Platinum. Every health insurance provider must offer these same plans, and they all include coverage for pregnancy and mental health.
The 4 Metal Tiers of Health Insurance
The metal tiers of health insurance describe how the insurer and insured will split the costs for covered and approved services. These levels only refer to costs, not to quality of care. A patient with a Bronze plan will still receive the same quality of care as a patient with a Platinum plan.
|Metal Tier||Insurer Pays||Your Co-pay|
Looking at the plans above, it makes sense that a young, healthy person with no known medical conditions might prefer a Bronze plan to keep monthly costs down. An older individual, or someone with serious conditions, might choose to spend more on a Platinum plan – they know they will need lots of care. Young, growing families might prefer more expensive plan, because it will cover more of the costs associated with pregnancy and childbirth.
- We mentioned this above, but it bears repeating – insurers are free to set the price for every plan.
- A Bronze plan at Company A might cost $100 per month, but Company B can choose to charge $200 for the same plan.
Therefore, it makes sense to get quotes from a handful of health insurance providers before you commit to buy health insurance.
And, as with all things related to insurance and health, things can get a little more complicated.
Coming Soon to a Hospital Near You: Price Transparency for Patients
All practitioners and hospitals have a list of services, and prices they charge for those services vary.
For example, a series of five chest X rays might cost:
- $1,000 at Hospital A
- $2,000 at Hospital B
- $5,000 at Hospital C
Until recently, those prices were private between the providers and insurance companies. But President Donald Trump signed an executive order requiring healthcare providers to publish their rates. This is great news for the public, who will better informed about expensive medical bills before they happen.
Soon, you’ll be able to look at a doctor or hospital’s website, see the cost of a service and do the math (based on your insurance plan) to know how much you’ll pay. It also means hospitals and doctors will need to be a bit more competitive with their pricing, as patients will know beforehand whether those X rays will cost $1,000, $2,000 or $5,000.
Another key point for many people to consider when they buy health insurance is the medication coverage.
Health Insurance and Formularies
A formulary is a list of covered medications. Every insurer must cover certain types of common medication, though the medication itself may vary.
Put another way, every plan must cover a few antibiotics, a few pain management medications, a few versions of insulin, and so on.
This can be an important point for people with certain medical conditions or allergies to medicines. For instance, if you have diabetes and need a specific brand of insulin, Insurance Company A might cover it, while Insurance Company B might cover a different brand, or only pay for a generic version.
While generic and brand name medications are nearly identical in function, small differences in formula can make a big difference.
The same goes for people with allergies to some medications. Consider Penicillins, for instance. These widely-used antibiotics are prescribed against bacterial infections, but some people are allergic to them.
If you have a known condition or drug sensitivity, it’s important that your new health insurance will cover the right prescription.