Choosing the Right Health Insurance Plan for Your Lifestyle

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(Photo : Marek Studzinski via Unsplash)

While the U.S. medical system is one of the most advanced in the world, accessing it can be costly. The average American family pays more than $1100 per month for health insurance coverage. 

Just over half of Americans receive health insurance as an employer-sponsored benefit. The other half of the country must obtain coverage on the open marketplace or through government programs like Medicare and Medicaid.

If you're considering a new insurance plan, or need to get coverage for the very first time, consider the following factors when making your decision. 

Your Medical Needs

Health insurance policies vary widely on the types of procedures they will cover. Under the Affordable Care Act, insurance companies are obligated to include a variety of preventive and routine services in their policy. 

This means that any insurance purchased through a state-managed exchange will cover recommended screenings, such as the Aptima HPV Assay for cervical cancer, pediatric care, and emergency hospitalizations. 

If you have a chronic or rare illness, you probably need access to multiple specialists and health providers. In this case, a plan that allows you to see any provider for a slightly higher co-pay may be the most suitable. 

Your Family Size

The smaller your family, the better able you are to predict your health insurance costs. For example, an individual purchasing insurance only for themselves will only need to take their risks into consideration. For this reason, many single people chose low-premium, high-deductible catastrophic plans and health savings accounts to cover their health care needs.

If your family includes dependents, you will need a more robust insurance plan. Most insurers charge a higher premium for each additional family member. As a result, a childfree couple will pay less than a single parent with four children. 

However, many companies will have a premium threshold. For example, the premium cost will increase until the fourth or fifth dependent. Any additional family members are covered at no extra cost. These thresholds usually don't apply to adult dependents, which include elderly parents or children over 18.

Your Budget

One of the trickiest parts of finding the right health insurance plan is understanding the actual cost. This is because there are different types of fees within a single policy. While most people know they must pay a monthly premium, they may be surprised by out-of-pocket costs like copays and deductibles. 

One way to compare costs is to imagine a best and worst-case scenario over a full year. In the best-case scenario, you only use your insurance to cover routine preventative care. In the worst-case scenario, you or one of your family members must be hospitalized for a few days.

Calculate the total out-of-pocket costs and add this amount to the yearly premium. If you qualify for any subsidies or discounts, factor them in. 

After you run the numbers, you will probably find that a low-tier policy is the cheapest under the best circumstances, but far more expensive than other tiers in the worst-case scenario. You will need to analyze which scenario is more plausible given your medical history, age, and other considerations. If you do go with a low-premium plan, consider also building a savings cushion to help cover the costs of an unexpected medical emergency. 

Your Coverage Needs

Even the most expensive health insurance plan will not cover every type of medical expense. For many years, insurance providers could refuse to cover costs associated with treating pre-existing conditions. 

While this practice was outlawed by the Affordable Care Act in 2014, most plans still do not cover dental or vision care.  If you need to see a dentist or eye specialist more than once a year, consider purchasing a separate insurance plan. 

People with chronic mental health conditions that require ongoing medication and in-patient treatment should also consider a supplemental plan. Although in-patient and outpatient treatments are among the essential areas insurers must cover, supplemental insurance can give policyholders more flexibility on where they seek treatment. 

Insurance plans can also vary widely on their prescription drug coverage. For example, some policies will only pay for generic drugs. Other insurers may deny prescriptions due to high deductibles. In these cases, pharmacists can recommend a cheaper alternative or prescription drug savings program.