When choosing a health insurance plan, most people often pick one of the two options. They either choose the cheapest plan because they believe it will save them some bucks. Or they purchase the most expensive plan because they are too afraid of losing some coverage benefits. They often overlook the possibility of an affordable insurance plan that provides effective health coverage.
In this blog post, we will explain why it is a bad idea to choose the cheapest plan for health coverage. We will also walk you through all the out-of-pocket payments to help you choose the most cost-effective health insurance plan for your needs.
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Why Is It A Bad Idea to Look for The Cheapest Plan?
If you aim to save some money on health insurance coverage, purchasing the cheapest plan can be a risky act. Although you will save a few bucks upfront on your premiums, you will need to brace yourself for the costs of any medical expenses that are not covered by the plan. Here is how an inexpensive plan can be bad for you.
High out-of-pocket costs:
When looking for an insurance plan, many people often make up their minds based on the annual premiums they have to pay for coverage. But the costs of medical bills that aren’t covered by the plan and other out-of-pocket expenses could also be substantial. Below is a brief of the expenses associated with health insurance plans.
- A health deductible is the amount of money paid by a policyholder for covered health care before your insurance plan begins to pay. For instance, if you buy an insurance plan with a $1,000 deductible, you will be responsible for paying the $1,000 before the insurance kicks in. In general, if your plan has a lower monthly premium, you will likely have a higher deductible.
- Copay: A copay, or copayment, is a fixed amount of money paid by the insured for a covered healthcare service. It is usually a small portion of the service’s cost, which is meant to prevent people from seeking unnecessary medical care. Setting up copayment is a tricky act because you have to find a balance that won’t surge medical expenses or alternatively render them useless.
- Coinsurance is a portion of costs, often a fixed percentage, that the policyholder pays for covered healthcare services after meeting the deductible. Generally, if a plan has an 80/20 coinsurance clause, the company will be responsible for paying 80 percent of the medical care costs. The remaining 20 percent of expenses will be paid for out of your pocket.
- Out-of-pocket maximum: Another vital feature of a health insurance policy is the out-of-pocket maximum. It is the maximum amount that a policyholder can pay for covered healthcare expenses in a given year. Once you reach this limit, the insurance company will pay 100 percent of the healthcare costs for the rest of the year.
Cheaper plans often limit the insured person to a limited network of medical practitioners. So, the policyholders can’t just visit any medical services provider and expect the insurer to pay for them. You will be required to stick to the doctors or hospitals that come within the plan’s network. If you want to go to a healthcare provider outside the network, you have to pay out of pocket for the services.
Failing to purchase a qualified health insurance plan puts you at risk of paying penalty taxes. The move was implemented to make people purchase health insurance plans, but some still feel they do not need any health coverage.
No one anticipates to have a major health episode, but once it hits, a cheap insurance plan appears useless to cover the expenses. Many cheaper plans do not cover pre-existing or chronic conditions.
You will also see prescription drugs listed under the benefits column of a cheap plan. But once you read the details, you will often notice that they either require a discount car or only cover inpatient prescription drugs. Hence, cheap health insurance plans become useless in times when you need them the most.
Choosing an Affordable Health Insurance Plan:
Health insurance plans should not be picked based on the monthly premiums alone. Instead, you should gather information about the benefits offered by various plans and choose the one that offers affordable health coverage. Estimate all the out-of-pocket medical expenses and anticipate any unplanned medical expenses for the plan year. Make sure that the plan covers regular and necessary care, including prescriptions and visits to specialist doctors. Also, make sure that your preferred doctor or hospital is listed within the plan’s network. Compare various plans based on the annual premiums, benefits, in-network facilities, and additional expenses before buying an insurance plan.