How to choose the best health insurance plan for 2024

Open enrollment season is here, and millions of Americans are faced with the daunting task of picking a health insurance plan for the next year. Whether you get your coverage through your employer, the public marketplace, or Medicare, you need to understand some key terms and concepts that can affect your health care costs and benefits. Here are six health insurance terms you need to know as open enrollment starts.

Premiums

The premium is the amount you pay every month to participate in a health insurance plan. It is like the sticker price of the plan, and it does not depend on how much health care services you use. The average premium for an individual worker was $1,401 a year — or about $117 a month — in 2023, according to a survey on employer-sponsored health coverage from the Kaiser Family Foundation (KFF), a nonprofit. Families paid $6,575 a year, or $548 a month, on average.

How to choose the best health insurance plan for 2024
How to choose the best health insurance plan for 2024

However, low premiums do not necessarily mean good value. You may have to pay more out of pocket when you see a doctor or get a procedure, depending on the plan. You also need to consider other factors, such as the size of your employer, your location, and the type of plan you choose.

Deductibles

The deductible is the amount you have to pay for covered health care services before your insurance plan starts to pay. For example, if your deductible is $1,000, you have to pay the first $1,000 of your medical bills before your plan kicks in. The average deductible for an individual worker was $1,641 in 2023, according to KFF. For families, it was $3,655.

Deductibles can vary widely depending on the plan. Generally, plans with higher deductibles have lower premiums, and vice versa. However, some plans may have lower or no deductibles for certain services, such as preventive care or prescription drugs. You should check the details of your plan to see what services are subject to the deductible and what are not.

Co-payments and co-insurance

Co-payments and co-insurance are two types of cost-sharing that you have to pay after you meet your deductible. They are different ways of splitting the cost of health care services between you and your plan.

A co-payment is a fixed amount that you pay for a specific service or prescription. For example, you may have to pay $25 for a doctor visit or $10 for a generic drug. A co-insurance is a percentage of the cost that you pay for a service or prescription. For example, you may have to pay 20% of the cost of a hospital stay or a specialty drug.

The amount of co-payments and co-insurance can vary depending on the plan and the type of service or prescription. You should compare the cost-sharing requirements of different plans to see which one suits your needs and budget.

Out-of-pocket maximum

The out-of-pocket maximum is the most you have to pay for covered health care services in a year. It includes your deductible, co-payments, and co-insurance, but not your premiums. Once you reach your out-of-pocket maximum, your plan pays 100% of the cost of covered services for the rest of the year.

The out-of-pocket maximum can protect you from high medical bills in case of a serious illness or injury. However, it does not apply to services that are not covered by your plan, such as cosmetic surgery or out-of-network providers. You should check what services are covered by your plan and what are not before you sign up.

The average out-of-pocket maximum for an individual worker was $4,326 in 2023, according to KFF. For families, it was $8,352.

Network

The network is the group of health care providers that have contracted with your plan to provide services at discounted rates. It may include doctors, hospitals, pharmacies, labs, and other facilities. You usually pay less when you use providers in your network than when you use providers outside your network.

Different plans may have different types of networks. Some plans may have a narrow network that only includes a limited number of providers in a specific area. Other plans may have a broad network that includes many providers across the country. Some plans may have no network at all and allow you to choose any provider you want.

You should check if your preferred providers are in your plan’s network before you enroll. You should also check if there are any restrictions or requirements for using out-of-network providers, such as prior authorization or higher cost-sharing.

Types of plans

There are many types of health insurance plans available in the market, each with its own features and benefits. Some common types are:

  • Health maintenance organization (HMO) plans: These plans require you to use providers in their network and get referrals from your primary care doctor to see specialists.
  • Preferred provider organization (PPO) plans: These plans allow you to use providers in or out of their network, but you pay less when you use in-network providers. You do not need referrals to see specialists.
  • Exclusive provider organization (EPO) plans: These plans only cover services from providers in their network, except for emergencies. You do not need referrals to see specialists.
  • Point of service (POS) plans: These plans combine features of HMO and PPO plans. You need referrals to see specialists, but you can use providers in or out of their network, with different cost-sharing levels.
  • High-deductible health plan (HDHP) with health savings account (HSA): These plans have higher deductibles and lower premiums than other plans. They also allow you to save money in a tax-advantaged account that you can use to pay for qualified medical expenses.

You should compare the features and benefits of different types of plans to see which one best fits your health care needs and preferences.

Choosing a health insurance plan can be challenging, but it is an important decision that can affect your health and finances. You should take the time to understand the terms and concepts that are involved in health insurance and compare the options that are available to you. By doing so, you can find the best plan for 2024.

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