Choosing the Right Health Insurance

Financial Advice By: Carmen Wong Ulrich

Q: Whenever I have a job that offers health insurance, I definitely make sure to take it, but I have to admit that I don’t always understand what is actually being offered, I just know that health insurance is something that everyone needs to have.  Now that “Obamacare” recently launched, I’m just even more confused!  Is there a way that I can tell if I am getting the best coverage for the money that I’m paying with all of these different options now available?

No matter what age you are or even how healthy you are, life happens: accidents happen, illness happens.  Health insurance protects you from paying much—much—more out of pocket for health and medical needs than if you didn’t have insurance coverage.

Some employers offer health coverage as part of your benefits package, which can also include other benefits, such as 401k plans or disability insurance.  And coverage through your employer will most likely cost less than coverage you can buy on your own because employers are able to get lower rates as they pool together large groups of people.  The government now offers coverage (with uninsured Americans as their ‘pool’ of people) through Healthcare.gov though it still is most likely more expensive and restrictive than what you can get through an employer.

So, if your employer offers coverage, it’s a valuable benefit to sign up for and it’s usually through one overall provider who then offers various tiers of service.  Usually the tiers are split between:  1) the size of the deductible, 2) the ability to choose doctors/hospitals, 3) how much of the bill they’ll pay for you.

Essentially, the lower the deductible (say $2,000 vs. $5,000), plus the more choice you’d like to have with your network of doctors and providers and the more you’d like the insurer to pick up the bill (say 100% or 90% vs. 60%), the more you’ll pay monthly for coverage.  These choices make sense for someone who goes to the doctor often—for example, a pregnant mother with full family coverage—rather than a young, healthy, single adult who can afford to risk a much higher deductible and fewer choices for providers.

So when you’re shopping around with your employer’s coverage, think about what’s most important for you and do not be shy or lazy about scheduling time to talk to the plan administrators to answer your questions—they are there to help you.  And if you have to shop on your own at Healthcare.gov, anticipate spending some time with the sign-up process, but know that a couple of hours online or some minutes on the phone with someone to help you through the sign-up process can mean the difference between paying $250 a month, just in case, or tens of thousands of dollars should you not have coverage at all and you need medical care.

Consider health coverage as a protection of your finances now, as well as your plans for the future.  After all, health is wealth!

 

Carmen Wong Ulrich is a personal finance expert and author of “The Real Cost of Living.”

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