Health Insurance: Choosing the Plan That's Right for You
by Cynthia M. Johnson, MA
You may be buying insurance or choosing one that your company offers. Either way, you will need to know how much insurance you can afford, what amount you can pay out of pocket, and what services you need.
Common Points Among Plans
Most health plans will only cover the products and services they say are needed. This includes preventive care, medicine, and surgery. They usually don't cover cosmetic or other optional surgery, but this can sometimes be challenged. Most insurers will also not pay for experimental treatments.
Almost all plans require that patients pay part of the bill. This is called a co-payment. There is often a cap on how much you will need to pay in a year. But keep in mind that one injury or a severe or chronic illness can be costly.
The Types of Plans
There are so many health plans. It can be hard to pick one. Most of them fall into three types:
Indemnity or Fee-for-Service Plans
These plans let you pick any doctor or hospital you like. The insurer pays a percentage of what they consider usual and customary charges. If you choose a provider who charges more than the company’s limit, then you pay the rest.
You usually have to pay a deductible. For example, the first $300 of medical costs per year before the plan starts paying. There is also a yearly maximum amount you may need to pay for medical care.
Managed Care Plans
Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are managed care plans. They are often less expensive than fee-for-service plans, but they have a limited choice of doctors and hospitals. However, more and more providers are taking part in these plans and this increases choice.
Managed care plans may only pay for doctors, labs, clinics, and hospitals in theirs network. A co-payment is usually needed for each visit. The amount encourages members to use less expensive services. For example, the co-payment for a visit to a doctor’s office is less than a visit to the emergency room. Some plans require that you select a primary care doctor. This person will need to give you a referral before the plan will pay for you to see a specialist. Some will pay a percentage of visits to specialists outside the network, but the aim is to remain in network.
Health Savings Accounts (HSAs)
A health savings account (HSA) is a tax-exempt account that pays you back for certain medical expenses.
The account includes discounts, routine care, and co-payments. It depends on which package your employer offers. Unused money may roll over to the following year. It may revert to a traditional managed care with caps on out-of-pocket expenses if the fund is used up and after a deductible is met.
Questions to Ask
It is hard to know what type of care you will need in the future. But there are questions you can ask yourself to find the best plan:
Agency for Healthcare Research and Quality
US Department of Health and Human Services
The College of Family Physicians of Canada
Glossary. Agency for Healthcare Research and Quality website. Available at:
...(Click grey area to select URL)
Accessed October 15, 2021.
Health insurance and Obamacare terms. Health Insurance Resource Center website. Available at: https://www.healthinsurance.org/glossary. Accessed October 15, 2021.
Health savings accounts (HSAs). US Department of the Treasury website. Available at: https://www.treasury.gov/resource-center/faqs/Taxes/Pages/Health-Savings-Accounts.aspx. Accessed October 15, 2021.
Publication 969. Internal Revenue Service website. Available at: https://www.irs.gov/publications/p969#en_US_2012_publink1000204081. Accessed October 15, 2021.
Questions and answers about health insurance. Agency for Healthcare Research and Quality website. Available at: https://archive.ahrq.gov/consumer/insuranceqa. Accessed October 15, 2021.
Last reviewed October 2021 by EBSCO Medical Review Board
Last Updated: 10/15/2021
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