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How to Comparison Shop Your Health Plan

Comparison shopping is important, especially for large purchases.

Health insurance is one of those purchases. It’s a monthly expense that offers valuable coverage when you get sick. Here are six steps to follow to make sure your comparison shopping is successful:

  1. Evaluate Your Budget
  2. Know Your Health Needs
  3. Start with the Health Insurance Marketplace
  4. Compare Premiums and Out-of-pocket Expenses
  5. Review Prescription Out-of-pocket Costs
  6. Check Each Plan’s Network

Evaluate Your Budget

Before you start comparison shopping for a health plan, take a good look at your budget.

  • How much have you spent on health insurance premiums in the past? Knowing how much you’re spending each month on premiums will help you have a baseline for your health insurance costs.
  • How has your income changed? If your income has changed recently, you may be more comfortable spending more or less each month on regular premiums.
  • How much are you comfortable spending on monthly premiums? Use what you’re spending currently on premiums as a starting point to determine the most you want to spend each month on health insurance premiums.
  • How are you planning to pay for copays or coinsurance? Monthly premiums need to easily fit into your monthly budget. You should also be setting aside funds regularly to cover any medical for prescriptions and medical services.

Answering these questions will help you understand your price range and what you want to spend on health care from the monthly premium to the typically less-predictable copays and coinsurance.

Know Your Health Needs

As you consider your budget, think about you and your family’s health needs.

  • How much did you use your health plan this year? Review the submitted claims and Explanation of Benefits (EOB) to get a clear picture of the health care services you received and their cost.
  • Did you receive mostly preventive care or other types of medical treatment? If you received mostly preventive care, you may not need to worry as much about out-of-pocket costs for medical treatment. If you receive other health care services and anticipate a recurring need, you’ll want to pay even more attention to out-of-pocket costs of a health plan.
  • How much did you spend on copays and coinsurance? Understanding these costs will give you a better sense of your out-of-pocket cost actuals.
  • What were your prescription costs? Prescription costs are usually handled separately from medical services on a health plan. If you take prescriptions regularly, you’ll want to understand these costs to better evaluate a health plan’s prescription coverage.
  • Do you anticipate using your health plan more or less this coming year? Health can be quite unpredictable. However, some things are predictable like regular follow-up for a health condition.

Understanding your health needs will help you determine what kind of health plan you need and evaluate plans for their cost-effectiveness.

Start with the Health Insurance Marketplace

The Health Insurance Marketplace lists plans with comprehensive coverage available in your state. Most states use HealthCare.gov. However, some states have their own websites. Plans listed on these marketplaces are eligible for income-based subsidies on premiums.

Beginning your search on the marketplace is a good place to start because you can find plans with comprehensive coverage and potentially save on monthly premiums.

Keep in mind that plans on the exchange are tiered based on how much responsibility you take for out-of-pocket costs. Bronze plans have the lowest premiums, but you’ll assume more responsibility for out-of-pocket costs. Silver and Gold plans are a little more balanced between monthly premiums and out-of-pocket costs. Platinum plans have high premiums and the lowest out-of-pocket costs of the tiers. Depending on how much you use your health plan, you may save money on out-of-pocket expenses by choosing a plan with higher premiums.

HealthCare.gov makes it easy to compare up to three health plans at a time online. This ability is beneficial if you’re looking for an on-exchange health plan. Other comparison sites make it easy to cast a wider net and compare on- and off-exchange health plans from different insurers online. These sites include HealthCare.com, Health Markets, and GoHealth.

Compare Premiums and Out-of Pocket Expenses

As you compare health plans, you need to compare the costs. The monthly premium must fit into your monthly budget, but you also need to evaluate the out-of-pocket expenses to understand the true cost of a health plan.

It’s impossible to get concrete estimates on cost from health insurers, but it’s worth asking if there are specific health services you receive regularly. Even if you can’t get hard numbers with these estimates on out-of-pocket expenses, look at the copay and coinsurance costs to get a sense of how much cost coverage your plan provides.

As you look at the cost-sharing features of each plan, remember that insurers negotiate lower rates with their network providers. This negotiation means that even if your provider tells you a specific cost, you’ll likely be charged a lower amount.

You also need to consider the deductible and out-of-pocket maximum of each health plan. Once you hit your deductible, the insurer will start covering more of your out-of-pocket costs. Once you reach your out-of-pocket max, the insurance company takes on more responsibility for your out-of-pocket medical expenses.

Getting a sense of your potential out-of-pocket costs alongside premium costs will help you determine which plans are most cost-effective for you.

Review Prescription Out-of-Pocket Costs

Some health plans have separate out-of-pocket maximums and deductibles for prescriptions. If you or your family have regular prescriptions, you need to review this section of your health plan.

Health plans have drug formularies that list what medications are covered on your plan and what tier they fall under. Check to make sure your regular prescriptions are listed on the plan’s formulary or if there’s a similar drug covered under your plan.

Once you know that your medications are covered, you need to look at the cost-sharing and ask the insurer for pricing estimates. The cost-sharing for your prescriptions is based on what tier they are assigned in the plan’s formulary. Some tiers have higher levels of cost-sharing than others.

Knowing what tier your regular medications fall under will help you predict costs.

Check Each Plan’s Networks

Once you’ve narrowed your options to the most cost-effective plans, look at the pharmacy and provider networks. If you already have a doctor or pharmacy you trust, make sure they’re included in the plan’s network.

If they’re not listed on a plans network, see if your plan offers out-of-network coverage. The out-of-pocket costs will usually be higher, but continuing care with your current doctor may be worth it for your peace of mind.

Understanding your budget and health needs will help you understand what you need from a health plan. Comparing plans by evaluating the full costs of a plan with the monthly premium and out-of-pocket costs will help you save money. As you review out-of-pocket costs, consider the copays, coinsurance, annual deductibles, and annual out-of-pocket limits.

Doing a careful comparison of plans will help you find a plan that meets your needs and is cost-effective. You’ll be able to save money while ensuring that you have good coverage.