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Read This Before You Buy Health Insurance

By Dan Caplinger - May 21, 2016 at 9:01AM

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Get the simple tips you need to know to be a smarter healthcare shopper.

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Dealing with insurance is always complicated, and health insurance in particular can be almost incomprehensible for the average person. Yet whether you get health insurance coverage through your employer, an independent insurance provider, an Obamacare exchange, or a public program like Medicare Advantage, you need to be aware of the impact that your choices can have both financially and in terms of giving you the healthcare services you need. Below, you'll get some must-read tips on making the most of the opportunities you have.

Total cost is the key

It's tempting when you're shopping for health insurance coverage to focus almost entirely on the premium cost of the policies you're considering. For many people, even the least comprehensive policies out there carry considerable monthly premiums, making it even more difficult to consider anything but the lowest-cost options.

However, you need to remember that what you pay in premiums is just one part of your total healthcare costs. Copays, deductibles, and out-of-pocket maximums can vary greatly from policy to policy, and the health insurance with the costlier premiums often brings lower out-of-pocket costs when you actually need care.

If you don't expect to have many healthcare needs, then focusing almost exclusively on premium cost isn't a big mistake. For those who will tap their health insurance regularly, however, it's crucial to look beyond premium to consider coverage for specific situations that you're likely to face.

Don't take what someone gives you

Every year, you have the right to reconsider your health insurance coverage. Be sure to take advantage of that right. Often, if your healthcare needs change, the best policy to meet those needs will change as well.

In particular, if something happened to your old health insurance plan, be sure to look closely to make sure you didn't get automatically enrolled in a replacement without even realizing it. Insurers can automatically replace a discontinued coverage option with another policy in their lineup, even if it won't necessarily fit as well with your particular needs. Look closely and make sure any new policy keeps doing what your old one did.

Coordinate with your family

As hard as it can be to pick good coverage, it gets even harder when two spouses have options that could potentially cover either or both of them. Coordinating coverage gets particularly tricky when children are involved, because family coverage often integrates both a spouse and kids under one individual policy. Many employers, meanwhile, offer little or no incentive to workers to claim coverage under a spouse's plan at another company -- despite the huge savings that it can produce for the company.

The best thing to do is to weigh all your options and compare costs. Then, choose the path that will result in the lowest total healthcare expenses, including both premiums and out-of-pocket costs like copays and deductibles. You won't always be able to make a precise estimate, but an educated guess should get you close more often than not.

Get the doctor you want

One key aspect of modern health insurance is the type of network it offers. Health maintenance organizations, preferred provider organizations, point of service plans, and exclusive provider plans all have different rules governing whether you can choose the medical professionals you want to deliver your care. In some cases, coverage you might think looks attractive will turn out to be irrelevant because the doctor you want isn't part of that policy's available network. If a limited plan happens to include the professionals you want, on the other hand, then it can be an extremely cost-effective option to consider if it's available to you.

Find out about subsidies

If you get an Obamacare exchange-offered health insurance policy, you might qualify for a subsidy. Those who make up to four times the federal poverty level can qualify for subsidies, and those who make 250% of less of the poverty level can also get out-of-pocket cost-sharing assistance if they choose a Silver health plan. In many cases, subsidies can reduce your costs dramatically.

However, note that having qualifying coverage through work can present difficulties. Choosing an Obamacare policy instead of participating in your employer group health plan can make you ineligible for subsidies. That's the incentive that Obamacare created to keep workers in their plans, but it can present an additional headache for you in considering your options.

Getting the health insurance coverage you need is important. By reading these notes before you get your next health insurance, you should be able to avoid worst-case scenarios where it's almost impossible not to make a mistake.

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