"...as grandmothers used to say, "Better to pay the grocer than the doctor."
-- Michael Pollan
Food writer Michael Pollan and countless grandmothers are right: Ideally, we should tend to our health, and that should, in general, reduce our medical expenses. But life doesn't always unfold in ideal ways, and most of us will face healthcare costs in our lives.
Those costs are likely to be hefty, too. Our nation's healthcare costs recently topped $3 trillion, accounting for more than 17% of our gross domestic product (GDP). Per person, that's about $9,900, with much of it paid out of pocket. Given that average, and the fact that a course of some medications cost more than $100,000, health insurance is rather vital for most of us.
Don't buy health insurance blindly, though, as policies can vary widely in how well they'll serve you. Here are some critical things to know.
Figure out where you'll get your coverage
First off, give some thought to where you'll get your health insurance. If you're 65 or older, Medicare is probably your best bet. "Original" Medicare includes Part A (hospital coverage) and Part B (physician/medical insurance). Part A is free, and Part B costs most people just $134 per month this year. You're allowed to opt for a Medicare Advantage plan, sometimes referred to as Part C, instead of original Medicare, and some of those plans charge no premium at all.
Next, look to your employer or your spouse's (or domestic partner's) employer. This is generally a more affordable route to health insurance than other options, as employers typically pay a portion of the cost -- and sometimes a sizable portion. On average, in private industry and in state and local government, employers pay close to 70% of premiums, with workers paying about 30%. (Single workers tend to pay an even smaller percentage than those on family plans.)
The next best option is likely your local health-insurance exchange, created because of the Affordable Care Act (ACA, or Obamacare). A visit to Healthcare.gov can direct you to your local exchange.
The ACA appears to be in the process of being repealed and replaced by the present administration in Washington, but it's not gone yet. For now, it offers subsidies to keep policies affordable to those with limited means -- and more than 80% of people who enroll through the exchanges receive a subsidy to help them afford their premiums.
The ACA also requires all plans to offer certain minimum levels of coverage that are greater than what many plans offered in the past. In some circumstances, such as if you're quite young, a plan on your local exchange may even be more affordable than what your employer offers.
Compare your options
Next, whether you're choosing coverage within the Medicare realm, or from your employer's menu of options, or from what's available through your local exchange, you need to compare the available plans to see which will serve you best.
Don't make the mistake of just focusing on one factor, though. Choose the least expensive plan, for example, and you might end up paying more through a higher deductible and/or having to pay a higher percentage of costs incurred. Note that there are different kinds of plans, such as health maintenance organizations (HMOs) and preferred provider organizations (PPOs). An HMO will generally require you to stay within its network of service providers for most of your care, while a PPO will charge you less for seeing in-network providers, but will allow you to see out-of-network providers, too.
The best strategy is to spend a little time figuring out just what your needs are and what kind of healthcare expenses you're likely to face. For example, jot down all the doctors you see and want to keep seeing. Then find out which of the plans you're considering have them in-network, where it will cost you less to see them.
Make a list of the medications you take and what they'll cost under various plans. List services you expect to need, too, such as visits to mental health counselors. Then try to estimate how much each candidate plan will cost you. Don't be afraid of high-deductible plans. If you're not likely to spend a lot on healthcare, they offer a good way to keep costs down.
You might also consider some other aspects of various plans, such as whether they offer telemedicine visits (where you consult with healthcare professionals over the phone, or ideally, over a Skype-like video service), or coverage for smoking-cessation programs. Compare deductibles, and note, too, that some plans, such as Medicare Advantage plans, will offer a limit on what you'll pay out of pocket.
Follow the rules
Finally, familiarize yourself with the rules related to your plan. (Ideally, familiarize yourself with the rules of all candidate plans before you choose one.)
With Medicare, for example, it's critical to sign up on time, which is anytime within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow. If you're late, your part B premiums -- which cover medical services, but not hospital services -- can rise by 10% for each year that you were eligible for Medicare, but didn't enroll. (Fortunately, anyone receiving Social Security benefits when they're 65 will likely be enrolled in Medicare automatically.)
Both Medicare and private insurance plans have special enrollment periods each year, and during that time, you should be able to switch between available plans, such as switching from original Medicare to a Medicare Advantage plan, or vice versa, or switching from one employer-sponsored plan, or a healthcare exchange plan, to another. Find out when these periods are, and aim to reevaluate your options each year. Don't assume that the plan that's best for you today will be best next year, or in a few years.
Health insurance is critical for most of us, and we would all do well to choose the plans that serve us best, offering the most coverage for products and services we need at the most affordable cost.
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