If healthcare costs are a major source of worry for you, you're definitely not alone. Four in 10 adults throughout the United States have difficulty paying their health insurance deductibles, and almost 30% of Americans report having trouble paying medical bills, according to the Kaiser Family Foundation. In fact, nearly a quarter of Americans have skipped recommended healthcare for financial reasons.
As lawmakers grapple with fixing a broken healthcare system, everyday Americans just want to be able to pay for care. Buying the right insurance policy helps make that possible, but digging through the details of every policy available in order to find the best possible deal is a daunting task.
Fortunately, you can simplify the search by comparing five simple factors across all the policies you consider.
1. What is the premium?
The premium is the fixed monthly cost you pay for a health insurance policy. Under Obamacare, many people receive tax credits premiums if their estimated income is between 100% and 400% of the federal poverty level. If the American Health Care Act, a.k.a. Trumpcare, is passed to repeal and replace Obamacare, premium credits will still be available, but Trumpcare would calculate those credits differently.
When it comes to health insurance, as with most things, you get what you pay for. Insurance policies with minimal coverage will have lower premiums, while more comprehensive policies will have higher premiums. Don't assume the policy with the lowest premium is always the best deal. If you can pay a slightly higher premium to get more necessary healthcare services covered, this may lower your total costs.
2. What is the deductible?
A deductible is the amount you must spend on healthcare services in a given year before your insurance company will start covering them. While you must generally pay 100% of costs until you've met your deductible, some policies cover specific services even if your deductible isn't met. For example, an insurance policy may have a $1,000 deductible but offer a free annual exam.
Your policy specifies when your out-of-pocket healthcare expenses count toward meeting your deductible. If you have a $1,000 deductible and you pay $1,000 to a doctor who participates with your insurer for a test your insurance covers, then you've met your deductible. However, if you pay $1,000 for an elective procedure not covered by insurance, none of it would count toward your deductible.
Lower deductibles correspond to higher premiums and vice versa. If you can only afford a minimal premium and you don't expect to need much care, then you may prefer "catastrophic" insurance, which charges a low premium but has such a high deductible that the insurance only kicks in if you have an expensive health catastrophe.
3. How big is the network of doctors?
A health insurer will not necessarily pay for any care provided by any doctor. Insurance companies make deals with care providers: Those providers accept an insurer's terms and conditions for payments, and in return they become part of the insurer's "network."
Policyholders who want an insurer to pay the bills must typically get care from in-network doctors. Even policyholders paying out of pocket typically go to an in-network physician, so the entire payment to the doctor counts toward a deductible, and the doctor charges the patient a lower rate negotiated by the insurer.
Because you'll probably get your care from an in-network provider, the size of the network matters. You may want coverage for a top-notch children's hospital or a renowned cancer clinic, for example. An insurer may offer low premiums and a low deductible, but if its network doesn't include any quality healthcare providers within 50 miles of your home, then you should probably look elsewhere.
4. Is there any coverage for out-of-network care?
Sometimes you really need out-of-network care. If you require specialized assistance from an out-of-network doctor and don't want to get stuck with 100% of a massive bill, then you'll want an insurance policy that provides at least some coverage for out-of-network care.
Some insurers are more generous than others when it comes to paying out-of-network providers. Some plans pay nothing at all, some pay a small percentage of what the doctor charges, and some will only pay for out-of-network care in an emergency situation.
Don't assume you can avoid out-of-network care, no matter how careful you plan to be. There have been many cases in which people went to in-network hospitals and ended up with big bills because an anesthesiologist or some member of the care team wasn't part of the patient's insurance network. Having at least some coverage for out-of-network treatment shields you from this kind of unexpected expense.
5. What is the maximum out-of-pocket cost you'll have to pay?
An out-of-pocket maximum is the maximum amount you'll pay for covered services during a year. Once you reach this limit by spending on deductibles, co-pays, and coinsurance costs, your insurer pays 100% for the rest of the year. Premium payments don't count toward your out-of-pocket maximum, but all covered healthcare services do.
An out-of-pocket maximum is not the same as your deductible. Once you've met your deductible, you'll still be required to pay co-pays and coinsurance costs, which are determined by your policy. However, once you've reached your out-of-pocket maximum, you don't have to pay anything more for any covered services.
A low out-of-pocket maximum means you don't have to worry about surprise expenses, and you know the maximum you'll pay, so you can budget accordingly. If you expect to need lots of care, buying a policy with the lowest out-of-pocket maximum is often a wise budget move.
Ultimately, the choice comes down to whether you want to pay higher monthly premiums -- a fixed cost -- and pay less for care during the year, or pay a lower premium but assume more risk that you'll foot the bill for costly health services. Your health status, as well as your ability to pay premiums and come up with cash for unexpected expenses, will dictate which option is the right one.
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