Depending on the choices you have, choosing a healthcare plan can be frustrating – with different plans that have different structures and costs, how will you know which one is best for you and your family?
Start with any tools your employer offers
Your benefit provider may offer access to tools that help with this decision, so check for that as a first step for a more personalized answer based on the plan options available to you. It may be some type of quiz or interactive process that asks you to make a rough prediction of your anticipated healthcare needs – if you have a tool like that, definitely start there. Doing so won’t commit you to a particular plan, but it can help you narrow the options based on your answers.
Beyond using the decision support tools that may be offered, there are a few key things to consider. Here’s how to choose.
It’s all about balance
Big picture, choosing the best plan for you and your family comes down to whichever plan balances your personal healthcare needs with care that you can afford – no one wants to find themselves underinsured, but lots of people end up over-insuring. In some cases, that’s intentional – lots of people tell us they’d rather know they are covered just in case, and we can’t argue with that if you know the trade-offs you’re making. If instead you’re trying to find the best value without overpaying, it may require a little more legwork.
What are the premiums?
Before you start comparing the details of each plan, make sure you factor in this cost, which is the one thing you can count on spending no matter what for your healthcare. It can be tempting to choose the lowest premium, and if you expect to use your plan very little beyond preventive care services (which are covered 100% under most plans), then that may be all you need to consider.
If you think there’s any chance you’ll need to use your healthcare, then keep looking beyond the premium.
How does the coverage differ under each plan?
Make sure the plan you choose actually covers your needs. If you want to keep your primary doctor and other providers, make sure they are in-network so you don’t end up paying more for their services. See the extent to which any procedures or prescription drugs you’re expecting to need over the next year are covered as well.
A few more things to consider:
- If you or a dependent have chronic health issues and one spouse has access to a plan with lower deductibles and co-pays, make sure that child or spouse is on that plan.
- If you have traditionally had your entire family on one plan but both spouses have health coverage available, you should start looking into whether your doctors and providers are in the networks of both plans. If so, see if it may make sense to go ahead and put the spouses on different plans. Even if your company isn’t charging a premium for “covered” spouses, it may be less expensive overall to be on different plans.
- As always, take a good look at any pending issues such as braces, lasik, etc. that are in your family’s future and plan accordingly.
How much might you have to pay out-of-pocket?
It’s important to compare the different ways you’ll share the costs of your care with your insurance company through co-pays, deductibles and coinsurance. You may also want to compare out of pocket maximums if you anticipate large expenses for the year.
Is there an HSA option?
If you’re looking for a healthcare option that also offers the ability to save for future medical expenses, even into retirement, you may want to pay special attention to any HSA-eligible plans. This article goes into the details of how these aspects work.
Why give Health Savings Accounts a look?
If your employer is contributing to your HSA, that’s free money that can help to offset your out-of-pocket costs since your employer is essentially putting some of that money into your pocket. (Your HSA is your money so you can take it with you when you leave or retire.) If you plan to contribute to the HSA, calculate how much you can save in taxes. (You can get the same tax benefit by contributing to an FSA for health expenses, but the contribution limits are lower and you probably won’t want to contribute as much since the FSA is mostly “use it or lose it.”)
A case study: how one mom chose her plan for her family
As a real-life example, one of our coaches worked with someone who was trying to decide between a traditional PPO plan with a $1,000 family deductible versus an HSA-eligible plan with a $2,600 family deductible. The coverages would have been similar for her, but she was concerned by potentially having to spend so much out-of-pocket to reach her deductible under the HSA plan.
When we factored in the premium difference, we found that the PPO plan premiums were an extra $49 a month or $588 a year. In addition, her employer was willing to contribute $2,000 to her HSA. So, by choosing the HSA-eligible plan, she would basically be saving $2,588, which turned out to be more than the difference in the deductibles. Even if she spent the whole $2,600, she’d still be ahead under the high deductible plan.
In addition, if she decided to contribute an additional $3,000 to her HSA, she would save another $720 in federal taxes at the 24% tax bracket (not including state taxes or the tax savings on any future earnings in the account).
Of course, your numbers will be different, and your decision may not be as simple based on other factors. The lesson here is that you need to consider all of the factors, not just the premiums and the deductibles.
Choosing the ideal plan
Choosing a healthcare plan is a highly personal decision and there’s no perfect way to go about the decision without a crystal ball to tell you how the year ahead will go. Definitely take advantage of any decision-support tools your employer is offering, then check that against other possible scenarios in your life.
There are things you can anticipate such as braces, ongoing treatments or childbirth, but even the best laid plans can go awry with your health. The ideal plan for you is the one that covers the most likely scenarios you and your family will encounter without paying too much for coverage you don’t need.