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Health Insurance Basics - Choosing Coverage

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Choosing a health insurance plan is not as straightforward as it should be. There is no way to know with absolute certainty what benefits the plan will cover or your out-of-pocket cost. There is also no way of knowing with certainty what all of your and your family's medical needs will be over 12 months. However, in addition to reading information to educate yourself about health insurance in general, there are tools and resources that make the medical plan comparison process a little easier:
But before tapping into these resources, take the time to learn and understand the basics. Reviewing our health insurance questions and answers below is a good place to start. Click on the tabs on the left side of the page.
Most of us would agree that it is important to have health insurance coverage. Very few of us can afford to pay hundreds, thousands, or tens of thousands for medical care if we become ill or are injured. The American health insurance system is a patchwork of various private and public options.

  • Private Coverage - Employer-provided, Individual Policy, Health Care Reform ACA Exchanges (federal and state)
  • Public Coverage - Medicaid, CHIP, Health Clinics

  1. Employer-provided (Group) - most Americans receive health insurance coverage from an employer (their own, a spouse's, or domestic partner's). Many employers pay a portion of the cost of coverage
  2. Individual Policy - if you are not eligible for employer-provided insurance, you can purchase coverage directly from the insurance company for you and your family. You are responsible for 100% of the cost
  3. Health Care Exchanges (federal and state) - The Affordable Care Act (aka Obamacare) allows individuals and small employers to purchase health insurance from a federal or state-managed Exchange. This is not government provided insurance like Medicaid and Medicare. You purchase individual private health insurance policies from the Exchange, and there are federal monetary subsidies available to help pay for coverage, dependent upon your annual income (Learn More)
  4. State/federal (Public) Insurance - low-income, disabled, and older adults may be eligible for state and federally-funded health insurance programs. Even if you work and your employer offers health insurance, you may be eligible for assistance in paying your portion of the monthly premium
You will never have complete information when the time comes to choose a health insurance plan. The plan summaries you receive will not list all the benefits the plan covers. Nor will it list every medical service subject to the plan deductible or coinsurance. Before deciding which health to enroll in:


  • Know your health status and medical care needs, as well as what you can truly afford, which may not necessarily be what you want to pay

  • Read all the available plan information

  • Review the plan exclusions - services the plan does not cover

  • Decide if you prefer to pay less in health insurance premiums versus paying more out-of-pocket in the form of deductible, coinsurance and co-pays

  • Decide if you want the option of going to providers outside of your plan's network, even if it means paying more out-of-pocket

  • Contact your HR department or insurance representative if you have questions about benefits for a specific condition (before you receive care)

  • Use a price transparency tool to estimate the cost of care (before you receive care)
Once you decide on the type of health insurance plan you want, you need to find a doctor. Ideally, you want to find a provider who contracts with your insurance plan. You will save money when you receive care from an "in-network" or "participating" provider versus going to a provider who is not in your plan. Out-of-network providers can charge whatever they want for their services and are not responsible for filing your claims. To find a doctor, dentist, or eye care professional:

  1. View your plan's online provider directory for providers in your area, some of these sites also include provider performance ratings

  2. Asks family and friends for recommendations

  3. Ask your former doctor to recommend a doctor (if you need a different type of doctor or are moving to a different area)

  4. Asks your insurer for help locating a doctor

  5. Use a "find a doctor" website like:


These sites include basic information about providers and medical facilities, like name and location. However, many of them also provide patient ratings and comments. Some even allow you to make appointments online… These sites are still being developed--some provide more patient comments than others.
Most people agree that health insurance information is confusing. Unfortunately, if you do not know the meaning of basic insurance terms, you will not know how your plan works. You will not know your financial responsibility for the benefits you receive.
There are quite a few health insurance terms; however, five terms you should truly understand the meaning of are:

  • co-payment or co-pay - The amount you must pay for medical services (for example, $25 copay…)
  • coinsurance - The amount you must pay for medical services (for example, 30% of the cost…)
  • deductible - The amount you must pay for medical services each year before your health insurance plan pays for any care (for example, you may have to cover the first $5,000 of your medical care costs before your health insurance pays anything). If you do not receive any medical care in a given year, you do not have to pay a deductible
  • out-of-pocket maximum (OOPM) - The maximum amount of money you pay for covered medical care services in a year. This does not apply to payments you make for services not covered by your health plan. Once you have met your OOPM, your health plan pays 100% of covered medical care expenses for the remainder of the plan year
  • premium - the amount you must pay every month for health insurance even if you do not receive any medical care services
Review our health insurance terms
directory for more insurance terms.
Choosing a health insurance plan is not something you do once and forget about. Life changes, and so will your health care needs.

You should review your health plan options at least once every 12 months and when you experience changes such as:

  1. Life status events:
    • birth or adoption of a child
    • marriage, domestic partnership, legal separation, and divorce
    • death of spouse or child
    • change in your or your spouse's employment status
    • change in your child's age or employment status
    (Review our life events checklist):

  2. Health changes - you should always consider your current health status when choosing a health plan. You want a health plan that will provide the maximum coverage for any health condition you have. And as the status of your health changes, so should your health insurance coverage

  3. Financial changes - medical care in America is too expensive to pay for without health insurance. However, you do not want to purchase more health insurance than you can comfortably afford, nor do you want to be in a situation where you have too little coverage.

    There are many options for financing health insurance based on your budget. For example, if you are generally healthy and do not anticipate many doctor visits, you may purchase a lower premium, high deductible health plan. If, on the other hand, you have a chronic disease such as diabetes, you may want to purchase a plan that has a mid-size premium but lower out-of-pocket cost.

  4. Stage of life changes - your health plan when you are young may not be what you need when you near retirement. Make sure your health plan changes as you move through the different stages of your life
Even if you work full-time, you may find private health insurance unaffordable. Fortunately, there are free and low-cost health insurance programs you may qualify for. Some of these programs provide financial assistance paying for the private insurance you already have, and others provide comprehensive health benefits based on whether you meet specific requirements.

These requirements may include employment status, income, other financial resources, age, health status, or whether you are single or have children.

Medicaid

One of the largest public health insurance programs in America is Medicaid.
  • Medicaid is administered by the state you live in and provides health insurance coverage to the low-income, elderly and disabled, and families and children
  • Each state has different rules regarding who can get Medicaid
  • Some state Medicaid programs help you pay the cost of private health insurance
  • If you do not have private health insurance, Medicaid offers comprehensive health insurance coverage that includes:

    • hospitalization
    • outpatient care
    • lab tests
    • mental health benefits
    • prescriptions drugs and more


  • Depending on your circumstances, there may be some out-of-pocket costs with Medicaid, such as small office visit copays
Medicaid is not just for the poor or unemployed. To determine if you qualify for Medicaid in your state, go to
medicaid.gov.

The Affordable Care Act funds states to extend Medicaid to those previously ineligible. However, many states elected not to extend Medicaid to these individuals for various reasons. Click here to track Medicaid expansion by state (compiled by statereforum.org)

CHIP

If you have children, they may qualify for health insurance under your state's
Children's Health Insurance Program (CHIP). CHIP is for families who make too much to qualify for Medicaid. Check out our state insurance page to find out the rules in your state and how to apply for coverage.

Community Health Centers

Another alternative for affordable health insurance is to use a free or low-cost Community Health Center (CHC). Community Health Centers can be privately or publicly owned, but their primary role is to provide care to underserved areas. Nurses, nurse practitioners, and general practitioners staff these centers. They provide various medical and dental care services for children and adults.
Locate a CHC.

THIS TOOL DOES NOT PROVIDE INSURANCE ADVICE. It is for general informational purposes and does not address individual circumstances.