This blog was updated in May of 2022
THERE ARE SEVERAL DECISIONS IN LIFE THAT CAN HAVE A LASTING AND SIGNIFICANT IMPACT ON OUR WELL-BEING, OUR LIVELIHOOD, AND OUR FINANCIAL SECURITY. PURCHASING HEALTH INSURANCE IS ONE OF THOSE DECISIONS. AND, WHILE NOT QUITE AS IMPORTANT AS GETTING MARRIED OR BUYING A HOME, IT CAN STILL BE OVERWHELMING.
If you are considering health, dental, and maybe vision insurance coverage for the first time, or you now find that you have to shop for your own coverage, understanding how to choose the best plans can be challenging.
And, while it is certainly possible to find and purchase your own health coverage, for example, it can be far easier to rely on the services of a reputable and experienced health insurance agent, like J.C. Lewis Insurance Services.
In addition to knowing and understanding the insurance industry from decades of experience, a reliable agent can help you understand the fundamental factors you should know when choosing health insurance, as well as dental and vision plans.
In fact, there are seven key factors to take into consideration when health insurance plans, as well those for dental insurance and vision insurance coverage.
7 KEY FACTORS IN CHOOSING INSURANCE
While there are probably dozens of questions and concerns when it comes to insurance coverage, when we are speaking specifically of health insurance, there are seven key factors that are the most relevant and essential.
If you are an employee, you may be offered a few choices by your company, comparing plans and health coverage might be relatively simple.
As an employer looking to offer coverage to employees, however, making a decision among all the dozens of providers and plans they offer is a much more involved often onerous task.
And for individuals who have no health coverage options with their employers or are self-employed, shopping for and deciding on the best medical coverage for themselves and possibly their families can be confusing and just as difficult.
Fortunately, the key factors one should consider when choosing and purchasing health insurance, along with dental and vision plans, the following items are the most essential:
1. PLAN TYPES
The U.S. health insurance industry is somewhat complex. In addition to more than a dozen major providers offering coverage in California alone, there are several plan types of health insurance coverage.
Of these, the most common are:
HMO – HEALTH MAINTENANCE ORGANIZATIONS
HMOs typically limit coverage to care providers working for or under contract with the HMO. These plans generally will not cover out-of-network care except in emergency situations or with approved out-of-network referrals in some cases. In addition, many HMOs require members to live or work in its service area to be eligible for coverage.
PPO- PREFERRED PROVIDER ORGANIZATIONS
Most PPOs contract with healthcare providers to create a network of participating providers. Unlike a typical HMO, you can make use of providers outside of the network, however, you pay less by using providers that are part of the plan’s contract network. Visiting healthcare providers and facilities outside of the network will incur higher fees.
EPO – EXCLUSIVE PROVIDER ORGANIZATIONS
An EPO is a type of health insurance plan that is often referred to as a “hybrid” plan and only covers the cost of services from doctors, specialists, and hospitals in its network. EPOs may or may not require referrals from a primary care physician and the premiums are typical higher than those for HMOs, but lower than most PPOs.
POS – POINT-OF-SERVICE
According to VeryWellHealth.com, POS plans resemble HMOs but are less restrictive in that you’re allowed, under certain circumstances, to get care out-of-network as you would with a PPO. Like HMOs, many POS plans require you to have a PCP referral for all care whether it’s in or out-of-network.
HDHP/HAS – HIGH-DEDUCTIBLE HEALTH PLANS AND HEALTH SAVINGS ACCOUNTS
HDHP plans have much higher deductibles than most traditional insurance plans, however, their monthly premiums are usually lower. This means that, in practice, any healthcare costs incurred will be higher with an HDHP until the deductible is reached.
An HDHP can be combined with an HSA, or health savings account. This account is used for tax-free funds for medical bills. Plans that are HSA-qualified must meet specific plan requirements set out by the IRS, but they are not restricted in terms of the type of managed care they use.
2. MONTHLY PREMIUMS
This is the amount you pay for your health insurance every month. In addition to your premium, you typically must pay other costs for your health care, including a deductible, copayments, and coinsurance – costs that are also known as “out-of-pocket expenses.”
For those individuals who qualify for subsidized coverage through the state’s health exchange marketplace, known as Covered California, it is possible for them to qualify for lower monthly premiums through tax credits.
3. OUT-OF-POCKET EXPENSES
These are expenses for health care that aren’t reimbursed by insurance. Out-of-pocket costs include copayments, deductibles, coinsurance for covered services plus costs for any other services that aren’t covered by a healthcare plan:
- CO-PAYMENTS: A fixed amount a member must pay for a covered health care service after the deductible is paid.
- DEDUCTIBLES: This is the amount that must be paid for covered health care services before an insurance plan starts to pay. After the deductible is paid, usually only copayments or coinsurance for covered services may be required and the insurance company pays the rest.
- CO-INSURANCE: The percentage of costs of a covered health care service a member pays after the deductible has been paid.
4. PRESCRIPTION DRUG COVERAGE
This coverage is the amount a health insurance or plan pays for prescription drugs and medications. Most plans offer some degree of coverage to help pay for prescription drugs and medications and all the plans included in Covered California cover prescription drugs.
This aspect of any health plan is considerably more important if you or a family member requires ongoing medications due to health issues.
5. HEALTH SAVINGS ACCOUNT (HSA) ELIGIBILITY
Most people, especially those with families, will be better served by more traditional health insurance plans such as HMOs or PPOs. However, certain individual may be able to save significant amounts of money over time by opting for an HSA.
According to an article from Investopedia,
“The main benefit of a health savings account (HSA) for many people is the ability to save on taxes. An HSA account is a tax-advantaged account, which means that holders of HSAs enjoy certain types of tax benefits. For example, you can claim a deduction on your tax return for your HSA contributions regardless of whether or not you itemize your deductions. You can also claim a tax deduction if someone other than your employer makes a contribution to your HSA.”
To be eligible for an HSA, you must meet the following requirements, as defined by the IRS:
- You must be covered under a qualifying high-deductible health plan (HDHP) on the first day of the month.
- You have no other health coverage except what is permitted by the IRS.
- You are not enrolled in Medicare, TRICARE, or TRICARE for Life.
- You can’t be claimed as a dependent on someone else’s tax return.
- You haven’t received Veterans Affairs (VA) benefits within the past three months, except for preventive care. If you have a disability rating from the VA, this exclusion doesn’t apply.
- You do not have a health care flexible spending account (FSA) or health reimbursement account (HRA). Alternative plan designs, such as a limited-purpose FSA or HRA, might be permitted.
6. PROVIDER NETWORK
An insurance plan’s network consists of the facilities, providers, and suppliers that the health insurer or plan has contracted with to provide various, covered health care services. The network of a particular plan is the basis for the terms “in-network” and “out-of-network” when referring to specific healthcare providers.
While some plans have relatively small networks and limited geographic coverage, others have networks that are nationwide and composed of multitudes of contracted participants.
7. ADDITIONAL BENEFITS
Aside from basic healthcare provisions, many plans work to provide additional benefits that may include such things as wellness programs, gym membership discounts, free counseling sessions, legal consultations, and intuitive online portals for tracking claims, making appointments, and even speaking with health care providers through video chat tools.
THE MOST IMPORTANT FACTOR IN CHOOSING HEALTH, DENTAL, AND VISION INSURANCE
Regardless of whether you are an individual who needs to purchase insurance for yourself or your family, or you’re a small employer wanting to offer group coverage options for your employees, unless you are already in the business, it is a complicated process.
What is unavoidable is the fact that there are a wide variety of choices and options when it comes to medical, dental, and vision coverage. And navigating through them can be difficult.
This is why working with an experienced and local health insurance agent like J.C. Lewis Insurance Service can be your best alternative.
According to one article,
“Only licensed agents can legally recommend specific plans for you based on your personal needs and budget. That’s because agents are specially trained and licensed by the state to help consumers.”
In addition, experienced agents can help both individuals and small business owners compare plan prices and coverage details, explain features or unfamiliar terms, discuss tax advantages, and even offer recommendations.
For individuals and families, an agent can help determine whether they qualify for insurance premiums subsidies available through Covered California.
In addition, an independent agent can advise clients regarding available choices of dental and vision insurance plans.
YOUR LOCAL RESOURCE FOR AN EXPERT CALIFORNIA HEALTH INSURANCE AGENT
J.C. Lewis Insurance is located in beautiful Santa Rosa in Sonoma County, near the heart of the wind country. We have been offering California health insurance plans only from leading health insurance carriers licensed to do business in California for more than four decades.
In addition to being expert health insurance agents and brokers, we are licensed and certified by each insurance carrier to offer coverage to individuals, families, and small group employers, as well as to seniors for Medicare supplemental and prescription drug plans.
Not every small business is required to offer health insurance options to employees, and if your employer does not provide health benefits, purchasing an individual or family plan may be the best option for you and you and your family.
If you are a small business employer and you do want to offer health insurance options for your employees, we are ready to help and to answer any questions you may have.
It is important, too, to note that in California health insurance plans are categorized as “on-exchange” versus “off-exchange.” This means that buying a plan “on exchange” refers to buying a plan directly through the state health insurance exchange, Covered California. Purchasing a plan “off-exchange” refers to enrolling in a plan directly through an insurance carrier.