Investing in health insurance is prioritizing yourself. You need to select health insurance that fits your current needs and be ready to adjust as your health and requirements evolve. The more you grasp the intricacies of health insurance, the better choices you can make for yourself and your family.

The bottom line is this: the health insurance that works best for you today might not be the same type of health insurance that would have worked best for you ten years ago and is unlikely to be the type of health insurance that will be best for you ten years in the future. What you may not realize is that health insurance is a vital component of a solid plan for your financial health as well as your physical health. Here’s what you need to know.

Understanding Health Insurance

Health insurance comes in many different shapes and sizes. There is likely a plan that is well-suited for every need. While many will debate the affordability of health insurance coverage, few will argue that you can’t live well or long without it. Because your health plays a pivotal role in your ability to provide for yourself and your family, it is also a crucial component of a well-rounded financial plan. In addition to safeguarding your physical health, health insurance protects your financial health while providing much-needed peace of mind in an increasingly uncertain world.

Choosing the Right Health Insurance

Because there are so many different types of health insurance, you may spend a little time exploring your options to determine which policy or coverage is best for you. These are some of the primary types of health insurance available to consumers today.

• HMO (Health Maintenance Organization): A plan where members pay a fixed monthly fee and must use health care providers in the network, usually requiring a primary care physician referral for specialist services.
• PPO (Preferred Provider Organization): A flexible plan where members pay less if they use providers from a specified network but can go outside the network for a higher fee.
• POS (Point of Service Plan): A hybrid plan that combines features of HMOs and PPOs; members choose a primary care physician but can go outside the network for specialist services with a referral, usually at a higher cost.
• EPO (Exclusive Provider Organization): A plan where members can use any doctor or specialist they want without a referral but must use providers within the network, or they pay all costs out-of-pocket.

Even within the different types of organizations or plans providing insurance coverage, there are differences in your expected costs and contributions that go beyond simple insurance premiums.

Costs Associated with Health Insurance

In addition to your monthly premiums, there are other costs associated with health insurance you need to be aware of. The following four terms are essential when comparing costs between different insurance products.

• Deductible. The amount of covered medical expenses you are responsible for paying before your insurance begins to make payments for your medical expenses.
• Copay. Flat rate you must pay for specific medical services – even after you’ve reached your deductible.
• Co-insurance. You're responsible for paying the percentage of medical expenses, typically 20 percent, once you’ve reached your deductible.
• Out-of-Pocket Maximum. The maximum “out of pocket” amount you might have to pay within a year for covered medical expenses.

Each policy has different numbers and amounts, so you must pay close attention when comparing policies from one company to the next.

Health Insurance and Life Stages

You may require more robust health insurance coverage at different life stages than others. For instance, women in their childbearing years might prefer to maximize their insurance policies and protection before getting pregnant or bringing a new baby into the world. If you’re facing retirement, you might be interested in choosing a plan that offers outstanding benefits as you age while shielding your finances from the rising healthcare and medical expenses you face. That is when terms like “high deductible health plan,” “flexible spending account,” and “health savings accounts” take on greater importance for the sake of your financial and natural health.

Special Health Insurance Considerations

There are many considerations to keep in mind when choosing health insurance. Each one can profoundly impact the type of coverage that is best for you. Some of the primary considerations include the following:

• Your age.
• Your marital and family status.
• The number of people depending on you for financial support.
• The age of your children (if you have them).
• Your current state of health.
• The amount you currently spend each year on health care.
• Anticipated health needs for the coming year.

The more honest you are with yourself when asking these questions, the wiser choices you will make when buying health insurance to meet your needs and protect yourself and your family from various financial and health shakeups.

Regular Reviews and Updating of Health Insurance

In addition to choosing the best policy for your needs, it is equally essential to constantly review your health insurance coverage and make changes each year in anticipation of your changing health needs. For instance, if you’re retiring within the next year, you may consider increasing your coverage to account for shifting health needs as retirement looms. Most employer-sponsored and government health insurance plans have a period of open enrollment each year, during which you can make changes for the coming year or elect to continue your current level of protection. Use this time wisely to explore your options and ensure you do not go without this essential insurance protection.

Takeaways

Health insurance may appear confusing at first glance. It doesn’t need to be. Evaluating your needs, doing your homework, and asking the right questions can help you save time and money while getting the best health insurance protection your budget can afford.