Health insurance is one of the most important things you can buy. It’s also confusing and overwhelming, which means that people often figure it out too late or not at all.
If you choose to get health insurance through your employer , there are a few things to consider:
*Does my employer offer health insurance and what does it cover? What do I need to know about selecting a plan? *Can we afford this coverage? What might our costs be in the future if we opt out of this coverage, given our medical history and financial situation?
You should also think about how much risk you want to take on when buying health insurance . Just like car or home owners' policies, some plans offer more comprehensive protection, but they come with higher premiums. “Before you pick a plan, figure out what your needs are and what you can afford,” says Jonathan Wu, founder of the money-saving comparison
Here is a step by step guide to best health insurance plan :
Step 1: Know Your Tax Credits
If you’re going to be buying health insurance on your own for 2016 – whether through your state’s online marketplace or outside it – you need to know if you qualify for subsidies as well as which tax credit might save you the most money. If your income falls between 138% and 400% of the federal poverty level ($16,000 – $47,500 for an individual), there's a good chance you do.
The subsidy, which is also called the premium tax credit, can be applied to any plan you choose. But it's important to know that not all plans are created equal when it comes to subsidies. Plans on the federal exchange are categorized into four levels: bronze, silver, gold and platinum. The more expensive the premium, the higher the metal level.
Your subsidy is based on the cost of the second-cheapest silver plan in your area . That’s why it’s important to compare premiums for all plans available to you before deciding which one to buy.
“If you're thinking about buying a health plan outside the marketplace, make sure you in the cost of the subsidy,” says Wu. “Make sure you know what your out-of-pocket costs will be.”
Related: 5 Ways to Save on Health Insurance and Medical Bills in Retirement. Family Insurance: The Understanding, Benefits, and Tips for Choosing It
Step 2: Pick a Plan (or Two)
Once you find the health plan that best fits your budget and needs, it’s time to sign up. It can feel like enrolling for health insurance is like taking a test — but knowing these rules of the road should help you get through without too many mistakes.
When shopping around for plans outside of government exchanges, look at both monthly premiums as well as how much total cost sharing you have each year before allowing benefits from the policy to kick in. You may not think about this so much when you are young and healthy, but it will become more important as you get older and your health needs increase.
“If something happens and you have to go to the hospital, your out-of-pocket costs could easily be $10,000 or more,” warns Wu.
In addition, make sure to check if the plan's doctors are in-network. Out-of-network services can be much more expensive.
If you’re comfortable with your current doctor, make sure that he or she is in-network with the insurance company you’re considering. You don’t want any unpleasant surprises when it comes time to file a claim.
Step 3: Understand How Plans Compare
The bronze, silver, gold and platinum level labels on the health insurance exchanges are helpful, but they’re also complicated. This is largely because plans with higher premiums have lower cost sharing and vice versa.
To help you compare plans, Wu at ValueGenius created a tool that lets you compare health insurance premiums side by side to see how much you'll pay out-of-pocket for things like doctor visits, drugs or hospitalization. You can even enter your prescription history to get an idea of what your costs might be in the future should you find yourself unable to afford coverage.
“Know your expected healthcare needs,” says Wu. “What kind of plan do you want? How much risk are you willing to take?”
Related: 5 Ways to Save on Health Insurance and Medical Bills in Retirement
Step 4: Think Ahead
The best health insurance plan for you should be one that not only fits your budget today, but also over the course of your life. That means understanding how age can affect your expenses.
“We just naturally get sicker as we get older,” says Wu . “You want to think about what kind of premiums you'll face in old age.”
This can mean choosing a plan with high monthly premiums during your younger years so that it will pay off when you are older. Or it may be better to go with a less expensive plan now but then upgrade when you are older or if your health takes a turn for the worse. Either way, creating an insurance plan that you can afford all the way until retirement is key.
Step 5: How to Get Help
While health insurance websites like healthcare.gov provide lots of information, they’re not always user-friendly. If you want help choosing the best plan for your needs, consider seeking out an independent third party .
“One option is to see if there's a local agent who specializes in health insurance,” says Wu. “They may be able to save you time and money by showing you different plans.”
You can also talk to other people who have recently signed up for health care so that you get real-time feedback on how well each plan has worked for them. The more realistic information you get about how each plan will actually work for you, the more likely you will be to choose the best health insurance plan for your family.
In today’s world, choosing a health insurance plan that works for you and your family can feel like an overwhelming task. Use these five steps as a guide, and hopefully insurance doesn’t seem so complicated next time around.