Understanding Your Health Insurance Options

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Editor’s note: This year, the timeline for enrolling in health insurance under the Affordable Care Act begins November 1 and ends December 15. For more information, and to help others get covered, visit getamericacovered.org.

Nearly half of all millennials go without health insurance, usually because they cannot afford it. Yet medical bills are the number one cause of personal bankruptcy in the United States. Going without insurance is an expensive gamble.

The Open Enrollment period for the Health Insurance Marketplace–health insurance made available to the public through the Affordable Care Act–is open from November 1 – December 15 this year. You can get an affordable health plan to fit your unique needs, and you may even be eligible for a subsidy to reduce your costs

Alternatively, if your employer offers health insurance, you can pick a new plan now. But if you haven’t gone through the process before, reviewing your options can be overwhelming and confusing. Below, we break down the different aspects to consider so you better understand your options and potential costs.

Deductibles versus premiums

Deductibles and premiums are some of the most commonly discussed factors affecting your coverage, but many people do not understand what those terms mean.

Your premium is your monthly bill for your health insurance policy. It stays the same regardless or whether you went to the doctor, filled a prescription, or neither.

Your deductible is what you have to pay before the insurance company kicks in and helps.

If you want a low deductible, you will pay a higher premium. But if you opt for a high deductible to get a lower monthly bill, you will have to pay more of your own health care costs before the insurance company starts to pay up.

If you are relatively healthy, rarely go to the doctor, do not have many prescriptions, and are on a tight budget, a high deductible plan makes sense. But if you have ongoing medical needs, you may want to opt for a plan with a lower deductible.

Bronze or Platinum?

Similar to deductibles and premiums, on Healthcare.gov, there are four tiers of coverage: Bronze, Silver, Gold, and Platinum. The tiers refer to how much insurance covers versus how much you handle on your own. With the bronze plan, insurance companies pay just 60 percent of your costs. On the other side, with a platinum plan, you pay just 10 percent of your costs.

All of the options provide good levels of care; it’s up to you to decide how much you need to cover. If you have a lot of medical needs, opting for a higher tier may be a good idea.

Do you feel like you understand your health insurance plan?

PPO or HMO?

Most plans will have letters after their name like HMO or PPO. These acronyms refer to the network type of the plan.

With a health maintenance organization (HMO), you’re more limited. You can only see doctors within your network except in extreme emergencies. And if you need to see a specialist, you have to have a referral from your doctor before you can make an appointment.

When choosing between an HMO or a PPO, keep in mind that the premiums for an HMO plan are typically much cheaper than a PPO. If you know what doctors you like and that they are in your network, selecting an HMO can save you a lot of money. But if you do not have a primary care physician, or travel out of state often, a PPO may be worth the extra expense.

Figuring out the formulary

One of the most ignored aspects of choosing a health insurance plan is the formulary, the list of drugs your insurance company covers. But it can have a huge impact on your medical costs if you take any medications.

Some health plans will cover some medications, while others are not covered at all. And some companies will cover brand-name drugs, while others will only pay for generic medications. Depending on what prescriptions you take, the formulary can really impact how much you spend each month on your medications.

Review the formularies for potential plans before enrolling to ensure your medicine is covered. That will help you avoid surprises at the pharmacy.

Enrolling in a plan

Enrolling in a health insurance plan can be confusing, but getting coverage is an important step to protect your health and your finances. If you are having trouble finding a plan, you can get free assistance, either on the phone or in person. Visit Healthcare.gov to find a trained specialist near you, or ask your company’s human resources department for advice on particulars about employer-offered plans.