What to Look for When Buying Health Insurance

Purchasing a health insurance policy requires careful consideration and analysis to ensure the plan meets your needs and budget. With so many different types of policies available from several insurance carriers, it can be difficult to decipher the language used in policy contracts. By understanding the major aspects of health insurance plans, your search for appropriate coverage will take less time and create less stress.

Policy Type

• Health insurance plans come in a variety of types, with the vast majority built on a managed care platform. The managed care concept uses established groups of physicians and facilities to render medical services at pre-negotiated prices. Some policy types restrict payment of benefits only to providers within the network, while others contain provisions to pay for non-network services. Your freedom to seek consultations and treatment is also directly affected by the type of plan, as certain policy types require referrals from family physicians before visits to specialists are approved for payment. Plans with out-of-network coverage and the freedom to visit any doctor at any time carry much larger price tags.

Deductibles

• Many health insurance plans contain deductibles. These amounts tend to be larger lump sums that exist to reduce the regular monthly premium you pay for coverage. Deductibles represent the amount of money you must pay toward your own treatment before the insurance company begins paying benefits. It's important that your deductible does not exceed your emergency fund, so the stability of your financial situation is not threatened by overwhelming medical bills.

Prescription Benefits

• Most health insurance plans typically offer a choice of prescription drug benefits to suit your individual needs. Three-tiered plans have become common and serve to reduce the overall cost of the policy. Generic medications cost the least, popular brand-name drugs cost slightly more, and rarer brand-name drugs cost the most. Medications in this top tier, called "non-formulary" drugs, represent a potentially significant expense for both the customer and the insurance carrier. If you currently take a non-formulary prescription on a regular monthly basis, choose your coverage wisely to avoid excessive drug costs at the pharmacy.

Maximum Out-of-Pocket

• In an attempt to prevent you from catastrophic financial burdens, health insurance policies contain stop-loss figures representing the most money you can be obligated to pay for your care over the course of a year. These "maximum out-of-pocket" amounts differ from plan to plan, and include all deductibles. However, many plans do not add standard office co-pays or prescription drug costs to the maximum out-of-pocket calculations. Be sure your policy's maximum out-of-pocket figure is within your financial capabilities.

Network Size

• When buying health insurance, examine the carrier's network to check if your current physicians participate with the program. If they are not listed as in-network providers, you may have to purchase a more flexible plan that covers out-of-network treatment, or consider changing doctors. Additionally, the distribution of physicians in your geographic area should be large enough to include several specialists in every major field. This allows you to choose from several specialist providers and seek multiple opinions on an issue before deciding on a course of treatment.