How Do I Choose a Health Insurance Plan?

When switching to a new insurance plan, there are a lot of factors to consider. On top of that, there’s often a limited window of time to make selections, and choosing the right one out of a list of many options can feel overwhelming.

Still, finding affordable coverage — even with the network of healthcare providers and hospitals you already use — is possible with the right know-how.

The type of health insurance you qualify for will likely depend on a number of criteria, including your age, current health, work status, and income level.

If you’re 65 years or older, you likely qualify for Medicare, a federally run health insurance program that covers much of your healthcare costs.

If you’re younger than 65 and are employed (or your spouse is employed), the employer will likely provide you with preselected health insurance options; an HR representative may provide you with the details, including the coverage options, premiums, out-of-pocket costs, and when the enrollment window closes.

“Employer-based coverage and Medicaid may not give a ton of options, but the Marketplace can be a bewildering experience,” says Sabrina Corlette, a research professor and the founder and codirector of the Center on Health Insurance Reforms at Georgetown University in Washington, DC. “On average, there are about 120 plan choices, depending on where you live.”

You can also look for plans through a licensed insurance broker, but “you need to be careful about searching that way,” says Christen Linke Young, a visiting fellow with Brookings Institution’s Center on Health Policy in Washington, DC. “Some of them have relationships with the Marketplace, but they can also sell you unregulated health insurance that’s not subject to federal rules.”

If you decide to use a broker, make sure you use one that's licensed in your state. You can find a licensed broker through HealthCare.gov. Ask your broker if the plans you’re considering meet the federal requirements.

Cost is a big consideration, but it’s equally important to look for a plan that will cover what you need as well as what the rest of your family needs, if there are multiple people on your plan. This includes any ongoing healthcare treatment you’re currently receiving as well as any prescription medication you may be taking.

“If you take one particular medication to treat, say, your blood clots, there are a couple of different meds that are used for that,” says Young. “Start out by considering a plan that you know will cover it.”

If no plans sync up with your current roster of doctors, ask family and friends for recommendations for providers they trust, and look for policies where those healthcare professionals will be available to you.

• Preferred Provider Organizations (PPOs) You pay less if you use network providers, but for an additional cost, you can use healthcare professionals and facilities outside of the network without a referral. PPOs can be either high- or low-deductible plans.
• Point-of-Service (POS) Plans You pay less if you use in-network healthcare providers and medical facilities, and you’re required to get referrals from your primary care doctor to go to specialists. These typically have lower deductibles and higher monthly premiums.
• Health Maintenance Organizations (HMOs) These budget-friendly plans typically limit care to doctors contracted with the HMO and only cover out-of-network care in case of an emergency. You may also need to live or work in the HMO’s service area to qualify for the plan.
• Exclusive Provider Organizations (EPOs) An EPO is a combination of an HMO and a PPO. You can see any network provider without a referral, but you will likely have to pay the full cost of an out-of-network visit.
• High Deductible Health Plan (HDHP) and a Health Savings Account (HSA) This plan is typically offered through employer plans but can also be purchased on the individual market. An HDHP has low premiums, but higher out-of-pocket costs. The employer typically pairs this with an HSA account to help you cover some or all of your deductible. You can also deposit pre-tax dollars in your HSA to cover medical expenses. An HDHP can be an HMO, Pos, PPO, or EPO.

The first step is to assess your needs, including your age, health status, current medications, as well as those of any other family members who will be covered by the plan. Corlette says you also need to know your risk tolerance.

“Some people feel very comfortable paying as low of a premium as possible,” she says. “But they may get hit with a high deductible. Other people will want to pay more each month knowing if they do get sick, they won’t be hit with a massive bill.”

Once you’ve narrowed down the list of options, it’s time to dig into the details about what each of the plans will cost.

“When you’re shopping for health insurance, there are two kinds of costs,” says Young. “One is the monthly premium, and the other is cost sharing, such as deductibles and copays. It’s generally true that plans with lower premiums have higher cost sharing. Healthier people who don’t use a lot of medical services will find they’re better off with lower-premium plans that aren’t as generous, and people who have more medical expenses will want a low deductible health plan.”

“Even if you’re paying the lowest premium, there will still be a cap,” she says. “At the end of the day, you’re protected, so the decision of which plan to choose has less consequence than maybe it used to.”

There is, however, a big asterisk here: The out-of-pocket maximum usually only counts toward in-network care, says Corlette, so if you go out of network, you may have to foot the entire cost of that bill.

If you have an employer-provided plan, you will be notified when the open enrollment period begins, which is typically in the fall. The open enrollment period for plans available on HealthCare.gov is typically November 1 through December 15.

“You can’t change your health insurance on a dime,” says Corlette, so making the right plan decision the first time around is important.

• There are many factors to consider when choosing a health insurance plan, such as your age, your family’s needs, and your income.
• There are several different types of health insurance plans available; these range from low- to high-deductible plans and low- to high-premium plans.
• Pay attention to the specifics of a plan before you make a selection. If possible, choose a plan that includes the doctors you already use in their network of providers.
• Plans can typically only be changed during an open enrollment period, but a qualifying life event like a marriage, divorce, or the birth of a child will let you enroll in a plan outside of that window of time.