You know the old saying, “The only things you can be sure of in this life are death and taxes.” Well, we think that should be revised to, “The only things you can be sure of in this life are death, taxes and rising health care costs …”
As health care costs continue to increase, choosing the right health insurance plan for you and your family is more important than ever. And due to how complicated the health care world has gotten, often times, choosing the right plan can feel like navigating a minefield. With a number of options available, the choice you make will affect your medical care coverage and your wallet.
Insurance should be part of an overall financial plan. After all, it is an important cost that should be considered both short-term and long-term. Talk with a financial advisor to see if he or she can advise or supply insurance coverage for you, keeping your services under one roof. Just make sure the financial advisor is working as a fiduciary, so you know he or she is working in your best interest and not trying to sell you insurance because of hefty commissions that will benefit them and not you.
Here are 4 of the most important considerations when selecting the right coverage for you and your family.
1. Type of Plan
Choosing a managed health care plan with a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) can help reduce costs. The plan sponsors negotiate reduced rates for their policyholders with hospitals, specialists and other service providers by including these providers in the network.
HMOs often have the lowest premiums. With an HMO, you must choose a Primary Care Physician (PCP) from within their network, you’ll need a referral from your PCP to see a specialist, and you won’t be covered for non-emergency out-of-network care.
PPOs offer more flexibility. A PPO will cover care outside the network, but you can save by choosing in-network care. Additionally, you won’t need a PCP or a referral to see a specialist.
Indemnity plans are a more traditional option. You can visit any doctor or specialist you choose with no referral or prior approval. This is the most flexible option, but these plans are more expensive and difficult to find. They may also require you to pay for the service upfront and submit a claim – something that may have a material effect on your bank balance.
2. Out-of-pocket Costs vs. Monthly Premium
When choosing a plan, consider the total cost to you. Besides the monthly premium you pay your insurer, you may also need to cover certain out-of-pocket costs before your insurer will cover the rest.
The deductible is how much you pay out-of-pocket on covered health services before your insurer pays anything. The higher your deductible, the lower your premium will be.
But that’s not all! You may also have co-payments or co-insurance. A co-payment is a flat fee you pay each time you visit your doctor or buy prescription medications. Co-insurance is a percentage of the remaining charges you pay after reaching your deductible. Your insurer then pays the remaining percentage.
3. Health/Marital Status
Reviewing your previous medical history will help you choose your plan. Consider whether you met your deductible in previous years, which specialists you saw and which medications you took.
If you’re in good health, a plan with a lower premium but higher out-of-pocket costs might suit you. However, if you’re already suffering from an illness, a plan with lower out-of-pocket costs might be more appropriate.
Upcoming life events should also inform your decision. You’ll need to ensure you’re covered for costs associated with any planned surgeries, pregnancy or marriage. Married couples may enroll in the same plan or separate plans, depending on their individual health status, whether employer-sponsored plans cover spouses or whether one spouse is eligible for Medicare or Medicaid.
4. Access to a Health Savings Account
Rising medical costs have led to the increased popularity of Health Savings Accounts (HSAs), which can help people with high-deductible insurance plans cover out-of-pocket health care costs.
In 2019, to be eligible for an HSA, you must have a high-deductible health insurance plan with a minimum annual deductible of $1,350 and maximum out-of-pocket costs of $6,750 for self-only coverage. Family plans must have a minimum deductible of $2,700 and maximum out-of-pocket costs of $13,500. Self-only policyholders can make up to $3,500 in tax-deductible contributions to an HSA, while family policyholders can contribute up to $7,000. Plus, in the year you turn age 55, you can contribute an additional $1,000.
Most employers that offer high-deductible health insurance plans have an HSA option, but if your employer doesn’t – or if you’re self-employed – you can open an HSA at a bank, brokerage firm or other provider.
As you can see, there are many options available and choosing one can be overwhelming. Working with a financial advisor can help you choose the best plan to suit your needs.
Gary Williams, CFP®, CRPC®, AIF® and Nicholas Ibello, CFP®, AIF® are Wealth Managers with Williams Asset Management. Williams Asset Management is located at 8850 Columbia 100 Parkway, Suite 204, Columbia, MD 21045. They offer advisory services as Investment Adviser Representatives of Commonwealth Financial Network®, a Registered Investment Adviser. Fixed insurance products and services offered by Williams Asset Management. For additional information about the services of Williams Asset Management, please call (410) 740-0220 or email at Info@WilliamsAsset.com. © Williams Asset Management. For more information about Williams Asset Management, please visit http://www.williamsassetmanagement.com/. ked0 Li
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