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If you were insuring your car or your home, it would be easy to place a fixed value on the object insured and decide how much insurance to buy on that basis. But when you are protecting yourself against potential medical expenses, it's impossible to know for sure how much you and your family might use across the next 12 months.
That said, there are some good principles you can use to gauge your health insurance needs. Here are some basic steps to follow in choosing your next plan:
1. Calculate Your Past Annual Healthcare Expenses
Determine how much in total healthcare expenses (that an insurance policy would cover) you used in the previous year and across the last 5 years. This should give you a good idea of what to expect, on average - a "ballpark range" of what level of coverage to look for.
You need to do the same thing for each member of your family who would be covered by the same policy or by a separate policy. Add it all up to get your total household estimated healthcare needs, but you'll also need to reference the individual totals since many health insurance policies have individual (as well as total) deductibles or out of pocket maximums.
2. Adjust Estimates Based On Foreseeable Likely Needs
You may have noticed that some years you've had much higher health expenses than others. To some degree, this is unpredictable - as when an accidental injury or unexpected illness strikes. But, on the other hand, there are needs you can reasonably foresee as "more likely" during a particular year.
For example, you may plan on getting pregnant this year or be in a relationship where that's now a possibility. You may have taken on a new job where risks of an accident are higher or started to commute long distances on a busy freeway every day.
Or, you may have developed a condition toward the end of last year that is continuing into the next year and is almost certain to incur heavy medical bills. And you may have an ongoing prescription for expensive drugs. These, and other, factors must be taken into account to estimate costs for a particular year.
3. Estimate Your Financial Ability
If you had unlimited funds, you could buy a health plan that covered everything 100%; but then, if you had unlimited funds, you wouldn't need insurance to begin with. So you need to take stock of how much you can afford to pay in health insurance premiums in the year ahead.
If the "perfect" plan is out of reach, then at least secure the best plan you can afford. On the other hand, don't overpay for more coverage than you need - which is why we went through the first two steps above.
You might qualify for subsidies or for a group rate discount, so don't assume you can't get the insurance you want. Talk to an insurance agent to find the best plan that meets your needs and fits within your budget.
4. Consider Cost-sharing Arrangements
It's not enough to just look at premiums. You also have to consider the deductible(s), out of pocket maximums, copays, and coinsurance.
If you choose an ACA-compliant plan off the Marketplace, then you will need to consider the four "metal plan" types. Bronze pays 60% of covered costs, leaving you to pay a 40% coinsurance charge. This only starts after you've met your deductible, of course.
Silver pays 70%, gold 80%, and Platinum 90%. For the lower coinsurance rates at each level up, you have to pay a higher premium - but it may be worth it.
For more assistance in selecting your ideal health insurance plan, talk to an experienced agent at Summerlin Benefits Consulting today!