How To Select Health Insurance Based On Cost-sharing

The high cost of health care in today's US economy, coupled with the certainty that sooner or later you or a family member are going to need serious health care services, makes it particularly crucial to choose your health insurance policy wisely.

​There are many pitfalls to avoid in selecting a policy, and in selecting an insurer, and the complexity of insurance plans can make the process difficult to the uninitiated.

An experienced, professional health insurance agent can help you wade through the details of specific plan options and find the one that best fits your situation. But here below, we can look briefly at how cost-sharing should impact your choice.

How Basic Cost-sharing Works With Health Insurance
There is no health insurance policy out there that will simply pay for any and all health care expenses you might incur. The risk to insurers would be too great, so all insurers offer policies based on some sort of cost-sharing scheme.

The two basic ways costs are shared are through copayments and coinsurance. A copay is a fixed dollar amount you have to pay for a specific type of medical service, while the insurer takes care of the rest.

Coinsurance refers to the percentage of a medical bill the insured has to pay. Typically, the insurer pays 80% or so, while the insured pays the remaining 20%.

However, almost all insurance policies will require that you pay an annual deductible before the insurer will begin to pay out. So the 80% mentioned above is only paid for expenses above and beyond the stated deductible.

A typical deductible might be around $3,000 in today’s market, but you can opt for higher or lower deductible plans. The monthly premiums will usually go up as the deductible goes down.

Paying For Health Insurance And For What It Doesn't Pay For
There is no way to 100% know what the next year may hold for you and yours health-wise. All you can do is make an educated guess based on your current health condition and on how much you have spent on medical bills in the years (and years) preceding.

The basic strategy to use is this:

• If you are relatively healthy and don't expect big health expenses anytime soon, go with a high-deductible plan to save on the premiums.
• If you expect high medical bills in the year ahead, or if your health is not all you'd like it to be, opt for a lower deductible plan because you are more likely to spend above you deductible anyway - which is when the insurance starts to pay.

Selecting health insurance is a matter of calculated risk, just like all other insurance is. And both insurer and insured are making these kinds of judgment calls, because they have to.

But besides choosing a health plan you can afford and that will likely save you money, you may also be able to defer health care costs through a Flexible Spending Account, which covers care traditional insurance does not; or through a Health Savings Account, which helps pays for medical expenses with high-deductible plans (so you can reduce out of pocket costs even if you don't reach your deductible that year).

There are many competing and complex factors that go into selecting your optimal health insurance plan. Contact Summerlin Benefits Consulting today for expert advice and guidance to help you make the best decision!