Choosing the right health insurance policy is always a time-consuming and a somewhat confusing affair; especially if you've never done it before.

But as the old saying goes, "we all have to start somewhere". While options like an HMO (Health Maintenance Organization), a PPO (Preferred Provider Organization), an EPO (Exclusive Provider Organization), a POS (Point Of Service), and others may seem strange, it is a relatively straightforward process. You just need to keep a few key things in mind along the way.

Getting the Right Health Insurance: Your Guide

The most important thing to understand about purchasing health insurance as a first-time buyer is that you will need to shop around to find the best policy. That includes not only the best price, but also the best array of benefits as well.

Thanks to Obamacare or the ACA (Affordable Care Act), this has gotten easier to a degree. You can head to the Marketplace in your state and compare available policies right from your web browser. You can also compare what is available from private insurance companies in terms of medical coverage, typically from their website.

While doing so, one of the primary factors you'll obviously want to focus on is cost. What, exactly, determines the cost of the policy you're looking at? The first thing to know is that health insurance is regulated by the state where you live. This means the cost and offerings of a policy in, let’s say Nevada, will be different than what’s available for someone in New York. Another factor on cost will come down to the provider in question (Aetna, United Health, etc.). Sometimes your age will play a role. As an example, older people tend to use medical coverage more, making them more expensive to insure, thus raising the cost.

Most health plans, however, cover basic care like annual checkups, and some other items. The summary of benefits often gives an overview so you know before you buy. This summary often explains what items are covered by the plan, with you only paying the co-pays, versus larger things like surgery, where the deductible and co-pay both come into play.

Health Insurance policies have so many variables in terms of what you must have covered for your needs (such as covering the birth of a child, or managing a condition like asthma or seizures), and some items you may only use occasionally (perhaps seeing a specialist every once in a while).

Each policy will discuss what your deductible is (how much you have to pay before insurance pays). The higher the deductible, the lower your premium. But if you need major medical care and you have a high deductible, you will be required to pay the deductible before insurance kicks in.

Another thing to look at is co-insurance costs. All major health plans have contracts with various hospitals and doctors where they have an agreed upon amount the insurance will pay the provider for a service. On a lot of insurance policies, the insurance company has what’s called co-insurance (or as you may often hear it, a co-pay). This is often a percentage that you pay out-of-pocket for those agreed-upon contracted rates – you pay a portion, and the insurance company pays the rest. This co-pay is in addition to your deductible.

As an example, if your deductible is $3,000, and your co-insurance is 10%, and let’s say you need a surgery that will cost $10,000. You must pay the $3,000 to meet your deductible. Now $7,000 is still needed for the surgery. With your co-insurance being 10%, you need to pay an additional $700. Your total out-of-pocket for this surgery being $3,700, and the insurance will pay the remaining $6,300. As you can see, it’s important to factor in what deductible you’re willing to pay, and how much you can afford for co-insurance.

You'll also want to look into what supplementary benefits may be offered based on what you need. Some plans offer dental insurance, for example, but it may lead to a more expensive policy than if you had just purchased dental coverage elsewhere. The same is true of things like vision and even critical illness insurance.

Finally, as a first-time healthcare buyer, you'll want to be aware of the various plan types that are available when you buy private health insurance. An HMO/PPO are among the most common available. An HMO usually has a lower monthly cost, but requires you select a Primary Care Provider (PCP) and you must stay within the network of available doctors. PPOs may be more expensive on a monthly basis, but you have the freedom to use providers of your choice that are both in and out of network.

Next is an EPO, which makes you use an exclusive list of providers they have available – this can be very restrictive for some. Finally, you have a POS, which is similar to an HMO, but it has more freedom on going out of network. A useful thing to do is look at the health insurance provider’s network for the various types of plans they offer, and see what kinds of doctors and specialists are available in your area for that plan type. This will help you decide which type of plan makes the most sense for your needs.

If you're a first-time health insurance buyer and have additional questions about the types of medical coverage that you may need, or if you just want to discuss your own needs with someone in a bit more detail, please don't hesitate to contact us today! We will connect you with a licensed health insurance agent who can explain things in greater detail and help you find the right plan!