What to Know When Shopping for Health Insurance


WRITTEN BY: Craig Sturgill

UPDATED: NOVEMBER 04, 2022 | 2 MIN READ

For most Americans, Open Enrollment in October and November presents the opportunity to switch health insurance plans. Whether you’re changing plans or buying health insurance through your employer, Medicare/Medicaid, or the health insurance Marketplace for the first time, there are many factors to consider to ensure you’re selecting the right plan for your needs. Here’s what you need to know when shopping for health insurance coverage this fall.

Shopping For Health Insurance In The Marketplace

Before you compare different health care plans and prices, choose your Marketplace. If your employer offers health insurance, you may not want to explore the options on Healthcare.gov. Employer plans are generally cheaper than Healthcare.gov plans because most employers pay a portion of their employees’ insurance premiums.

If your employer doesn’t offer health insurance, shop the online Marketplace in your state (if available) or visit HealthCare.gov. You can also purchase private health insurance for families and individuals.

Federal/State Marketplace Metal Levels

If you shop for insurance on the federal or state Marketplace, you will browse plans categorized by metallic tier: bronze, silver, gold, and platinum.

  • Bronze: You can expect to pay 40% of the costs for covered care with your plan paying 60%; these plans have the highest out-of-pocket expenses with the lowest premiums.
  • Silver: You can expect to pay 30% of the costs for covered medical care with your plan paying 70%; Silver plans have high care costs with low premiums.
  • Gold: You can expect to pay 20% of the costs for covered care with your plan paying 80%; these plans have low out-of-pocket costs with high premiums.
  • Platinum: You can expect to pay 10% of the costs for covered care with your plan paying 90%; Platinum plans have the lowest care costs with the highest premiums.

If you’re 30 or younger or qualify for a “hardship exemption,” you may choose to get a plan with catastrophic coverage. These high deductible health plans have low premiums and protect you from high medical bills in a worst-case scenario.

Shopping For Health Insurance: Plan Types

Once you’ve decided where you’ll be shopping for health insurance, consider the available plan types. Your plan determines out-of-pocket expenses, network providers, referrals, and more.

Health maintenance organization (HMO) plans

HMO plans provide a local network of participating doctors and hospitals. You’ll also have to choose a primary care physician (PCP) that will also make any referrals required for in-network specialists. HMOs offer lower out-of-pocket costs (as long as you stay in-network), but you’ll have less freedom to choose providers.

Preferred provider organization (PPO) plans

PPOs are typically more expensive than other plans but offer an extensive network of participating providers. You may also choose to see out-of-network providers, but you’ll pay more out-of-pocket. You also don’t have to pick a PCP and can see specialists without a referral.

Exclusive provider organization (EPO) plans

Like HMOs, EPOs offer lower out-of-pocket costs with a network of participating providers and don’t cover out-of-network care unless it’s an emergency. Depending on the EPO plan, you may be required to choose a PCP, but you won’t need a referral to see in-network specialists.

Point of service (POS) plans

POS plans combine HMO and PPO plans. The provider network is smaller than PPO plans, but the in-network care costs are lower, like an HMO. You also have to pick a PCP from their network. Referrals are required, but you can see any specialist you like. However, if the specialist is out-of-network, you’ll pay more.

Check the summary of benefits

Before selecting your plan type, look for the plan’s summary of benefits. This fine print explains the plan’s costs and coverages and lists the provider directory. If you’re exploring employer-sponsored plans, ask your benefits administrator.

Networks

Your network refers to your plan’s contracted providers and facilities that provide you with care. Providers will either be in-network or out-of-network.

  • In-network providers accept your insurance plan, meaning most of the costs will be covered because your insurer negotiated lower rates.
  • Out-of-network providers don’t accept your insurance plan, and you will pay costs out-of-pocket.

If you want to keep seeing your current providers, check your potential plans’ provider directory or ask your doctor if they take the plan. If you don’t have preferred doctors, look for a plan with a large network that offers you more choices.

Out-of-Pocket Costs

Many health care plans include several out-of-pocket costs, such as deductibles, monthly premiums, and copays.

Cost-sharing

Before enrolling in a health care plan, you must consider your medical expenses and the plan’s cost-sharing. There are three basic types of cost-sharing: deductibles, coinsurance, copayments, and out-of-pocket maximums.

  • A deductible is an amount you’ll pay before your coverage kicks in. For example, if you have a $1,500 deductible, you will pay $1,500 for health care services before your insurance starts to kick in.
  • Coinsurance is a percentage of the total care cost. Many health insurance policies have an 80/20 split: the policy covers 80%, and the patient covers the remainder.
  • A copayment, or copay, is a fee for particular health care services, such as a $40 charge for a doctor visit.
  • An out-of-pocket maximum is the most you’ll pay in cost-sharing within a plan year.

Some health care plans will have deductibles for certain services, like the costs of prescription drugs. If you’re enrolling in a family plan, those often have individual and family deductibles.

Some preventive care services, such as specific cancer screenings, well-woman exams, and immunizations, are exempt under the Affordable Care Act (ACA), meaning you won’t have to pay a deductible or copay.

Premiums

Premiums are what you pay the health insurance company for coverage. You will pay your premiums whether you receive care or not; if you stop paying your insurance premiums, you risk losing your health coverage.

Generally, health care plans with higher monthly premiums usually have lower deductibles. Plans that offer lower monthly premiums have higher deductibles.

Prescription Drug Coverage

Knowing your plan’s prescription drug coverage is essential, especially if you need specific prescriptions. Many insurance companies use lists of covered drugs (formularies) that categorize drugs into tiers.

Generic prescription drugs are cheaper with a lower copay, while brand-name drugs are more expensive. Some insurers may require you to try a lower-tier drug first or require prior authorization before the plan pays for costly medications.

Other Things To Consider

In addition to reviewing networks, cost-sharing, and prescription drug coverage, you may want to consider other factors before enrolling:

  • Health Savings Accounts (HSAs): These tax-advantaged accounts help those enrolled in qualifying high-deductible health plans save for qualified medical expenses.
  • Subsidy Eligibility: Established by the Affordable Care Act, subsidies help cover some of the premium and out-of-pocket costs. Eligibility depends primarily on how much you earn compared to updated federal poverty level (FPL) guidelines.
  • Wellness Programs: Some employers include programs in their benefits package that offers gym memberships and other incentives to stay healthy. If the program offers discounts on health care, review the program benefits and incentives to ensure the deal is worth it.

What To Know When Shopping For Health Insurance

Exploring plan types, networks, and health care costs is vital to ensure you enroll in a plan that fits your budget and care needs. Please use our free tool to understand and compare your area’s best health care plans.