How to Select Health Insurance

Most people depend on their workplace for their health insurance. Employers usually offer only a limited number of selections, so making a choice isn't difficult--take what your employer offers. However, if you have to shop for your own health insurance, you'll need to obtain health insurance quotes. Before you do, make certain you know the type of insurance you want and need for your situation and budget.

Select the Type of Plan

Choose health insurance that's a managed care or indemnity plan. Managed care plans use specific doctors. Health maintenance organizations (HMOs), preferred provider organizations (PPOs) and point of service (POS) policies are all managed care. HMOs only pay for the providers in their plans and only the primary care physician can make the referral to a specialist. PPOs and POS managed care policies are more liberal, but pay a smaller percentage of the bill if the provider isn't on the list. Indemnity policies allow you to see any physician you wish, but the policies are more inexpensive. If you visit the doctor frequently, then a managed care policy with copays can get expensive by the end of the year. In this case, an indemnity policy with a reasonable deductible might be more cost-effective.

You'll save money if you seldom see a physician by obtaining a high-deductible insurance policy with a health savings account. With the HSA, health savings account and HDHP, high deductible health plan, you pay a premium for the insurance and put additional funds into the health savings account. The money that goes into the HSA is tax-deductible and grows tax-free. You can use the funds to pay the deductible or for any medical need, including eyeglasses and dental, on a tax-free basis. If there is money in the fund at the end of the year, you keep it. If you die, it passes it to your heirs.

Deductibles, Coinsurance, Copays and Out of Pocket Maximum

Choose the deductibles, copays and coinsurance that fit in your budget. Many people confuse copays with coinsurance, but they're two different things. Copays are monies you pay at each doctor or hospital visit and part of managed care plans. A deductible is money you pay before the insurance company pays anything. After the deductible the company pays a percentage of the bill, this is the coinsurance section. Once the amount you pay out of your pocket reaches the predetermined out of pocket maximum for the policy, the company pays the full bill.

If you seldom go to a doctor, this is the best type of health insurance for your needs.

Secure Quotes

Look for websites that offer price comparisons of several companies or call local representatives. Compare rates for the type of policy you selected. Make sure you use the same deductible, copay and coinsurance amount when you compare health insurance rates. If you select a plan with a preferred provider list, check first to see if doctors near your home are on their list. Fill in your information for the quote and then compare the health insurance quotes for the best price. If the price is still too high for your budget, consider increasing the deductible or copays.

Before You Buy

Investigate the claims paying efficiency, financial stability and complaints on the companies you choose. Use the NAIC website map to find your state's department of insurance website. These sites show customer complaints about different companies. Often the sites show the companies' ratings there too. It's either the AM Best rating or Moody.

References:

Personal experience as a licensed insurance rep since 1979

Department of the Treasury: Health Savings Accounts [http://www.ustreas.gov/offices/public-affairs/hsa/]
Heath Insurance: Indemnity vs Managed Care [http://www.agencyinfo.net/iv/medical/types/indemnity-managed.htm]
Health Insurance: HMOs, PPOs and POS Plans [http://www.agencyinfo.net/iv/medical/types/hmo-ppo-pos.htm]