Are you making one of these costly health insurance mistakes? Your expenses may be much higher than they should be if you are making one of these common mistakes.
- Failing to look at overall healthcare costs
- Choosing the wrong medical insurance deductible
- Making a final decision regarding health insurance
Overall Health Care costs
Overall healthcare costs include not just the premium you might pay, but also the cost shares. Cost shares are deductibles, co-pays and other charges that you pay for your health care. Sometimes the plan with the lowest premium has the lowest overall cost and sometimes it is a more expensive option. Add your estimated cost shares to the annual premium. The sum will be your estimated overall healthcare costs.
I’ve found that the best way to compare health insurance plans is to look at your overall costs in various scenarios. One scenario should be based on a year with a catastrophic medical event. One should be based on a year with moderate expenses. Another should be based on a year with no medical expenses. Look at how various policies will perform in various scenarios before making a final decision.
Selecting Your Deductible
Choosing a health insurance deductible that is too low or too high low can cost you. A low deductible will cost you more in premiums each month, but less out of your pocket when it you have a claim. The reverse is also true. However, the amounts are not always equal. In another words, a more expensive policy with a low deductible may be $100 more expensive each month, but only give you $50 more each month in value.
To better compare the different options annualize your premiums. Multiply your premiums by twelve if paying monthly or by four if paying quarterly. Now you are in a better position to compare a policy’s premiums with the policy’s deductible and other cost shares.
Sometimes plan A will cost $1,300 more in yearly premium than plan B but plan B will have a deductible that is only $1,000 more. In this situation your overall costs with Plan B may be less than your costs with Plan A in every scenario.
Review Your Health Care Coverage and Needs Regularly
Decisions about health insurance or other insurances shouldn’t be made once and forgotten. Once a year or once every two years, you should have a discussion with your family and with your insurance broker and make sure that you are still getting the best plan for your needs.
Insurance rates change approximately once per year. The carrier or insurance policy that was the least expensive in 2005 may not be in 2010.
Also, your needs will change as time goes on. Don’t make the mistake of carrying maternity insurance after you or your wife has had a medical procedure that prevents pregnancy. Many people make this or similar mistakes.
Unfortunately health insurance costs are rising and will probably continue to rise each year. However, by shopping around or letting a broker shop for you and by avoiding these common mistakes, you can avoid paying more for medical insurance than you should.