Whether your family consists of just your spouse and yourself, a single parent with children, or a big family, we all deserve to have the very best medical insurance benefits we can possibly afford at a fair rate.
Your needs and invariably the kind of health coverage you will require will most definitely depend on the size of your family. Older couples, a few years away from retirement will need totally different coverage than a husband and wife with young children such as toddlers running around.
With that in mind we have put together some of the most important factors every family should consider when comparison shopping for family medical insurance in the US.
Out-of-pocket maximums versus deductibles- What is the difference?
When you shop for insurance coverage for your loved ones on the private market, you most definitely need to understand how deductibles and coinsurance works. A medical insurance deductible works similarly to how the car insurance deductible works. A deductible is the amount the insured is responsible for before the health insurance carrier pays any claims.
Now, there are two important differences that you should take a look at right away. With health insurance deductibles, if you are utilizing a plan which uses a PPO network, then you will get some financial relief right away. From day one is long as you are using in network providers, and the medical treatment you are seeking is covered by your plan, you are only getting charged the “contracted rate” your insurance carrier has negotiated with your provider. This is very important, because the negotiated rates can save you 30 to 60%, off the retail costs that medical providers charge the uninsured. As an example, if you needed an MRI done and the cost is $1500 without insurance, but through your insurance company, it’s only $750 (a savings of 50%) -then you would only pay the $750, and that amount would be credited toward your deductible for the year.
It’s time for the other side of the coin, and that is coinsurance. Coinsurance is essentially you and your health insurance carrier splitting your medical costs, until you hit a cap or what is called an “out-of-pocket maximum”. To better understand this concept let’s look at a real life example. You’re family has a medical insurance policy that covers doctor visits at a $35 co-pay, generic medications at a similar co-pay, and brand medications at a $50 co-pay after a separate drug deductible has been meant for the year of $500. Your medical plan deductible, this is the deductible for things such as hospitalizations/surgeries/lab expenses, is 10,000 for the family for the year. And last but not least your coinsurance, is 20% of the next $15,000.
What all this math means is this:
- All of your day today medical care is covered at a flat co-pay. These are expenses such as doctor visits, annual preventative care checkups, and prescription medications.
- After your family deductible of $10,000 is meant for the year, your insurance carrier will pay 80% and you will pay 20% of the next $15,000 in covered expenses, or in layman’s terms until you come out-of-pocket an additional $3000. So once you have come out-of-pocket a total of $13,000, then you would be covered at 100% for the rest of the year. Granted this is just an example, to illustrate the concept of looking at your total out-of-pocket exposure versus just your medical plan deductible.
- Keep in mind if you purchase a health insurance policy that includes co-pays for doctor visits and medications, those expenses almost universally will not be credited towards your medical plan deductible for the year. So co-pays for doctor visits, deductibles and co-pays for prescription drugs are not credited towards the medical deductible. This is why a lot of families like going for high deductible health plans, because all expenses are credited towards deductible to the year.
What kind of health benefits does a family need?
This is a question quite honestly only you can answer. What isn’t born to one family might not be necessary for their neighbors down the road. That’s why it is very important to sit down with your family and to discuss exactly what’s important to you when it comes to medical coverage. Is vision and dental benefits, a deal-breaker for you? That is something that you should definitely think about.
From an insurance agent’s point of view, I can tell you it is very important to have solid prescription drug coverage, because over 30% of all medical claims are all tied into prescription drug use. If if you think about the Medicare program for a moment, it’s not hospitalizations or surgeries, which are usually one-time occurrences, that is bankrupting that program, its prescription medications.
Having worked with hundreds of families over the years, to pick health benefits for their family, let me share with you what I believe are the most important benefits that your family health insurance policy could possibly include:
- Solid prescription drug coverage. This includes coverage for expensive brand-name medications. After all we all can afford to pay for our own generic drugs, it’s the $1k/month cost for chemotherapy medications that would quite literally kill us.
- Coverage for Dr. office visits. It’s very important that your insurance policy covers office visits, even if you get to meet the deductible before they are covered. You don’t want to be in a situation, where you have a stroke and have to go to your doctor every month, and come to find out that the visits aren’t covered. This is a very common occurrence with cheap hospital surgical plans.
- No cap on hospitalizations or surgeries. Major medical health insurance plans no longer can be legally sold with a cap or limit on lifetime benefits as a whole, however it’s important to make sure that the policy does not limit essential benefits for inpatient hospitalizations/ outpatient surgeries/ lab expenses.
How to balance the cost of Family Health Insurance with the Affordability Factor?
It’s important to learn how to balance finding a policy that is affordable for your family, and making sure the plan covers the most important medical expenses that commonly arise for most Americans. On one end of the spectrum, you don’t want an inexpensive plan doesn’t cover anything, just so you can say that you have health insurance. And of course it doesn’t make much sense, to struggle each month with the health insurance premium payment, because you purchased a “Cadillac Plan” that you’re family really does not need.
This why speaking with a local licensed independent health insurance broker, can really be a saving grace for your family. It does not cost anything at all to speak with an agent, since all health insurance premiums are the same across the board, you get the luxury of the agent’s expertise and experience, with the peace of mind of knowing that you’re not paying anything for the knowledge they possess.