Your Step-by-Step Guide To Choosing A Health Insurance Plan

Choosing a health insurance plan can be a daunting task. There are certain things to consider when selecting health insurance for you and your family. In this article, we’ll work you through the step-by-step process of choosing a health insurance plan.

A health insurance plan covers the medical expenses incurred during a period of hospitalization of any form. They come as a means of financial assistance in times when needed.

Before we go on to talk about why you need a health insurance plan, you may want to read through why a health insurance plan is important.

Why Choose A Health Insurance Plan?

Medical expenditures do put a burden on one’s finances. It deviates from one’s financial objectives. This is due to the fact that medical inflation has been on the rise, and treatments are becoming increasingly expensive. It is frequently stated to be around 15% every year.

A health insurance plan is required to cover such costs. Medical expenditures incurred during hospitalization are covered by health insurance policies. As a result, they offer you much-needed financial help in the event of a medical emergency while also protecting your funds.

According to, health insurance protects you from health and financial risks. It covers all essential health benefits critical to maintaining your health and treating illness and accidents.

What Are The Benefits Of Having A Health Insurance Plan?

Nobody intends to become ill or injured, yet the majority of individuals will require medical attention at some time in their lives. These expenses are covered by health insurance, along with a slew of additional advantages such as: 

  • Health insurance provides the following health benefits that are necessary for preserving your health and treating illnesses and injuries.
  • Health insurance protects you against unanticipated, excessive medical expenses.
  • Even before you reach your deductible, you pay less for covered in-network health care.
  • If you have a Marketplace plan or other qualifying health coverage for the entire plan year 2018, you are exempt from the penalty that people who do not have coverage must pay.

5 Key Things To Consider When Choosing A Health Insurance Plan

Choosing a health insurance plan can be tricky at times. To beat the trickiness you need to be aware of the following 5 key factors to consider before choosing health insurance coverage:

#1 Type of plan and provider network

It is important to know the available and possible plans and provider networks before setting out to get health insurance. 

Depending on where you reside, you can shop for insurance through either the federal exchanges on or your state’s marketplace. Twelve states, as well as the District of Columbia, operate their own exchanges. The federal exchange’s open enrollment period ends in mid-December. If you reside in a state with its own marketplace, you may have extra time.

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#2 How much will you pay per month for coverage

After deciding on the type of plan and provider network to enlist in, you need to find out the cost of the premium to be paid. Premiums are the amount you pay to an insurance company for coverage. They are usually paid monthly and the moment you stop making payments, you are at the risk of losing your coverage. Therefore, it is important you find out how much is to be paid as a premium to the healthcare provider.

#3 Deductibles 

A deductible is an amount you must pay out of your pocket before your coverage kicks in. For instance, if your deductible is $1,000, your health plan won’t cover most expenses until you spend $1,000 on expenses out of pocket. For this, it is imperative you check with your insurer to know if your plan has either a single, combined deductible for medical services or a separate deductible for prescriptions to know how much to be paid before medicines are covered.

Patients who choose a plan with a high deductible will almost always have a lower monthly premium, whereas plans with smaller deductibles will almost always have a higher monthly premium. Most medical or pharmaceutical treatments are no longer covered by insurers until a deductible is reached.

#4 Co-pay or Coinsurance

Are you aware of other costs that you may be required to pay to access care?

Don’t forget that even after you’ve met your deductible, you may be responsible for additional out-of-pocket expenses like coinsurance and co-pay.

  • Coinsurance – A percentage of costs you must pay for a medicine or service.
  • Co-pay – This is the flat fees you are required to pay for prescriptions or covered services (often listed on the back of your insurance card)

#5 Coverage of Medicines

Are your regular prescriptions covered by your insurance plan?

Each insurer has a formulary (a list of medications) that is covered by the plan. If a medication is not on the formulary, it may not be covered, forcing patients to go through a potentially lengthy process to obtain coverage. The list of covered medications is also divided into tiers, which determine how much of a copay or coinsurance you may be required to pay. You are expected to make a list of your current medications and compare it to the plan’s formulary to ensure your medications are covered and you understand any out-of-pocket costs.

A step-by-step guide to choosing A Health Insurance Plan

Here’s a step by step guide on how to choose a health insurance plan:

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Step 1: Choose your health plan marketplace

The first step to take is to choose a health plan marketplace. If your job doesn’t provide health insurance, you can shop on your state’s public marketplace, if available, or the federal marketplace to find the lowest premiums. To get started, visit and enter your ZIP code during open enrollment. You’ll be sent to your state’s exchange if there is one. Otherwise, you’ll use the federal marketplace.

On the other hand, If your employer offers a health insurance plan, you won’t need to use government insurance exchanges or marketplaces. Essentially, your company is your marketplace.

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If your employer provides health insurance and you want to look for a different plan in the exchanges, you can. However, plans on the market are likely to be much more expensive. This is due to the fact that most employers pay a portion of their employees’ insurance premiums, and the plans have lower total premiums on average.

You can also buy health insurance directly from an insurer or through a private exchange. You will not be eligible for premium tax credits, which are income-based discounts on your monthly premiums if you choose these options.

Step 2: Compare types of health insurance plans

When looking for health insurance plans, you will almost certainly come across some alphabet soup; the most common types of health insurance policies are HMOs, PPOs, EPOs, or POS plans. The type you choose will determine your out-of-pocket costs and which doctors you can see.

When comparing plans, look for a benefits summary. Online marketplaces typically include a link to the summary as well as the price near the plan’s title. A provider directory, which lists the doctors and clinics in the network of the plan, should also be available. If you’re going through your employer, request a summary of benefits from your workplace benefits administrator.

If you choose an HMO or POS plan, which requires referrals, you have to see a primary care physician before scheduling a procedure or visiting a specialist. Because of this requirement, many people prefer other plans. Due to the restrictions, however, HMOs are the cheapest type of health plan, overall.

The POS and HMO plans may be ideal for you if you don’t mind your primary doctor choosing specialists for you, coordinating visits, and handling medical records. If you choose a POS plan and go out of network, make sure to get the referral from your doctor ahead of time to reduce out-of-pocket costs.

If you prefer to select your own specialists, you might prefer a PPO or an EPO. An EPO may help you keep costs low if you can find providers in the network; this is more likely in a larger metro area. A PPO may be preferable if you live in a remote or rural area with limited access to doctors and care, as you may be forced to go outside of the network.

Step 3: Compare health plan networks

When you visit an in-network doctor, your costs are lower because insurance companies negotiate lower rates with in-network providers. When you go out of network, the doctors don’t have agreed-upon rates, so you’re usually on the hook for a larger portion of the bill.

If you have preferred doctors and want to continue seeing them, make sure they are listed in the provider directories for the specific plan you are considering. 

If you don’t have a favored doctor, look for a plan with a large network so you have more options. A larger network is really important if you live in a rural community since you’ll be more likely to find a local doctor who takes your plan.

Finally, if possible, eliminate any plans that do not have local in-network doctors and those that have very few provider options in comparison to other plans.

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Step 4: Compare out-of-pocket costs

Here is where you are expected to compare the deductible, copayments, and coinsurance costs of the health insurance. Your out-of-pocket expenses will be higher if your premium is lower.

Out-of-pocket expenses are nearly as important as network costs. The summary of benefits for any plan should clearly state how much you will have to pay out of pocket for services. The federal marketplace website, as well as many state marketplaces, provide snapshots of these costs for comparison.

During this step, you can narrow down choices based on out-of-pocket costs. A plan that pays a higher portion of your medical costs, but has higher monthly premiums, maybe better if:

  • You see a primary physician or a specialist frequently.
  • There’s a growing likelihood of medical emergencies
  • You take expensive or brand-name medications daily.
  • There’s a surgery coming up
  • You are expecting a baby, plan to have a baby, or have small children.
  • You’ve been diagnosed with a chronic condition such as diabetes or cancer.

A plan with higher out-of-pocket costs but lower monthly premiums may be a better option if: You can’t afford the higher monthly premiums for a plan with lower out-of-pocket costs.

Step 5: Compare benefits

At this stage where your options have been cut down to a few, carefully go through the summary o benefits on the options left to see if any of the plans cover a wider scope of services.

Some may have better coverage for physical therapy, fertility treatments, or mental health care, whereas others may have better emergency coverage. Highlighting your preferences will help you choose a better plan for yourself and your family.

Once you’re down to a couple of options, here are a couple of important questions to ask:

  • Is the specific medication I take covered under this plan?
  • Which drugs for my condition are covered under this plan?
  • What maternity services are covered?
  • What happens if I get sick when traveling abroad?
  • How do I get started signing up, and what documents will I need?

Final Thoughts

Just buying the best health insurance plan for yourself and your family is not enough. Make sure to review your coverage once a year to ensure that it is still relevant to your needs. For example, if you marry or have a child, you have a new family member who should be added to your coverage. Add the member either during the policy’s term or at the time of renewal.

Regularly reviewing your coverage ensures that it remains relevant at all stages of your life. Furthermore, health insurance plans provide coverage for the rest of one’s life. So, renew your policy on time, every time, to ensure that you have continuous coverage in the event of a medical emergency.


  • – Your Step-by-Step Guide to Choosing a Health Insurance Plan
  • – 7 Things to Consider When Choosing a Health Insurance Plan
  •– Open Enrollment Is Here: 6 Tips For Choosing A Health Insurance Plan
  •– 5 Things to Consider When Choosing Your Health Coverage

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