insurance

Basics: How to buy health insurance

Understanding how to buy health insurance

There's no one-size-fits-all health insurance plan. Your needs should dictate your coverage. Here are a few questions you should ask yourself when shopping for health insurance:
  • Do you want it to cover the cost of an office visit every time someone in the family needs care?
  • Do you just want a safety net to protect you in case of something catastrophic?
  • How much money do you typically spend on health care in a year?

If you usually don't spend much on health care, you might be best served by a high-deductible plan with a health savings account, or HSA, for out-of-pocket costs.

A plan that offers special features, such as a flexible spending account, or FSA, or health savings account may be enticing. FSAs and HSAs allow you to set aside a certain amount of money from your paycheck before taxes to pay for qualified medical expenses. While these have lower costs, plans with these features usually have high deductibles.

Also, be careful with flexible spending accounts, because you can't roll over unspent funds at the end of the year. You must spend all of the money, or you'll lose it. However, health savings accounts do allow you to roll over the funds at the end of the year.

Choosing a plan

When looking up quotes from HMOs, PPOs and traditional indemnity plans, do your homework to find out how these plans differ from each other.

If you know people who are already on the health insurance plan you're considering, talk to them about it. Call your state insurance department to find out the complaint ratio about the company and its coverage.

At the end of the day, quality is your top priority when looking at health insurance. Look at the quality of care and the coverage offered, not just the cost. If you won't be able to meet the deductible or don't like the coverage, select a different policy.

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