How to Choose Health Insurance

Finding the right health insurance plan can be a challenge. With so many plan types, coverage options, and pricing tiers, how can you know which is best? We’re here to help with a step-by-step guide on choosing health insurance so you can make a confident decision. 

Identify What Kind of Health Insurance You Qualify For

The type of health insurance that’s best for you will depend on many factors, including your employment situation, age, and income. Learn the main options you should know. 

Employer Health Insurance 

Many employers offer health insurance as part of their employee benefits packages. The employer selects an insurance company and signs up for a group plan. Then, employees can enroll. On average, single employees pay about $137 per month for employer health insurance in 2021, according to the KFF.

While employee plans may come with affordable pricing and good coverage, they don’t typically give you the freedom to choose your insurer. Additionally, if you leave your employer, you’ll lose coverage. 

Health Insurance Marketplace Plans

The Health Insurance Marketplace is a federally run service offering health insurance for people who don’t have health insurance available through an employer.

Within the Marketplace, you’ll find four health plan categories. Here’s a look at the average lowest-cost monthly premiums for each plan type and how the medical costs are typically shared between insurers and policyholders:  

• Bronze: $342 per month; insurance pays 60%, you pay 40%
• Silver: $448 per month; insurance pays 70%, you pay 30%
• Gold: $472 per month; insurance pays 80%, you pay 20%
• Platinum: More than $472 per month; insurance pays 90%, you pay 10%

The higher the percentage of costs the insurance company covers, the higher your monthly premium. Bronze plans, for example, have the most affordable premiums but will cost you more when you pay for services. 

When you apply for coverage through the Marketplace, you’ll be asked for your income and household information. You’ll also see if you qualify for advanced premium tax credits (PTCs). If you do, PTCs can be applied throughout the year to lower your premium. 

Short-Term Health Insurance

Short-term health insurance plans offer less than 12 months of coverage and can be renewed for up to 36 months. You may want to opt for this type of plan if you’re between jobs or just missed the Health Insurance Marketplace open enrollment period and you don’t qualify for special enrollment.

You won’t find short-term policies in the Marketplace because they aren’t subject to the Patient Protection and Affordable Care Act (PPACA), so they don’t have to provide minimum essential coverage or cover pre-existing conditions. 

However, you can often buy short-term plans directly through a provider. Most short-term plans cover doctor visits, urgent care, emergency care, and preventative care,  but the coverage can vary greatly from one provider to the next. On the upside, they often come with lower premiums than other plan types. 

Medicaid

Medicaid is a joint federal and state program that provides healthcare coverage for low-income families, individuals receiving Supplemental Security Income (SSI), qualified pregnant women, and children. Additionally, some states offer Medicaid to certain people, such as those who have children in foster care or receive home and community-based services. 

As for the coverage details, federal law requires that certain mandatory benefits are provided, including:

• Home health services
• Inpatient and outpatient hospital services
• Physician services
• X-ray services
• Lab services

States can create their own Medicaid programs and decide on the duration, type, amount, and scope of the services. 

The cost of Medicaid coverage is either free or low-cost for qualifying individuals. While the specific eligibility requirements and pricing vary by state, federal law places limits on premiums and enrollment fees for certain vulnerable groups.

Medicare

Medicare is a federal health insurance program for people who are 65 and older, some people under the age of 65 who have disabilities, and people with end-stage renal disease (ESRD). 

The program is composed of three parts:

• Medicare Part A (hospital insurance): Part A covers inpatient hospital stays, hospice care, skilled nursing facility care, and some home health care.
• Medicare Part B (medical insurance): Part B covers outpatient care, medical supplies, preventative services, and certain doctors’ services. 
• Medicare Part D (drug coverage): Part D helps cover prescription drug costs, but plan costs vary depending on the Medicare-approved drug plan you choose. 

Original Medicare includes Part A and B, but you need to enroll in Part D separately. Medicare Advantage is offered through Medicare-approved private companies and is also called “Part C.” These plans often bundle parts A, B, and D with other benefits like dental, hearing, and vision. 

Assess Your Needs

Health plans are far from one-size-fits-all. So, to find the right health plan for you, be clear on what you and anyone else on your plan needs. Here are some factors to consider: 

• Overall health: Your overall health will determine the amount of medical services you need, which will determine which plan is the best fit based on the level of coverage it provides. 
• Health conditions: Do you have existing health conditions that need attention? Certain plans offer special programs for heart disease, depression, and diabetes, for example.
• Desired treatments/surgeries/services: If you want to undergo a treatment or surgery, check the coverage and costs with different providers. They likely have varying copays, coverage limits, coinsurance, etc. 
• Provider preferences: Consider the providers you want to use and if you want a primary care physician. 
• Budget: Determine how much you can spend, at most, for your monthly premium. From there, you can determine which plan offers the best value overall. 

Research Health Insurance Companies

Once you decide on a plan type, the next step is to compare the various health insurance companies that offer those plans in your state. 

If you’ve opted for a Marketplace plan, you can check each provider’s Healthcare.gov quality rating. The ratings range from one to five stars and are based on a provider’s medical care, member experience, and plan administration.

You can also check the ratings from the National Committee for Quality Assurance (NCQA), which issues ratings for commercial, Medicare Advantage, and Medicaid plans. The NCQA ratings also use a scale from one to five stars. Ratings account for three factors: patient experience, rates for clinical measures, and NCQA health plan accreditation.

Further, Medicare star ratings are available for Medicare Advantage plans. They are released each year before the fall open enrollment period.

Beyond ratings, other key factors to check on healthcare plans include the costs, coverage details, and provider networks.

Best Health Insurance Companies

While individuals have different health insurance needs, certain companies have strengths that benefit most customers. We selected the best health insurance companies based on cost, coverage, maximum out-of-pocket expenses, and more. Here are the five that topped our list:

• Best Overall: Blue Cross Blue Shield
• Highest Quality Plans: Kaiser Permanente
• Most Health Management Programs: Oscar
• Best for Same-Day Care: Aetna CVS Health

For an explanation of how we chose these companies, see our full health insurance methodology.

Compare Health Insurance Insurance Quotes

Once you have a shortlist of health insurance providers, contact them for quotes. The Marketplace makes it easy to compare costs once you’ve applied because available plans are listed in one place. 

With short-term insurance, contact each provider to apply for quotes or use a website that generates quotes from multiple providers. Similarly, if you’re interested in Medicare Advantage plans, browse provider websites or compare them using a third-party broker. 

You won’t need to get multiple quotes for Original Medicare, Medicaid, or employer insurance as they are provided through single providers. In some cases, though, employers may give you the option to choose between multiple plans. 

Cost

Once you receive a quote, assess the following cost components. 

• Premium: The amount you pay each month to maintain health insurance coverage
• Copay: A fixed amount you have to pay for a specific medical service
• Deductible: The amount you must pay for covered services during a policy year before your insurer will begin covering a percentage of your costs
• Coinsurance: The percentage of medical service costs an insurer covers after you pay your deductible
• Out-of-pocket costs: The unreimbursed amount you pay for medical services
• Out-of-pocket maximum: The highest total amount you are required to pay out-of-pocket for covered services during a policy year

Coverage

When browsing plans, pay attention to the coverage types that are included. For example, all Health Insurance Marketplace plans must offer the following 10 essential benefits:

• Emergency services
• Pregnancy, maternity, and newborn care
• Laboratory services
• Prescription drugs
• Ambulatory patient services
• Hospitalization
• Mental health and substance abuse disorder services
• Rehabilitative and habilitative services and devices
• Pediatric services
• Preventative and wellness services and chronic disease management

Some plans include additional benefits, like dental coverage, vision coverage, and medical management programs for certain problems such as depression, weight loss, or pain management. These extra perks can play a role in finding the plan that best suits your needs. 

Network

Each health insurance plan comes with a provider network—a list of the hospitals, doctors, and other providers that the insurer contracts with to provide care to its members. The costs of getting services in and out of network, and the rules on getting referrals, vary by plan type.

Review Policy Terms and Exclusions

If you’re ready to enroll in a health insurance plan, look over the plan’s brochure and online details. It will cover claim details, coverage details, exclusions, eligibility requirements, and limitations. Knowing the policy’s details upfront helps you avoid surprises later. 

Final Word

When it comes to health insurance, there’s no shortage of options. You can find a plan to suit almost any situation. The key is finding out what’s available to you, identifying your needs, comparing your options, and figuring out which will offer you the best overall combination of coverage and value.