Here's great news if you're looking for a cheap health insurance plan: You do have options, and you don't have to sacrifice care to find a plan that fits your budget.
But where do you start? First, you need to understand the basics of cheap health insurance plans:
High-Deductible, Low-Premium Plans: A deductible plan is simply a plan that doesn't help cover your costs until you've spent an amount of money equal to the deductible in a given year. (A common deductible is around $2,000). You can save a lot of money with a high-deductible health insurance plan that comes with a cheap monthly rate, but be sure it provides adequate catastrophic coverage, with at least a $2 million lifetime maximum benefit.
High Deductible with HSA: Getting a high-deductible plan will save you lots of money month to month. And if it qualifies to be used in conjunction with a health savings account (HSA), then you can deposit those savings in a tax-free, interest-earning account for smaller health expenses to cover the extra out-of-pocket costs.
The funds in your HSA account aren't just tax-free. They can also be used for current and future health expenses. The balance rolls over from year to year, so if you're healthy now, you'll just keep accruing savings and interest until you need it.
The best part about an HSA account with a high deductible health plan is that once you turn 65, the funds can be withdrawn as income, much like an IRA.
If you're shopping for a high deductible health insurance plan to use in conjunction with an HSA, here's what you need to look for:
HMO Plans: Many individuals are more comfortable with a managed care plan such as a Health Management Organization plan (HMO) or Preferred Provider Organization plan (PPO). With these, paying a higher monthly premium (in comparison to high deductible plans) provides a wider variety of coverage with lower deductibles.
The difference between a cheap managed care plan (typically HMOs) and an expensive one (typically PPOs) comes down to the freedom you have in choosing a health care provider, and determining which health care services you want to obtain. With an HMO, you choose a primary care physician from a list of participating (also known as "in-network") doctors. You then have to go through him or her for referrals to specialists in order for those services to be covered by your HMO.
For example, if you need to see a specialist, need to be hospitalized, or have lab or X-ray work, your doctor will refer you to a provider or facility.
So if you don't mind sticking to a list of specific doctors and going through them for all health care services, then this may be the right cheap health insurance plan for you.
PPO Plans: A PPO plan has a list of in-network providers (PPOs refer to these as "preferred providers") but allows you the freedom of using your choice of physician when medically necessary.
This added freedom comes at a price. Not only will you generally pay a higher monthly premium for a PPO, you might also run into deductibles and coinsurance traps along the way-–especially if you step out of their list of "preferred providers."
For example, a PPO plan may pay for 80% of the medical expenses if you get treatment from a Preferred Provider, but only 60% if you go to a Non-Preferred Provider. When you use a Non-Preferred Provider, you may also be responsible for any amount billed over customary and reasonable charges.
You may have to pay a portion of the cost for each office or hospital visit, regardless of how much the visit costs.
POS Plans: If you value the freedom of choice, but want to get it cheaper, a better option may be a POS plan. This type of plan combines the best of HMOs and PPOs at a price that typically falls somewhere in between.
With a POS plan, you choose a primary care physician who controls all aspects of care, including referrals to specialists. All care received under that physician's guidance, including referrals, is fully covered. Care received by out-of-plan providers is reimbursed, but you have to pay a significant co-payment or deductible.
Picking the right plan for you is only the first step in getting cheap health insurance. Now you need to get over to a large, trusted online quote site to shop and compare companies. Remember, the same type of coverage can have very different price tags from company to company, sometimes by as much as 50%.
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