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.
Some states have their own health insurance marketplaces. If your state does, you’ll use the state-level exchange. If it doesn’t, you’ll use the federal one.
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.
Enrollment in Marketplace health plans isn’t allowed year-round. You must enroll during open enrollment (November 1 to January 15) unless you qualify for a special enrollment period due to a qualifying life event (like having a child or getting married).
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.
If you’re interested in Medicaid coverage, check the program details in your state to find out the extent of the eligibility requirements that apply to you.
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.
Newer Marketplace plans and plans with low enrollment may not have ratings. The lack of a star rating isn’t an indication of a plan’s quality.
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:
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
While a low premium can sound enticing, you’ll typically have a higher deductible and higher out-of-pocket expenses. Alternatively, you don’t want to pay too much upfront and then not obtain enough medical services to make it worth it. Consider the medical services you’ll need throughout the year. Then, try to find the balance between upfront and out-of-pocket costs.
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.
| Plan Type | Pay Less In-Network | Referrals Required for Specialists | Out-of-Network Provider Coverage |
|---|---|---|---|
| Preferred Provider Organizations (PPOs) | Yes | No | Yes, but an additional cost |
| Point-of-Service (POS) Plans | Yes | Yes | Yes, but coverage is better and costs are lower in-network |
| Health Maintenance Organizations (HMOs) | Yes | Yes | No, except for emergencies |
| Exclusive Provider Organizations (EPOs) | Yes | No | No, except for emergencies |
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.
Is It Better to Have a High or Low Deductible for Health Insurance?
It depends on your health needs. A high-deductible plan is preferable when you don’t need many medical services throughout the year, as it often has a lower monthly premium. However, your out-of-pocket costs can quickly outweigh the benefits of your low premium. In some cases, it can be cost-effective to pay higher premiums to save on costs down the road.
What Is the Most Popular Health Insurance Plan?
Employer insurance was the most popular source of health insurance in 2021 (the most recent year for which federal data is available), making up the coverage that more than half of insured people. Preferred provider organizations (PPOs) are the most popular type of employer health plan, covering 49% of employees, according to KFF’s 2022 Employer Health Benefits Survey.
How to Get Health Insurance Without a Job
If you don’t have a job, you may be able to get a short-term health insurance plan, free or low-cost coverage through Medicaid, or a plan through the Health Insurance Marketplace. You can apply for Medicaid and Health Insurance Marketplace coverage using the Marketplace website. Additionally, you can browse short-term health insurance providers and compare plans.
Are Health Insurance Premiums Tax Deductible?
Health insurance premiums can be deductible if you itemize your deductions on Schedule A (Form 1040). The IRS allows you to deduct medical and dental expenses for you, your spouse, and your dependents that exceed 7.5% of your adjusted gross income.
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