Every year, Americans spend $200 billion in prescription drugs. People are taking more drugs, and drugs keep getting more expensive. The same can be said about medical insurance costs, which are so high now that some companies are dropping health benefits altogether.
Not having enough money to pay for their health care, some people are taking potentially fatal risks, such as skipping medications or stretching out their doses. There are, however, various options for people seeking good medical coverage with a tight budget.
When considering the costs of a health plan, you should pay close attention to:
These are the monthly payments you have to make to be in the health plan.
These are the amounts you will need to pay first before the health plan covers the costs.
These are fees you need to pay for each doctor or emergency room visit.
Generally, the lower the costs, the less flexible the plan is. If you want freedom to select any physician or service, you may have to pay high premiums. This type of plan is known as traditional indemnity.
Another option is a Health Maintenance Organization (HMO).
An HMO is not expensive and usually has a broad coverage. Although there are no deductibles-just co-payments-you can only see a doctor approved by the plan. Also, before seeing a specialist you must go to your selected primary care provider, who will refer you to the specialist.
A different plan is known as Preferred Provider Organization (PPO). Usually more expensive than an HMO but less expensive than a traditional indemnity, the PPO plan offers incentives for seeing a doctor within the plan’s network-you may see other physicians but at a higher cost. Both deductibles and co-payments are charged for some of the services.
A mix between an HMO and a PPO is the Point of Service Plan (POS), which costs about the same as a PPO. It is similar to an HMO in that you must choose a primary care provider, but, like a PPO, it lets you go out of the network at a higher cost.
If you don’t have health insurance or have only major medical coverage, you may be eligible for a Health Savings Account (HSA). An HSA is like an IRA, but instead of saving pre-tax money for retirement, you save to pay for medical expenses. The money can be withdrawn at any time for qualified expenses-otherwise you would have to pay taxes. This plan is good for healthy people that rarely use medical services.
Your employer may not offer every type of plan, but you can take some steps to obtain the best price according to your needs:
1. If you want a low premium and have some emergency savings, you can select a deductible between $250 and $500.
2. If you want lower costs in general, choose an HMO with a co-payment of $25.
Other factors that affect the amount of your health insurance premium are the lifetime maximums and the number of benefits in your plan. For example, you will probably want to include dental benefits in your plan, but not vision benefits. These days, health insurance companies offer sophisticated services that most people don’t really need-the more services you pick, the higher your premium will be. So choose wisely.