How to Compare Health Plans
Learn how to compare health plans to get the best deals on health insurance and health care. Compare your health needs with your plans costs and coverage, to find an affordable plan with benefits that are designed to cover you.
No matter how you shop, and boy are there a lot of different options under the Affordable Care Act, you’ll want to follow the strategy below for comparing health plans and getting the best health coverage at the best upfront and out-of-pocket costs.
Health plans must be purchased during open enrollment. For more information on understanding health plans look at types of health plans, how to buy health plans, and how health insurance works.
General Tips on Comparing Plans
If you are a student, an employer, an employee, shopping for an individual plan or family plan, and even if you are a senior looking a Medicare Advantage plans, understanding how to compare plans can help you shop smart. Here are some general tips for shopping for plans, details on comparing plans can be found below this. More health insurance tips can be found here.
Everyone is different. By knowing your medical needs and income, and even getting recommendations from your primary care provider and local medical services providers, you’ll have a much better idea of what plans to look at. It’ll making comparing plans easier as you’ll have less plan choices to compare.
- Higher deductibles mean lower premiums.
- High deductible health plans can be paired with Health Savings Accounts.
- Keep in mind that coinsurance won’t kick in until you meet your deductible.
- Not everything you pay out of pocket goes toward your deductible on all plans, make sure you know if your plan offers non-comprehensive and how that affects your out-of-pocket costs. Know what goes toward your in-network deductible, if you have an out-of-network deductible, and what doesn’t count toward any deductible.
- On a family plan deductibles are going to be higher, this is offset by the fact that all covered family members services go toward your deductible. This is called a cumulative deductible.
- Copays are small up-front fees you pay for services before you meet your deductible.
- By making sure your plan covers services you use regularly at low copays you’ll save on care over time. So make sure routine care and prescriptions have the best copays.
- Think about emergency room copays, in an emergency you’ll want to know what cost sharing will apply.
There are no dollar limits on essential care. Also there are out-of-pocket limits on what the maximum deductible or out-of-pocket maximum can be. There are also limits on the lowest average cost sharing a plan can have. Limits can be placed on non-essential care and the amount of times you can use some essential services.
Catastrophic Emergency Services
Some plans just cover you in an emergency. The lowest cost plans only cover minimum essentials like one wellness visit and key preventive services. You pay most costs out-of-pocket until you reach your maximum (typically set at the legal limit).
Not all plans offer the same benefits. Some plans will cover any pre-hospitalization service in the 30 days preceding a hospital stay. Other plans will only cover specific tests related to the stay. Some plans cover this with copays, others coinsurance.
Home Health Care
If you require home healthcare services make sure your plan covers it.
Drug Formularies, Networks, and Benefits
You’ll want to make sure the services you need count as covered in-network services. This counts for drugs too. All plans provide ten essential benefits, but cost sharing and amounts and coverage beyond this differs from plan to plan. Make sure your Primary Care Provider, services you need, local hospital and drugs are covered with good cost sharing in-network. Make sure your local pharmacy “likes” your insurance.
HMO or PPO
HMOs require referrals and a Primary Care Provider. PPOs allow flexibility between in-network and out-of-network. You may still need a referrals for out-of-network care.
Who is Getting Covered
Health insurance differs based on what type of coverage you are getting and income. Comparing employer plans, student plans, individual plans, family plans, and Medicare plans all require that you weigh some additional factors. Specifically these include weighing cost assistance amounts and, especially for employers, affordability.
What plan should I get? The going advice has been: when in doubt, choose a marketplace silver plan. As these are the only plans that qualify for out-of-pocket assistance (which you can qualify for mid-year if you lose income or gain income). However, that was before Trump said he would cut out-of-pocket assistance. If that ends up being true, then a bronze plan with an HSA is the most cost effective way to go for most families. That said, every family has different needs and some will prefer low-deductible high-premium Gold plans. Keep reading to learn more.
Health Plan Overview
To find the right health plan first you’ll gather some essential information on your health needs and figure out your projected income for the upcoming year. Then you will figure out which health insurance types you qualify for based on income and medical needs. Then you’ll compare health plan options within that insurance type based on your income and medical needs. Below we discuss each of these steps in detail, this should give you the basics of what you need know to compare plans like a pro.
In order to properly compare plans you’ll need to familiarize yourself with health insurance works and some key health terms. We won’t go in-depth on everything on this page, so make sure to follow the links if you want more information.
How to Compare Health Plans: Prepare Information
When comparing health plans, whether through the marketplace or any other insurance type, you should take the following steps to prepare. You won’t be able to properly shop for health insurance quotes without the following information. That being said you won’t need every piece of information for every insurance type, so don’t stress too much if you are missing something. Just do the best you can do to collect everything below.
1. Gather the basics. This part is pretty easy, but in order to make sure you can enroll in any health insurance type you’ll want to gather these basics.
- Last years tax information for you and your family
- Projected incomes for this year (discussed more below)
- Medical history – ObamaCare does away with pre-existing conditions and gender discrimination so these factors will no longer affect the cost of your insurance. Smoking, weight and age still all affect cost. (discussed more below)
- Social Security Numbers (or document numbers for legal immigrants)
- Employer and income information for every member of your household who needs coverage (for example, from pay stubs or W-2 forms—Wage and Tax Statements)
- Policy numbers for any current health insurance plans covering members of your household.
- A completed Employer Coverage Tool for every job-based plan you or someone in your household is eligible for. (You’ll only need this if you shop on the Health Insurance Marketplace. You need to fill out this form even for coverage you’re eligible for but don’t enroll in.)
2. Figure out your projected healthcare needs for next year. By knowing how much care you and your family will use, you’ll be able to shop for a health plan that meets your exact needs. This will help you avoid overbuying and underbuying, two of the top reasons people overpay in health care. To do this you’ll want to gather:
- Your total medical spending for last year
- Expected medical spending for next year
- A list of drugs you’ll need to use this year
- A list of doctors and hospitals you want to use
- A list of ongoing medical issues
- Any other known medical services you’ll need including checkups, screenings, blood-work, etc
- Remember you can’t be charged more for health status or gender any more, so always be honest about ALL your medical needs.
3. Figure out your projected income for next year. In almost every insurance type, what you pay will be based on your household Modified Adjusted Gross Income for this year, not last year. The more income sources you have in your household harder this is to project, as a rule of thumb you should always err on the side of caution. If you project too low you could end up owing more or not qualifying for help that your projected income qualified you for. If you project too high you may not get all the assistance you qualify for, but in some cases you can deduct it from your taxes at the end of the year and make up for it then. To properly figure out your income for next year you’ll want to know:
- Last years income and this years projected income
- How the federal poverty levels work and what percentage of the federal poverty level your household will be for next year.
- If anyone is changing jobs, if you will add a new dependent, or if generally any change that may affect your income and household size
How to Compare Health Plans: Choosing a Health Insurance Delivery Type
Figuring out what health insurance type is right for you should actually be pretty straightforward. So let’s do a quick list and present your choices based on your income and life situation. Remember you’ll need to understand Federal Poverty Level (FPL) first.
- If you are offered coverage through work. You’ll go with employer based coverage. It’ll be rare that you’ll want to shop around for quotes, but if you do want to just keep in mind you won’t qualify for marketplace cost assistance. If you are a dependent and have access to employer based coverage through a family member you won’t qualify for cost assistance either.
- If you are over 65. We are going to be looking at Original Medicare and Supplemental Medicare in most cases. You can’t buy private insurance outside of Medicare, but you can still retain specific insurance types past 65.
- If you are under 26. Stay on your parents plan or get covered through school. If that is not an option get Medicaid or subsidized marketplace coverage.
- If you are under 30. Consider a catastrophic marketplace plan if you are young and healthy, go with Silver if you take meds and use services.
- If you make less than 138% FPL. You qualify for Medicaid in state’s that expanded Medicaid. If your state didn’t you can see eligibility guidelines here.
- If you make between 100% – 400% FPL. You qualify for marketplace cost assistance on the Health Insurance Marketplace. The less you make the more likely it is that this is your best option. If you are also under 30 then
- If you make over 400% FPL. You can shop for any private insurance inside or outside the marketplace. You won’t get cost assistance, but you have options. With great options, comes great responsibility to shop smart.
- None of these apply to you. There are lots of health insurance options out there. Check out our how ObamaCare affect me page.
How to Compare Health Plans: Plan Categories
If you are using the Health Insurance Marketplace, getting covered outside the Marketplace, or Have Medicare you have an extra factor to consider: Plan Categories.
Plan categories should not be confused with health insurance delivery types like Medicaid or Medicare, and should not be confused with traditional plan types like HMOs or PPOs. That being said we could easily refer to any of these as categories or types, and you very likely will while searching around the internet.
Marketplace Plan Categories “Metal Plans”
There are 5 categories of Marketplace insurance plans: Bronze, Silver, Gold, Platinum, and Catastrophic. Plans in these categories differ based on how you and the plan share the costs of your care. The categories have nothing to do with the amount or quality of care for covered benefits. You can read more about Metal plans here. But here are some quick tips:
- All marketplace plans have a maximum out-of-pocket cost no more than $6,600 for an individual and $13,200 for a family for 2015 and must provide at least ten essential benefits as part of their covered benefits. When you shop for coverage your focus should be on cost sharing and networks since all plans cover the essentials and protect your wallet in an emergency.
- Bronze Plans have the lowest premium and lowest cost sharing. If you get one of these plan on paying for most of your out-of-pocket expenses on your own.
- Silver Plans are the marketplace standard. These are the only plans that qualify for Cost Sharing Reduction subsidies for lower out-of-pocket costs and the plans that tax credits are based on. A smart buy for most folks who get access to subsidies.
- Higher grade metals have better cost sharing and tend to have wider networks. So if you have a big family or a lot of medical needs you may want to shoot for Gold or higher.
- Catastrophic plans are only for the young and healthy. They won’t cover much of anything outside of emergencies.
All health plans sold on the marketplace are sold by Private insurers. Many qualified brokers, agents, and providers outside of the marketplace can help you shop for a marketplace plan. That being said always make your first stop Healthcare.gov.
Medicare Plan Categories: Supplemental Plans
There are 5 categories of Medicare insurance plans: Original Medicare (Part A & Part B), Medicare Advantage (Part C), Medicare Prescription Drug Coverage (Part D), and Medigap.
- Most seniors will want to enroll in Part A&B during their initial enrollment period.
- Most seniors will also want to enroll in C with a drug plan or Part D and Medigap. Pair any of these options to ensure you avoid missing enrollment periods and missing the coverage you deserve. Learn more about Medicare enrollment.
Medicare Part A & B are public healthcare. The other parts are all sold by private insurers. Many qualified brokers, agents, and providers outside of Medicare can help you shop for a supplemental Medicare plan. That being said always make your first stop Medicare.gov.
How to Compare Health Plans: Choosing a Health Plan
Now that you know what health insurance types you need it’s time to learn how to compare out-of-pocket costs, premiums, networks, and benefits to find the right plan. When you shop online you’ll have a basic benefits sheet for health plans you are looking at. This will include the premiums, out-of-pocket costs, networks, and benefits. Let’s talk about specific things you’ll find on benefits sheets and how you can use this to pick the right plan.
In order to use the information below properly you’ll want to see our section on how health insurance works. There we include more tips and breakdowns of all the jargon used below.
Comparing Premiums and Out-of-pocket Costs
- Monthly premiums: This is the amount you pay your insurance company for your plan, usually monthly, whether you use medical services or not.
- Out-of-pocket costs: These include the costs you pay before your insurance begins to pay its share (your deductible, copayments, coinsurance, and your out-of-pocket maximum).
As a rule of thumb, the higher the premium the lower your cost-sharing amounts. So you’ll almost always pay lower out-of-pocket costs on higher premium plans. The trick is to use your knowledge of what services you will need and use that to ensure that your insurer considers those in-network covered benefits. The better your copays and coinsurance on services you’ll use the better. If your insurer is picking up the tab via coinsurance, know whether or not that is subject to a deductible. Typically your insurer won’t pay their share of copays before your deductible is reached.
Comparing Traditional Plan Types and Networks
- Type of insurance plan and provider network: Some types of plans allow you to see almost any doctor or health care facility. Others limit your choices to a network of doctors and facilities, or require you to pay more if you use providers outside the network.
For most plans your main choice will be between an HMO and PPO. In general: HMOs are cheaper, usually have a more narrow network, and require referrals to see many health care providers. PPOs cost more but don’t require referrals, and tend to have wider networks. Your plan will include information about what health care providers, including doctors that are in-network.
Please keep in mind cost sharing amounts can differ between in-network and out-of-network services. Seeing a out-of-network doc can undo all the hard work you’ve done shopping for the right plan. It’s almost always cheaper to pay a higher premium then it is to get a plan with worse networks or cost-sharing for services you’ll use in a year.
Comparing Drug Formularies
Make sure all the drugs you take are covered at full cost-sharing amounts. When this isn’t possible see if a generic will do the same job. If you take meds, make sure you double check they are covered on the plans drug formulary.
- Benefits: All plans sold through the Marketplace provide the same essential health benefits and cover pre-existing conditions and offer free preventive services. But some plans offer additional benefits.
Sure all plans will cover benefits from ten categories of essential benefits, but a cheap plan may decide you don’t really need that doc or extra treatment to live. All plans may offer the basics, but if you want awesomely detailed coverage and benefits then you really can’t go wrong with a higher premium plan.