Which medical plan is right for you?

You have several opportunities to choose or update your employer-sponsored medical coverage — when you’re first hired, during the company’s annual benefits enrollment, or if you have a qualifying life event like a birth or marriage. Since you can’t change plans at any other time of the year, it’s important that you make the best choice for your situation. Choosing the “wrong” plan could cost you — studies show that most US employees buy more health insurance than they need and are paying higher paycheck premiums for coverage they aren’t using.

So, do yourself a favor and take a careful look at the medical plans offered to you. A little research can pay off all year long!

How can you tell which plan is best for your needs and budget? Here are four points to consider.

  1. What you pay for coverage.
    Paycheck deductions (also known as premiums) are an important part of your decision. This is the amount you pay to have coverage. Once you’re enrolled in a plan, this amount doesn’t change no matter how much — or how little — medical care you receive. Think about the amount of care you expect to need for yourself and your covered family members. If it’s mostly preventive check-ups and occasional doctor visits, you probably don’t need to pay for a more expensive plan. (Remember, your in-network preventive care, like annual physicals, is free.) On the other hand, if you think you might need a lot of care, and you don’t like the idea of high expenses during the year, you might want the predictability of a higher-premium plan.
  2. What you pay for medical care and prescriptions.
    Look at how you’ll pay for your medical and prescription costs with each plan. Compare deductibles (the amount you owe before the plan begins sharing costs), coinsurance (the percentage of costs you pay after meeting the annual deductible), and copays (the amount you pay at the time of service). Then, think about how much money you expect to have on hand to pay these costs as they come up. You should also compare each plan’s out-of-pocket maximums. This is the most you would have to pay for deductibles, coinsurance, and copays during the plan year. If your expenses exceed this amount, your plan will cover them at 100%.
  3. Your access to providers.
    Check each plan’s provider network. If you have certain providers you need to see, make sure they are in-network, or if they aren’t, check the plans’ out-of-network coverage. Keep in mind, staying in-network whenever possible is an easy way to reduce your out-of-pocket costs.
  4. Your ability to take advantage of tax-saving accounts.
    Like saving money? Then you’ll want to check out the tax-saving accounts available with each plan. Only high-deductible health plans allow you to contribute to a Health Savings Account, or HSA, which is an account you own for life and can use to pay for current and future medical expenses. Other plans that don’t qualify for an HSA allow you to contribute to a health care Flexible Spending Account, or FSA, which also saves you money on taxes but has lower annual contribution limits and restricts your ability to roll over a balance at year-end.

“Health Insurance Confusion Continues To Plague Americans, New Data Show,” Forbes (forbes.com), February 8, 2021
“How To Avoid Costly Financial Mistakes During Open Enrollment,” Forbes (forbes.com), October 24, 2020