Choosing Your Plan

Hey there! This is Jason, and welcome to Health Insurance 101. Today we're diving deep into one of the most important decisions you'll make - choosing your health insurance plan. Let me help break this down into digestible pieces so you can make the best choice for your health and your wallet.

Let's start with evaluating your healthcare needs. Take a moment to think about your typical medical usage. Do you see doctors frequently? Have any chronic conditions? Planning any procedures in the coming year? Make a list of your regular medications and typical doctor visits. This is your healthcare snapshot, and it's crucial for choosing the right plan.

I always tell my clients to look beyond just the monthly premium when comparing plans. Yes, that monthly cost is important, but it's just one piece of the puzzle. You need to consider the deductible - that's what you pay before insurance kicks in - and your out-of-pocket maximum, which is your worst-case scenario cost for the year. Also look at copays and coinsurance. A plan with a lower premium might actually cost you more if you have high copays and frequently visit doctors.

Now, let's talk prescription drug coverage, because this trips up a lot of people. Most plans have what's called a drug formulary - basically a list of covered medications grouped into tiers. Generic drugs are usually tier 1 with the lowest copays. Brand-name drugs are in higher tiers with higher costs. If you take regular medications, check where they fall in the formulary of any plan you're considering. Some plans might not cover your medications at all, while others might place them in different tiers.

Here's a pro tip: many insurers have online tools where you can plug in your medications and see exactly what you'll pay under different plans. Use these tools - they're incredibly helpful.

Now, let's demystify HSAs and FSAs - these are fantastic tools that too many people overlook. An HSA, or Health Savings Account, is available if you choose a high-deductible health plan. The beauty of an HSA is triple tax advantages: you contribute pre-tax dollars, the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. Plus, the money rolls over year after year, and you can even invest it. Think of it as a medical 401(k).

FSAs, or Flexible Spending Accounts, are different. These are use-it-or-lose-it accounts where you set aside pre-tax dollars for medical expenses. You typically need to spend the money within the plan year, though some employers offer a grace period or allow you to roll over a small amount. FSAs are great for predictable expenses like glasses, dental work, or regular prescriptions.

Let me share a real-world example. Say you're generally healthy but have one prescription that costs $100 monthly. Plan A has a $300 monthly premium and $20 prescription copays. Plan B has a $200 premium but puts your medication in a higher tier with a $50 copay. Over a year, Plan A would cost you $3,840 ($3,600 in premiums plus $240 in copays), while Plan B would cost you $3,000 in premiums plus $600 in copays, totaling $3,600. In this case, Plan B saves you $240 annually despite the higher prescription costs.

Remember to consider your provider network too. A plan might look great on paper, but if your preferred doctors aren't in-network, you'll pay more to see them. Some plans have no out-of-network coverage at all, so if staying with your current doctors is important, verify they're in-network before choosing a plan.

Here's my final advice: take time to do this analysis. Yes, it can be tedious, but this decision impacts both your health and your finances significantly. Use your insurance carrier's online tools, and don't hesitate to call their customer service with questions. They're there to help you understand your options.

Thanks for listening to Health Insurance 101. I hope this helps you make a more informed decision about your healthcare coverage.

Episode Transcript

Speaker 1 (00:00):
Hey there, this is Jason and welcome to Health Insurance
one hundred and one. Today we're diving deep into one
of the most important decisions you'll make, choosing your health
insurance plan. Let me help break this down into digestible
pieces so you can make the best choice for your
health and your wallet. Let's start with evaluating your health
care needs. Take a moment to think about your typical
medical usage. Do you see doctors frequently, have any chronic conditions,

(00:24):
planning any procedures in the coming year. Make a list
of your regular medications and typical doctor visits. This is
your health care snapshot, and it's crucial for choosing the
right plan. I always tell my clients to look beyond
just the monthly premium when comparing plans. Yes, that monthly
cost is important, but it's just one piece of the puzzle.
You need to consider the deductible. That's what you pay

(00:46):
before insurance kicks in and you're out of pocket maximum,
which is your worst case scenario cost for the year. Also,
look at copays and co insurance. A plan with a
lower premium might actually cost you more if you have
high copays and frequently visit doctors. Now let's talk prescription
drug coverage, because this trips up a lot of people.
Most plans have what's called a drug formulary, basically a

(01:08):
list of covered medications grouped into tiers. Generic drugs are
usually tier one with the lowest copays. Brand name drugs
are in higher tiers with higher costs. If you take
regular medications, check where they fall in the formulary of
any plan you're considering. Some plans might not cover your
medications at all, while others might place them in different tiers.

(01:28):
Here's a pro tip. Many insurers have online tools where
you can plug in your medications and see exactly what
you'll pay under different plans. Use these tools. They're incredibly helpful. Now,
let's demystify hsas and FSAs. These are fantastic tools that
too many people overlook. An HSA, or health savings account
is available if you choose a high deductible health plan.

(01:51):
The beauty of an HSA is triple tax advantages. You
contribute pre tax dollars, the money grows tax free, and
withdrawals for qualified medical expenses are tax free. Plus, the
money rolls over year after year, and you can even
invest it. Think of it as a medical four to
oh one K. FSAs or flexible spending accounts are different.

(02:11):
These are use it or lose it accounts, where you
set aside pre tax dollars for medical expenses. You typically
need to spend the money within the plan year, though
some employers offer a grace period or allow you to
roll over a small amount. FSAs are great for predictable
expenses like glasses, dental work, or regular prescriptions. Let me
share a real world example. Say you're generally healthy but

(02:32):
have one prescription that costs one hundred dollars monthly. Plan
A has a three hundred dollars monthly premium and twenty
dollars prescription copays. Plan B has a two hundred dollars
premium but puts your medication in a higher tier with
a fifty dollars copay. Over a year, plan A would
cost you three thousand, eight hundred and forty dollars three thousand,

(02:53):
six hundred dollars in premiums plus two hundred and forty
dollars in copays, while Plan B would cost you three
thousand dollars in premiums plus six hundred dollars in copays,
totaling three thousand six hundred dollars. In this case, Plan
B saves you two hundred and forty dollars annually despite
the higher prescription costs. Remember to consider your provider network too.

(03:14):
A plan might look great on paper, but if your
preferred doctors aren't in network, you'll pay more to see them.
Some plans have no out of network coverage at all,
so if staying with your current doctors is important, verify
their in network before choosing a plan. Here's my final advice.
Take time to do this analysis. Yes it can be tedious,
but this decision impacts both your health and your finances significantly.

(03:38):
Use your insurance carriers online tools, and don't hesitate to
call their customer service with questions. They're there to help
you understand your options. Thanks for listening to Health Insurance
one hundred and one. I hope this helps you make
a more informed decision about your health care coverage.