How to Compare Health Care Plans

The high cost of medical insurance puts a strain on family budgets across America but living without insurance is a recipe for financial ruin. Comparing health care coverage can decrease this strain while still safeguarding against medically induced bankruptcy.
To effectively compare health care plans you will first need to do a little research and learn about the various forms of health insurance. Then you will need to use your personal finance and health history to perform a side-by-side comparison of the options available to you.

Things You'll Need

• Copy of benefit summary/current health care policy Health care plan options available to you Notepad Pen or pencil Calculator Last year's federal income tax form Contact information for benefit coordinator or independent insurance agent (optional)

Instructions

First Glance Comparison

1. Research types of health insurance. Standard insurance plans include HMOs, PPOs, POPs and fee-for-service plans (also known as indemnity). Other health care plans include flexible spending accounts, health savings accounts and health reimbursement accounts.

2. Choose only the types of insurance that work for your lifestyle. Think about how you access the medical system. Do you stay in the local area? Will obtaining referrals be a problem? Is your family doctor participating in a PPO or an HMO?

3. Write down any benefits that you or your family absolutely need. For instance, if three members of your family wear glasses, write down vision coverage.

4. List any coverages that would be financially catastrophic if insurance did not cover them. The HCUP averages that the cost per hospital stay in 2006 is $23,958. Other services that may be catastrophic include obstetrics, psychiatry, durable medical equipment and long-term care.

5. Decide on a comfortable deductible (the amount of money you must pay out-of-pocket before your insurance starts to pay). According to the Kaiser Family Foundation, the average deductible in 2004 for a single person was $254. High deductible plans start at $1,000, but may save you on premium payments.

6. Review your finances to determine the amount you can pay, up front, at the time of service. This is the co-pay or co-insurance.

7. Eliminate any options that do not fit your lifestyle or your out-of-pocket requirements.

Comparing Plans

1. 

   Create a table with the insurance plans you are considering at the top and the list of coverages you desire on the left.

2. Fill in the table by noting what is covered and what the deductible and co-pay are for each service.

3. List the price for each health care plan under each column. Circle only those that fit into your monthly budget. The Kaiser Family Foundation states that workers paid an average of $558 of the $3,695 annual premium for single coverage and $2,661 of the $9,950 premium for family coverage in 2004 (with employers paying the remainder).

4. Decide upon the health care coverage that meets both your medical and financial requirements.

Tips & Warnings

• Talk with your benefits coordinator at work to see what plans may be available to you. Certain coverages can be bought as stand alone insurance (such as dental or vision) and may be cheaper through a spouse's plan. If your employer does not offer insurance, check into community or organization plans (such as Small Business Associations). Consult an independent insurance agent for information on plans and coverages available to you.

• Check to ensure coverage of preexisting conditions prior to changing health insurance plans.

Resources

• Agency for Health Care Research and Quality
• California Medical Association
• Kaiser Family Foundation