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Lesson 5: Balancing Coverage and Cost
Hi Firstname_placeholder, welcome to day three!
Hopefully yesterday's lesson helped you form an opinion as to what kind of health plan would best fit your needs and lifestyle. Today we'll balance the equation by helping you find a plan that fits your financial capabilities too.
Unfortunately, the reality of health insurance is that most of us simply can't afford the level of coverage that we would ideally like to carry.
Instead, we have to create some kind of balance between premiums, co-payments, coinsurance and deductible. And it's not easy. No one wants to carry a $5,000 deductible, but for a certain person in a certain type of situation, it's a sacrifice that makes sense.
So how can you tell what works for you?
It's actually simpler than it sounds. When you apply for a health plan, you' ll probably be faced with a list of options ranging from low-cost policies with high deductibles and co-pays to expensive policies with more comprehensive coverage. It's a matter of deciding which benefits are most important to you given your particular situation.
A few examples:
A young single person can probably better afford to shell out for a high deductible in the unlikely event of serious illness, particularly if that risk is offset by low monthly premiums.
A family of four, on the other hand, with several times the likelihood of illness, and four times the cost of preventative care, is less equipped to assume that risk. In their case, paying for a low deductible will probably help defray high overall medical expenses.
And anyone with a chronic illness needs the security of the most comprehensive coverage available.
It's human nature to opt for the policy with the lowest monthly costs (premiums), and if you're financially strapped such a policy may be all you can afford. It's better to have some coverage than none. But if you can afford more per month, and you are truly in a situation that calls for it, sacrifice a little more cash per month for a lot more in overall security.
Of course, up until now we've been speaking in the abstract. It's about time we (well, you) start looking at some real numbers!
One warning: health insurance is far from cheap, and, unfortunately, when you are buying an individual policy, your costs tend to be even higher. Employer-offered health plans spread the cost "risk" throughout the employee pool, and so the average premium usually falls as the size of the "pool" grows. You're a "risk pool" of one, which means costs aren't being spread around among too many other people. Or any other people, actually. So be forewarned.
Next: Lesson 6: all about health savings accounts
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