First you gotta
understand the basic terms. Beyond that, it's really not rocket science.
Everything you need to know about health insurance can be found in the wisdom of
game shows.
The Price is Right - Choosing a Plan by the Numbers
Choosing a plan by the numbers is like the Price is Right
Showcase Showdown. Here's how to pick a price without going over your limit.
To start, ask yourself two things:
1. What is my risk tolerance?
2. How much money
could I access if the worst happened?
When it comes to
the "accessing money" part, don't get all panicky. I know times are tight. I
can't even run to the Waffle House without using my credit card. But that
doesn't mean that if the worst happened, I couldn't pay a hospital a couple
thousand to cover a big bill. (I could use that Waffle House credit card if I
had to). Or, I could ask the hospital to put me on a payment plan. Most will do
it, and some will even stretch the plan over a year or more depending on
circumstances. What is important to note is that this only matters if the worst happens.
That's where your
risk-tolerance comes in. The higher you set your deductible, the lower your premium will be.
But just like the Showcase Showdown, the question is how high is too high. You should know that most people don't use the bulk of
their deductible. Only 16% of people with $2,000 deductibles use that entire
amount in one year. I know this because the fancy insurance company told me. So you
have to balance the risk of the worst happening against the benefit of having a lower monthly premium.
Where do you find the balance? Personally I find the balance in
a rosé spritzer and a Game Show Network fix, but that's neither here nor there.
With the risk vs. exposure equation, you find the balance in the numbers. You
can boil every plan down to the maximum annual financial
exposure. The plan deductible plus the out of pocket maximum is the most you will pay in one year. A $1,000 deductible with an out-of
pocket maximum of $2,000 ... equals a maximum exposure of $3,000.
$1,000(deductible)
+ $2,000(out of pocket max) = maximum cabbage you will spend in one year.
If that number doesn't keep you up at night, go higher. The
higher you get this number, the lower your monthly premium will be. And for me,
a lower monthly premium helps me sleep like a baby. Well,
that and the aforementioned rosé spritzer. But remember Bob Barker's advice and don't bet too
high. If you go over your risk tolerance all you get is a "thanks for
playing" and a reminder to have your pet spayed or neutered.
The bottom line, in this case, is the
bottom line. Balance what you can afford today with the bill you might receive
tomorrow -- if the worst happened.
The Dating Game - Matching Your Needs
Trying to find the right health insurance plan is likegoing on blind dates. You can ask questions up front, but you may not know what you've got until you spend time together. Ask the right pre-date questions to avoid surprises. Read more...
(Don't) Press Your Luck - Watch Out for Hidden Whammies
Ever wonder why some insurance plans are a fraction of the cost of others? These, too good to be true, plans are full of hidden Whammies. Read more...