How to Shop for Family Health Insurance

Shopping for the right health insurance plan for your family is no easy task. You need to know all the ins and outs of the industry before you sign the dotted line.
Shopping for the right health insurance plan for your family is no easy task. You need to know all the ins and outs of the industry before you sign the dotted line.
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Going to the doctor when you're sick can be stressful. Having a health issue and not knowing what's wrong can raise a lot of scary questions. Is it treatable? Do I need surgery? But imagine going through the same process knowing you don't have insurance to cover the cost of your care. You'd probably also ask yourself how much every little procedure will cost, whether they're follow-up appointments, surgery or prescription medications that may be necessary.

And if you have a family, it's also common to worry about how you'd provide for them if you go into debt paying for your own health issue. After all, a minor surgery could completely wipe out your savings. Even a gap in coverage of just a day can be detrimental if you're involved in a car accident or slip and break a bone. Although the right family health insurance coverage can seem expensive, it is very important and will save you money in the long run.

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There are a number of ways you can guarantee your entire family is covered by a health insurance plan. If you work for a company that provides a group plan, they will usually allow you to add your spouse and children under the age of 21, or 23 if they are a full-time student. (This age limit is changing thanks to health care reform. We'll talk about that more later.) If you are self-employed, you can sign up for a personal health plan that will get you the same coverage, but without the discounted group rate.

If you're in the process of transitioning from one plan to another, it's important to maintain coverage. COBRA might be a good option for your transition if you've recently left a job to be self-employed or to return to school. COBRA allows you to keep your employee plan for up to a year and a half. The only problem is your employer will no longer pay its share so COBRA coverage can be expensive.

However, maintaining coverage can prevent your new health insurer from siting pre-existing conditions they won't cover. Even if you got in an accident and sprained your ankle while not insured, a new insurance company could site the issue as a pre-existing condition and refuse to cover complications that could arise later. No matter what ailment you're being treated for while uninsured -- diabetes, migraines or even a broken bone -- a new insurer could exclude that treatment from coverage [source: Hawkins]. You would have to pay out of pocket for any appointments, medicines or surgeries related to that issue once you get new coverage. Imagine if your pre-existing condition was breast cancer. You would go into significant debt because you let your coverage lapse.

Due to the plethora of health conditions and needs, there is no cookie cutter solution for buying health insurance. You must assess your and your family's needs to find the right plan. On the next page, we'll discuss what you should look for in a family health insurance plan.

What to Look for in a Family Health Insurance Plan

Buying a family health insurance plan is a very personal decision that requires a lot of reflection of your and your family's needs and habits. The first thing you should decide is what type of plan best fits your needs, an HMO or PPO. With an HMO, or health maintenance organization, you are restricted to the plan's network if you want the cost of an appointment to be covered. Each insurance plan has its own network of doctors and facilities in your area with which they have relationships.

You're also required to choose a primary care physician from this network. If you need to see a specialist such as a neurologist or dermatologist, you are required to first obtain a referral from your primary care physician. If you want to see a doctor outside of the network, an HMO plan will not cover the appointments and procedures, and you will have to pay out of pocket for the entire cost.

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A PPO, or preferred provider organization, provides more flexibility when seeing a doctor who is out of network. Not only do you not need a referral from your primary care physician to see a specialist in your network, a percentage of your bill will still be covered if you see a doctor out of network -- usually about 70 percent of the cost [source: The Wall Street Journal]. If you travel quite frequently, you may want to investigate an EPO. An exclusive provider organization that functions very much like an HMO, but the network is nationwide instead of being limited to your primary city of residence.

Once you decide what type of plan suits your family's needs best, you'll want to look into the details of each plan. Things you may be interested in are a health savings account, prescription drug coverage, or a plan that provides dental, vision, mental health, maternity, or some other coverage specific to your care. A health savings account is usually available through an employee group plan and allows you to put pre-tax money from your paycheck into an account each month. You can use the money to pay for health related purchases such copays, prescriptions or even over the counter products at a drug store. The drawback to HSAs is your money usually goes away at the end of the year, even if you haven't spent a dime, so use it or you lose it. These plans are best if you have a specific use for the money in mind such as saving up for a procedure or planning to start a family.

Coverage for dental, vision, mental health and other services vary from plan to plan. If your plan doesn't provide these, it may be something that you can add for an additional cost. Make certain you consider all of your needs and ensure they are covered before choosing a plan. Don't assume your health insurance plan covers anything. Make a list of your needs and check them off for each plan you consider. You might be surprised what a plan doesn't cover. For example, many personal plans don't cover maternity costs unless you purchase a special supplement plan.

Once you've figured out exactly what your family needs, it's time to price the options. On the next page, we'll discuss how to find an affordable plan if you're on a budget.

Find Affordable Family Health Insurance

No matter what plan you choose, you should look at the plan in its entirety, not just the monthly fee.
No matter what plan you choose, you should look at the plan in its entirety, not just the monthly fee.
Visualfield/Dreamstime.com

Wouldn't it be great if we could pick a plan based solely on our family's needs without a thought to cost? Unfortunately, most families don't have this luxury, and health insurance is no exception to their tight budget. Once you've decided what you want in a plan, rank each item as a want or need. Are there wants you would be willing to compromise for a better price?

The next thing to do is start pricing out plans. If you're employed by a company that provides a group employee plan, this will most likely be your best option. Not only does the insurer provide a discounted rate for the group of employees, your employer will usually pay a portion of the cost. Even with employee plans there are usually a few choices such as PPO versus HMO, each with different costs and coverage options.

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If you and your spouse both have access to an employee plan, it may be best to choose one for the entire family. On the other hand, it might also be more affordable or give you better coverage for each spouse to keep his or her own employer's plan. It all depends on the options available to you and what is best for your family. Don't forget to ask your trusted coworkers for advice, especially if they've had more experience with the plan than you.

If you're seeking an individual plan, you should get multiple quotes from providers, and get several quotes from each provider to compare your best- and worst-case scenarios. Even if you're self-employed, you may still be eligible for a group plan that would provide a discounted rate. Unions, trade groups and other associations may offer group insurance plans [source: Reuters]. Although you won't have the added bonus of an employer paying a portion of the cost, you can still benefit from the group discount.

No matter what plan you choose, you should look at the plan in its entirety, not just the monthly fee. Every plan will have deductibles you must meet, copays you owe for each appointment and varying monthly fees. Some plans may even require coinsurance, where you are always responsible for a percentage of your health care costs. Take a look at how often your family uses the doctor and average out how much the plan will cost you in a year. Do you have a child with a condition that requires constant appointments? If so, a plan with a lower copay may be the best option. Is your family generally healthy and rarely visits the doctor? If so, a plan with a low monthly rate, but a high deductible might work for you.

If you are in a tight spot and can't afford the plan you want, you might want to consider catastrophic insurance, which is designed to cover emergency situations only. For a low monthly fee, you will receive a high deductible to meet. Compared to HMO deductibles of perhaps $250, a catastrophic insurance deductible might be closer to $2,500. The difference is you will be completely covered at 100 percent once this deductible is met. This way, if you are in a car accident, you won't have to go into severe debt to cover your bills. You'll have a plan to fall back on.

As you can see, finding the right family health plan is a complicated task. So what happens when the government gets involved? We'll discuss health care reform on the next page.

What about health care reform?

There has been a lot of talk about government health care reform. Although the plan -- referred to by many as "Obamacare" -- was signed into law in March of 2010, there is still confusion about what exactly the bill will mean for the insured and uninsured in America. Although the plan will not officially go into affect until 2014, there are some benefits you can take advantage of now for your family.

One benefit that is particularly of interest to families is the new mandate for the age of dependents. Historically, insurance plans would not cover children as dependents over the age of 21. Some plans allowed coverage up to the age of 23 if the child was enrolled in school. Thanks to the reform bill, you can now keep your dependent on your plan up to the age of 26. That means that from birth through the age of 26, they will cost the same amount on your insurance plan. Not only that, but there are no regulations about coverage ending if the child is not in school, gets married or is employed full-time [source: Jaffe].

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You should still look closely at your plan when it comes to your dependents. Despite this new mandate, there is no requirement that any plan cover children at all. Make sure you continue to do your homework where your children's coverage is concerned.

Another benefit available to you now is that you may be eligible for Medicaid or another government health plan that benefits from federal funding to offer you a cheaper plan. These plans used to be reserved for the poor or disabled, but the regulations have been relaxed to help those who have suddenly found themselves unemployed. Options vary by state, so check out your state government's Web site for more details on the options available to you [source: Hawkins].

Many believe the new law to be unconstitutional. In fact, many states and individuals have filed suit against the law. The Florida state court heard a multi-state suit and ruled parts of the law to be unconstitutional. The main controversy surrounds the requirement that every American purchase a health insurance plan. Once the law is enacted in 2014, you must have health insurance or else you'll have to pay a tax penalty. However, you don't have to adopt a government plan; you can keep your private or employer's plan.

As we're all starting to gain a better understanding of "Obamacare," the plan is getting closer to final ruling as the Supreme Court has agreed to hear Florida's multi-state case stating parts of the law to be unconstitutional. It looks like a final decision on the plan will be made sometime in 2012, right around the time of the presidential election. With the possibility of more change on the horizon, it seems health care will never be a black and white answer. But, if you do the work to understand what is best for you and your family, you can protect them from the added stress that comes with not having the right health coverage.

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More Great Links

Sources

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