How to Shop for Family Health Insurance

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.

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.