5 Vital Things to Remember When Buying Health Insurance

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Thanks to the Affordable Care Act (or "Obamacare"), now every individual has access to affordable health insurance. All new health care plans include 10 Essential Health Benefits, but there are other important factors to consider when choosing a plan. Here are the top five.

1. HMO or PPO?

There are generally greater limitations when selecting an HMO, but plan premiums are typically lower due to these very restrictions — such as being required to obtain a referral from your primary care physician (PCP) before receiving any health care services other than emergency.

Conversely, PPOs typically carry higher premiums. But, they allow more physicians to participate in the network, offer a larger number of in-network hospitals and clinics, and most likely will not require a PCP referral before you can receive services. Generally speaking, PPO plans are better-suited for people with more regular or intensive medical needs, whole HMOs are best for persons who limit their use of health care services.

2. Networks

Your insurance provider can specify in-network, out-of-network, and preferred networks for the services you receive. You should check to see which services are covered within your network, and if there are any out-of-pocket costs for going outside of it. It can mean a difference of thousands of dollars.

3. Deductibles and Co-Pays

Paying a higher deductible brings down the cost of your monthly premium. But there are other benefits: High-deductible plans can also be combined with health saving accounts (HSAs), which are medical savings accounts that allow you to pay for deductibles, premiums, prescriptions, medical supplies, and other qualifying health expenses using pre-tax dollars.

To save on insurance costs, check your plan's copay for routine office visits and prescription drugs. If you think you'll use these services regularly, make sure the plan offers a reasonable copay. Or, consider signing up for an HSA to help defray the cost.

4. Drug Benefits

Most insurance providers retain the right to only cover generic or less expensive prescription drugs when available, and require you to visit a pharmacy within your network. Read through the provider's drug benefits to make sure your desired level of prescriptions are covered.

5. Short-Term Coverage

Short-term plans provide coverage from 30 days up to one year. Use this type of plan only if you are in between plan options. Keep in mind that short-term coverage does not meet the ACA's essential coverage requirement, and as such, is still subject to penalties. In other words, these plans are not protected under ACA. You can be denied coverage, denied due to pre-existing conditions, and cancelled at any time.

What factors do you consider when shopping for health insurance?