Thanks to the rising costs of healthcare and health insurance, many people shop for new coverage based on premium alone. They come up with a number in their head in terms of how much they want to spend each month, then look for insurance plans that match that figure, not taking into account such factors as a plan's deductible, doctor network and co-insurance.
While these factors may not matter that much if you're generally healthy or don’t have dependents, for those who do need more regular healthcare, the cheapest option isn’t always the best. In some cases, going with the lower-premium insurance plan could wind up costing you more. Here are three good reasons to consider a more expensive plan over the cheapest option. (Read more, here: How To Shop For Health Insurance.)
1. You Have a Chronic Disease
When it comes to health insurance, the more that you pay in premiums, the more coverage you get and the less you'll need to pay out of pocket. These days, most insurance policies have co-payments, co-insurance and a deductible that you will have to meet before coverage kicks in. The size of your monthly premiums will dictate how much of that coverage you’re responsible for.
If you suffer from a chronic illness, going with a low-premium plan can turn out to be a bad financial decision. Because of the maintenance medications and frequent doctor visits typically associated with a chronic disease, any savings you’ll get from a lower-premium insurance plan will be wiped out by your out-of-pocket costs. Also, cheaper plans may not have your doctors and specialists in network and the plans may have a hefty deductible. And if you need to go out-of-network, the costs you're responsible for can skyrocket.
A better option if you have a chronic disease is to examine the total cost of care and then choose a plan that meets all your needs without requiring you to cover a high deductible or spend hundreds in co-payments and co-insurance. Make sure the plan covers your medications and includes your must-have doctors and specialists. (Read more, here: Cutting Your Cost For Marketplace Health Insurance.)
2. You Have Dependents
Anyone who has children knows that you can spend a lot of time in the doctor’s office, whether it’s for the flu or broken bones. While every plan will cover a specific amount of wellness visits for your children, cheaper plans could also mean a lot of out-of-pocket costs for unexpected injuries and illnesses. If you have children, a high-deductible health insurance plan, while temping from a cost point of view, may not make much sense. Just one broken arm, and you could owe a huge doctor bill before your coverage will kick in.
A low-deductible, higher-cost plan may mean that you have to shell out more each month. But all it takes is one accident a year, and the plan could save you substantial money. A low-deductible, pricier plan makes particular sense for parents of small children, who are more prone to injuries and illness, and/or of older ones who participate in potentially dangerous sports.
3. You Can't Meet the Deductible
Nobody can predict the future: no matter how healthy you are, you can’t prevent an unexpected illness or injury. What you can protect against, however, is how much the ailment will cost you. Many healthy people choose the lowest-cost option when it comes to health insurance, which means a higher-deductible plan. After all, they figure the odds of getting hurt and needing hospitalization are low, so they won’t have to worry about meeting a high deductible that comes with lower-premium plans. But if something bad happens and you can’t afford this deductible, the worse off you will be. It could mean delaying medical care or putting it off altogether. That in turn could worsen your illness, requiring more costly medical intervention down the road.
That's why a high-deductible, low-cost insurance plan doesn't make financial sense if you don’t have the money set aside to meet the deductible. (Read more, here: Choose Among Bronze, Silver, Gold and Platinum Health Plans.)
The Bottom Line
Health insurance isn’t cheap and by most accounts, it’s only going to get more expensive. It's why many people focus on the premium alone when shopping for health insurance. But doing so could end up costing them more if they aren’t careful. Unless you're in perfect health and have a lot of money in the bank, a high-deductible plan doesn't really make sense. People with chronic illnesses, those who have young children to care for and those who don't have enough money to meet a high deductible will ultimately save more with a higher-premium health insurance plan, which offers greater benefits and fewer out-of-pocket costs.