Our (Ridiculously Simple) Method for Choosing the Right Healthcare Plan For You

Choosing the right healthcare plan can be intimidating, especially if you’re doing it for the first time. The stakes are high; the options are confusing; there’s often a small window during which you can make the choice before you lose your chance; and the whole thing highlights the merciless jank that is our healthcare system!

Luckily, there’s an incredibly easy, 100% foolproof way to make the decision. Here’s our secret to choosing the right healthcare plan:

First, you put it off until there’s only, like, two days left to pick. Then, you forward all your onboarding documents to your dad’s wife, Carol. She is the perfect person for the task, being both generous and detail-oriented in a way you will never understand. Finally, you pick whichever one she says, and never think about it again until your soul walks the halls of the Duat and Anubis weighs your heart against Ma’at’s Feather of Eternal Truth.

Choosing the right healthcare plan? You can do that in your jammies.

… What’s that?

You don’t have a Carol?! My, how awkward for you.

I suppose that means the task falls to me. Heavy is the head that wears the crown of reading fine print! Today I’ll explain a really easy method for choosing the right healthcare plan. If you’ve never chosen your own plan, or you’re faced with a bunch of new options, it’ll help you quickly identify the best one based on your specific healthcare needs.

Today’s article pertains to the American healthcare system. International readers, I’m releasing you early. Use this time to study up on equally important international adulting tasks: navigating Ryanair’s lost baggage policy, keeping poutine from getting soggy, etc.

Step 1: Determine what you actually need

The easiest way to choose the right healthcare plan is to work backwards. Start by determining what kind of healthcare coverage you want to have. (And don’t sass me with that “universal public” stuff. What do we look like—a country that considers healthcare a fundamental right? What next, clean water and guaranteed housing?!)

As long as your doctor is in your plan’s network, 100% of routine preventative care should be covered. So no matter what you choose, you’ll be able to get annual check-ups, vaccinations, and basic screenings like mammograms and colonoscopies at no cost. (And you should always get them, because you’ve already paid for them! See our complete free medical care checklist here.) So think beyond that free, routine preventative care and consider…

  • Do you have existing health conditions? If so, what do you need in terms of support?
  • How often do you go to the doctor? Some people go to urgent care like it’s church. Others need their families to hold whole-ass interventions to get them to please, please go get that weird growth checked out. Be realistic about who you are.
  • How important is it for you to see a specialist easily? Some plans let you go straight to them, while others make a primary care doctor their gatekeeper.
  • Do you have existing medical providers you want to keep? I’ll see any old primary care or dermatologist. But you’ll pry my dentist out of my cold, dead hands—networks be damned!
  • Do you have plans for major medical procedures on the horizon? If you’re anticipating something big—like getting pregnant, seeking top surgery, fixing a whack meniscus—that should factor into your decision.

Obviously if you have dependents—like a partner or children—you’ll need to consider their needs as well.

Step 2: Evaluate your financial situation (and risk tolerance)

Fundamentally, choosing the right healthcare plan is a gamble. If you choose an expensive plan, you “win” when and if you actually get sick and use up the value of that coverage (and more). If you choose a cheap plan, you “win” when you don’t get sick and didn’t pay for coverage you didn’t need.

So the question that guides your choice is: How likely is it you’ll get sick in the coming year?

Until Raven Baxter DMs me to assert otherwise, I’ll assume that none of our readers have psychic powers. I don’t either, as evidenced by how rarely you catch me at the racetrack. Many people get sick and run up a bunch of medical bills without any forewarning that it’s going to happen. But sometimes you can anticipate high and low medical spending years. 

My partner and I tend to stick to low-cost, low-coverage plans. But if we get a few expensive yet not urgent tasks in our long-term medical to-do list, we bump up to a fancy plan for a year, and schedule all the allergy tests, surgeries, and sleep tests we want. It’s up to you to make your best guess, based on your past health and your current lifestyle.

Your financial risk tolerance is important too. If you struggle to make ends meet, but you do have an emergency fund or an empty credit card for emergencies, a cheaper plan with a high deductible may be a good choice. But if you’d rather avoid large bills, the predictability of a higher-coverage plan might be worth its bigger monthly price tag.

Step 3: Understand your healthcare options

If you’re like the majority of American adults, you’re getting private health insurance through your employer. There are many kinds of insurance: HMO, PPO, EPO, POS, HRA, HSA, CHI… My god! We’re bankrupting the alphabet with all these three-letter acronyms! I’m not going to go over them all, because that’s a lot of information you may not need.

Most employers offer a handful of options. As part of your onboarding, you’ll almost certainly get a sheet with a table showing the differences in very clear terms. 

Here are the key words to look for:

  • The premium is the total cost of the healthcare plan. If you’re getting insurance through your employer, they should cover a large chunk of it.
  • The deductible is the amount you must pay before your health insurance kicks in. For example, if you get a $900 bill and you have a $500 deductible, you’ll pay $500, and your insurance will cover the rest.
  • Your out-of-pocket maximum is the most money you will pay in a year before your insurance kicks in and covers 100% of any remaining costs. It’s a helpful metric for gauging emergency preparedness.
  • Co-insurance is a payment structure in which you and your insurance provider split the bill. For example, if you get something done out-of-network, you may have to pay 20% of the bill, and your insurance will handle 80%.
  • Co-payment is like a mini-deductible. It’s the (relatively tiny) amount you’ll have to pay directly to your doctors after each visit, usually between $20 and $60. Because this system sucks and makes no sense, co-pays don’t count toward your deductible.
  • The plan’s specialist policy determines how easy or difficult it is to see a specialist.
  • Your plan prefers some doctors and hospitals over others. This is called their network. They incentivize you to use “in-network” providers by making you pay more for “out-of-network” bills. It’s worth it to check if your closest ER is in-network. Although sometimes they’re in-network, but individual doctors are out-of-network, because of ummm reasons??????
Choosing the right healthcare plan? Trick question, they're ALL wrong!

Step 4: Look beyond for more options

Before you commit to a plan, stop and consider if you have other options.

Start by checking out your marketplace insurance options. Medicare is only an option if you’re disabled or older than 65. But you may have state-subsidized insurance or “Obamacare” (the Affordable Care Act or ACA) options that are worth examining. Healthcare sponsored by your employer is almost certainly cheaper than any marketplace option.

But money isn’t always the only deciding factor when it comes to health. And some employers will consider negotiations for a higher salary if you pursue health coverage elsewhere. You can see all public and marketplace plans by going to healthcare.gov.

Also consider joining your parent or partner’s plan. It’s usually MUCH cheaper to add a dependent to an existing family plan than to insure one person through their own standalone policy. Under the ACA, children can stay on their parents’ plan until age 26. It’s not a permanent solution, and you won’t have full control over choosing the plan, but it can save you a helluva lot of money during a time in your life when you probably need it most.

Keep in mind that if you’re on another person’s policy, they will have some visibility into your medical history via bills and EOBs (“Explanation of Benefits”—those bill-like things that weirdly say “this is not a bill,” and I’m like “okay but then WHY are you wasting my TIME?”).

Ngl, I kinda trust Bethany to choose the right healthcare plan. I can't articulate why.

Step 5: Make your best guess and go for it

Hopefully at this point, you’ve developed a gut instinct for choosing the right healthcare plan among all your options. If you have, don’t overthink it and go for it! Any health insurance is better than no health insurance, so as long as you get it, you’ve done well.

If you’re still unsure, there’s a slightly more involved exercise that can help you decide. Using the data each plan provides, run the numbers on two scenarios.

  • Worst case: You have bad health luck this year. You get very sick while on vacation, and have to visit an out-of-network hospital for $30,000 worth of intensive care. (In reality there are ways to mitigate such bills—but we’ll ignore that for now!) How much money would you end up paying under this plan?
  • Best case: You have great health luck this year! Other than routine preventative care and existing prescriptions, you have no medical costs at all for the year. How much money would you end up paying under the same plan?

These scenarios will help you understand what it is you’re really paying for, and how much risk you’re accepting or offsetting with those hard-earned dollars.

Our tl;dr for choosing the right healthcare plan

Want to cut to the chase and understand which options strike the best balance of affordability and good coverage? I don’t blame you! Here’s a tl;dr for my fellow fine-print haters.

This advice is true for most (but not all!) people, in most (but not all!) situations. Follow at your own discretion!

  • If you’re under 26, have a good relationship with your parents, and they have health insurance, stay on their plan. You can maintain some independence by reimbursing them for your portion of their bill.
  • If you’re partnered to someone you trust, they have decent health insurance coverage, and you’re eligible to get on their insurance, get on their plan. Don’t worry if your relationship changes—marriage, divorce, and legal separation are “qualifying events” for seeking a new plan.
  • If you’re on your own, but you’re relatively young and healthy, save your money by signing up for a cheaper plan. Use the money you save each month to build an emergency fund that could help in any emergency, medical or otherwise. You’re still covered if your wheels fall off, and HSAs make great investment vehicles!
  • If you have complex health needs and/or a family of your own to support, a PPO (preferred provider organization) is the most expensive option, but it gives you the most coverage and flexibility. If the price tag is too high, an HMO (health maintenance organization) is a reasonable middle ground.

The American health insurance system is so nonsensical and labyrinthine I suspect it escaped from the Shivering Isles. If you’re having a hard time with this decision even after reading this, it’s okay! If your workplace has an HR professional, this is exactly the kind of choice they can be trusted to help with. (Though I do think it’s wise to avoid disclosing any medical conditions, disabilities, or family leave plans to them.)

Readers, how do you approach this decision? Have you ever regretted your choice? Personally, I tend to cycle through high- and low-coverage years. That’s mostly worked well for me, though there are always cases where you get sick the first week of January after “downgrading.” That’s life, baby! Please add any insights to the comments below.

And last but not least, a special shoutout to our Patreon donors. Every month they vote on topics for us to cover here on the blog. This month they chose the health insurance question! And we’re so glad they did. If you want a say in what we say, donate to our Patreon with the button below.

7 thoughts to “Our (Ridiculously Simple) Method for Choosing the Right Healthcare Plan For You”

  1. I now live in Europe and everyone has health state health insurance. On top of that we have private health insurance for those who don’t want to stay in line for the free one. Even the private one is way more affordable than in the US. Reading this, I feel really lucky that I don’t need to deal with this.

  2. Some additional things I consider when evaluating plan options for myself or my friends:
    1 – Co-pays, how much are they and is it more for specialist care? My friend has a plan that charges her a $50 co-pay for every therapy visit, even though her therapist is in network, which makes therapy cost-prohibitive for her.
    2 – You can look up provider networks on the insurance company’s website. They don’t always make this obvious, but your company’s HR/benefits team could help you (if it’s the kind of care you feel comfortable talking to them about).
    3 – To elaborate a bit more on the above, an HMO will give you access to a more limited range of providers than a PPO, but still any specialty care you would need — just not at every hospital around, and you may have longer wait times. If the cost difference is significant, and you don’t already have relationships with providers/complex care needs, I’d recommend an HMO to most people. You can always switch to an PPO at the next open enrollment period if you develop the kind of medical issue that requires regular specialist care and you’re not happy with what you’re getting.
    4 – When evaluating a plan with higher premium and better coverage versus lower premium and higher deductible, absent any known recurring healthcare needs that make it obvious, I ask my friends to consider:
    A) Will the higher cost cause me to put off going to the doctor until the problem is worse? Sometimes, the psychological aspect of “I’m already paying for lots of doctor visits with this high premium, I guess I should just go get it checked out” is really valuable.
    B) What are the financial assistance policies of my local hospital? If your plan has an $8k deductible and you don’t have $8k just lying around, many hospitals *even if you are insured* will give you financial assistance if your income is low enough. Hospitals should have a page on their website that explains this, but numbers I commonly see are folks making less than 250% of the Federal Poverty Line are eligible for assistance. This assistance may involve adjusting off a portion of your bill, but you have to know to ask for it — most places won’t proactively offer it, especially if you aren’t on Medicaid. Even if you don’t qualify for financial assistance, most hospitals will offer either lump sum discounts (in the above example, this would mean calling up the billing office and saying “All I have is $5k, if I pay that today can you write off the rest?”), interest free payment plans, or both. If your local hospital is for-profit and offers less/no financial assistance, I’d place a higher priority on choosing a plan with a low deductible that is in network with that hospital.

    Also, if your insurance plan covers ER visits at all, it will cover ER visits (and associated IP admissions) for true emergencies, regardless of network status. So *if it’s an emergency, go to the hospital*. This article from CMS explains it in more detail: https://www.cms.gov/medical-bill-rights/know-your-rights/using-insurance

    1. “My friend has a plan that charges her a $50 co-pay for every therapy visit, even though her therapist is in network, which makes therapy cost-prohibitive for her.”

      As someone who used to manage a state health care exchange, this raised some flags for me. I’m not sure what sort of plan your friend has, but odds are that it’s a plan covered by the ACA. And under the ACA, there’s something called mental health parity. That basically means that a plan can’t charge more for mental health services (i.e. therapy visits) than they would charge for similar other medical services. So unless your friend is paying a $50 copay every time she sees her doctor, something is definitely off here. I’d encourage her to look more into this.

  3. Another thing to think about is health care coverage while traveling. One of my former co-workers had an HMO and went on a business trip to Texas (we’re in the DC area) and woke up blind in one eye. She went to the hospital and came out with a very expensive bill, because her HMO is only for our local area. My PPO has international options, and when we travel outside of the US, we are still covered. Our insurance may cost more, but the peace of mind is worth it. Peace of mind is a really big part of any financial decision (health insurance, paying off your mortgage, etc.) IMO.

  4. Thanks for this write-up, it covers in easy-to-understand terms what it took me about 10 employed years to figure out.

    The only other thing I’d add is the concept of an HSA (health savings account). In my current job, I opted for a higher cost plan for my first partial year since I had a six-month long elective treatment I was doing. For my second year, I opted to go with a lower-cost plan that was HSA eligible. Even though I could comfortably afford the higher cost plan, the math worked out that the same monthly cost of the high cost plan was equivalent to the cost of the low-cost plan + maxing out my HSA for the year. Other than the treatment I finished up, I happen to be someone with simple healthcare needs right now, so I feel better putting that extra money into an HSA instead of paying for a high-cost plan and feeling like that extra cash was just kind of disappearing into the ether rather than going into an account that I can spend on healthcare costs later.

    Of course, everyone’s situations are different but I figured I’d mention this.

  5. This tip is for after you pick a plan, and if you end up in “worst case scenario” land (or really, any billing after the fact in this forsaken country): Grab a copy of _Never Pay the First Bill_ from your local library.

Leave a Reply

Your email address will not be published. Required fields are marked *