Health Savings Account (HSA)

Health Insurance Advice

The Correlation Between Health Insurance Coverage and Costs

Two factors are important in selecting health insurance coverage for either yourself or your family.

Select the Level of Coverage Needed

First of all, the coverage provided by the policy must be adequate to meet the potential expenses you may incur. If you are young and do not have a history of health problems, most likely you do not need to pay for a top benefit health plan. Conversely, if you are reaching an age where your chances of developing health problems are heightened or if you do have a history of health problems, you need to purchase a policy that will cover the costs you may be facing.

Select the Level of Coverage You Can Afford

Secondly, and most importantly, your health insurance must be something you can afford. There are important health plan variables that are directly tied to the cost of the plan.

The initial variable is the deductible. Deductibles can range anywhere from $250 to $10,000. A policy with a $250 deductible will cost much more than a policy with a $10,000 deductible. If you are a young healthy person, it is unlikely that you will spend very much on health care. It may make sense to select a policy with a high deductible since you may not even have enough health expenses to trigger a lower deductible. If you pay for a $500 deductible, but only spend $300 in health care costs, you could have saved a lot of money paying for a higher deductible.

On the other hand, you must be able to pay your deductible. If you are on a tight budget and select a policy with a $10,000 deductible, a serious health problem could cause you great financial stress. If you cannot afford to pay your deductible, your health insurance policy is practically worthless to you.

The next variable that can help determine the cost of your premium is the level of coinsurance. Coinsurance can range anywhere from 50/50% to 100%. If an insurance policy has a coinsurance level of 100% it will cost considerably more than a policy with a 50/50% level of coinsurance.

Another variable to consider is the maximum out of pocket costs that you will be responsible for. Maximum out of pocket is usually connected with your coinsurance level and costs can range anywhere from $0 for a 100% coinsurance plan to $20,000. Again, the lower the maximum out of pocket the higher the premium.