Buying health insurance is a confusing process for many people. The new health insurance "exchanges" set up following the passage of the Affordable Care Act did little to help.
One unfortunate result of this confusion is that many consumers make mistakes when shopping for health plans. And those mistakes can be costly.
Here the 10 most common mistakes made during the health insurance buying process and how to avoid them.
Mistake #1: Lacking a general understanding of common insurance terms
Don't worry, no one is saying you have to develop an intimate knowledge of all the health insurance terms that are detailed on sites like healthcare.gov. That said, it could be well worth your while to read up on the terms that can be found there like:
- Co-insurance
- Co-pay
- Deductible
Understanding them is a very important part of how much a given health plan costs.
For the record, deductible refers to the amount you have to pay for any care you receive before your insurance provider will cover the remainder of its cost. Co-pay is a specific, set fee you pay at the time of service. Co-insurance is the amount you'll have to pay after you pass your policy's deductible.
Mistake #2: Deciding that because you’re young or healthy (or both) you don’t need health insurance
It's easy to assume when you're young or healthy or both that you don't need to bother with health insurance. The fact is, you never really know when you're going to become ill. The last thing you want to worry about at that point is how you're going to pay for medical care.
Mistake #3: Picking a plan because of its low premiums
Hardly anyone recommends choosing any type of insurance plan based on how affordable its premium is, and health insurance is no different.
The reason: those monthly payments are just a portion of the costs that are sure to be tied to any treatments or services you receive moving forward. As mentioned earlier, you'll also likely have to contend with and prepare for other expenses like co-pays, co-insurance, or deductibles, depending on your personal healthcare needs.
That's not to suggest a high premium is always the right choice. But you should always carefully consider all of your options before picking a particular plan.
Mistake #4: Skimping on coverage limits
Buying health insurance is a good idea. Buying enough health insurance coverage is better. Many people, however, make the mistake of not purchasing enough coverage. This decision is usually tied to the low premiums or deductibles being offered.
This is a big deal because if you skimp on coverage, it can leave you open to some shockingly high out-of-pocket costs. That's why many agents and experts advise looking at the coverage limits associated with a specific health plan. They also recommend considering the size of premium payments (and other aspects) when choosing one plan over another.
Mistake #5: Dragging your feet when it comes to the health insurance marketplace's "open enrollment periods"
Waiting to buy insurance until you need it never has been a great idea. But it's an especially unwise one now that the Affordable Care Act (or ACA) is in place. That's because of Obamacare's annual "open enrollment period." Open enrollment acts as the lone window of opportunity for those who want to buy health insurance via the government-run "marketplace."
What happens if you fail to purchase a policy during an open enrollment period? You may have to sit tight—and uninsured--until the next one rolls around, and that could mean a wait of nine months, if your timing is particularly bad. (Some are allowed to buy health insurance at other times of the year, but usually you have to have gone through one of a selection of "life changes" to be declared eligible for such preferential treatment.)
Mistake #6: Misunderstanding the difference between "preventative" and "diagnostic" care
The ACA promotes that it provides Americans with affordable preventive care in a number of ways. But that doesn't mean you should expect that every "preventative" service is offered at no or little cost.
Even when no co-payments or other charges are associated with this type of service there are times when it leads to additional care that's considered diagnostic rather than preventative. That's the kind of care you'll be charged for, so be sure to ask your physician or specialist up front about the costs that are likely to be tied to any future or follow-up visits.
As an example, a patient goes for a routine checkup. That qualifies as preventive care. During the appointment, the patient complains of frequent headaches. The doctor then treats the headaches with tests and medication. Those headache tests and medication may qualify as diagnostic care, which isn't always covered.
"Even though that patient came to the doctor to get a preventative wellness check that is fully covered, they will be billed for the diagnostic portion of that visit. The check-up would be covered but diagnosing or treating the headaches wouldn’t," explains Raichbach, Chief of Clinical Compliance at Ambrosia Treatment Center. Avoid situations like this by doing your homework with both your doctor and insurer before you make an appointment.
Mistake #7: Neglecting to ask or figure out if a particular physician or specialist is "in network" or not
Thanks to all of the different provider types, figuring out which doctors or specialists are part of your health plan's "network" isn't always easy.
You should have that down pat before you ever set foot into a hospital or physician's office. That's because of the differing impacts in-network and out-of-network care can have on your wallet.
So, if your goal is to avoid high medical bills, your best bet is to contact both your insurance company and healthcare provide. That will help ensure you're covered well in advance of your appointment.
Mistake #8: Ignoring flexible-spending accounts when they're made available to you
Flexible-spending accounts may not be quite as appealing as they used to be. That's because of changes that were brought about by the Affordable Care Act. But that doesn't mean you shouldn't take advantage of them when they're offered to you.
Why? They still allow you to set aside money, tax free, that you can use later to pay off all sorts of health-related bills that insurance won't cover, for starters. Also, the contributions you make to these accounts can reduce the amount of money you owe to Uncle Sam at the end of the year.
Mistake #9: Failing to make sure any medications you have to take are covered by your health plan
If you take one or more prescription medications, make sure they're included on the list of covered drugs before buying a policy. If you've already got a policy, make sure your medications are on the insurance company's formulary before filling prescriptions. If they aren't, check with your doctor to see if there are any acceptable alternatives.)
Although this information usually is included on an insurer's website, that isn't always the case. To be absolutely sure, give someone there a call so can be sure one way or the other.
A related mistake to avoid: using a pharmacy or mail-order service that isn't "preferred" by your insurance provider. (Preferred ones can save you a lot of money.)
Mistake #10: Being too eager to pay your bills
It probably seems strange to suggest that "paying your bills too quickly" could ever be considered a mistake, but that's basically the case when it comes to health insurance.
What should you do instead of paying your healthcare bills as soon as they arrive on your doorstep (or shortly thereafter)? According to the Kaiser Family Foundation’s Karen Pollitz, you should wait to send in payment until after you've received an explanation of benefits, or EOB, from your insurance company.
This document details the services you received, how much the healthcare provider charged for them, and how much of that amount your insurance company is willing to cover.
Pollitz recommends waiting for your EOB because you may find errors while reviewing it, and you'll probably want to have them taken care of before you send in your payment.
To learn more about the Affordable Care Act, by the way, read our articles, "16 Obamacare Myths and Misunderstandings" and "Understanding the Affordable Care Act."
You can also compare quotes to save. Enter your ZIP code here to get in touch with insurance agents and brokers to find the plan with the lowest cost for the coverage you need.
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