7 Mistakes to Avoid When Buying Health Insurance

Health insurance is one of the most important purchase decisions a person can make. It protects you and your loved ones against life’s unexpected turns. With the right health insurance, it’s possible to save money and save lives.

The topic of proper health insurance has been pushed to the forefront as the United States begins to adopt the universal health care principles pioneered by other countries such as Canada. Whether the insurance is through the Affordable Care Act, through an employer or through a self-employment service, you need to make decisions as to the amount of coverage and the cost of that coverage.

With a decision as important as health insurance, there are several potential mistakes to be aware of so you can avoid them.
1. Don’t focus solely on the premium and deductible

When people look to purchase health insurance, it’s very common to look at the premium and deductible only. This approach makes sense on the surface; it’s important to know what the monthly premium costs are so you can budget and account for them, and it’s also important to know the deductible to get a sense of overall coverage.

However, there are other costs and situations to consider, too. For example, some health insurance policies may have a deductible of $2,000, but they only cover 80% of surgical procedures. If you have an accident that results in a $13,000 surgery, the out-of-pocket payment will exceed the $2,000 deductible.

Look at all the associated coverages and costs, and not just overall deductible.
2. Make sure to read the fine print

As with any multi-page contract, one of the biggest mistakes people make is not thoroughly reading the fine print.

For example, some health insurance may have great in-network coverage, but very poor out-of-network coverage. If a situation arises where you must see or use an out-of-network provider, the great coverage might result in a large out-of-pocket payment.

Additionally, some health insurance covers specific procedures while others do not. If a specific health insurance looks great on the surface but doesn’t cover unique or uncommon surgeries, it’s possible that it will result in paying large out-of-pocket fees.
3. Always shop around to multiple providers

When people decide to buy a house or a car, they shop around for months, finding the best price and the best asset for them. When people decide to purchase health insurance, however, they often take the first provider that suits their general needs.

Often, health care providers have different cost structures and coverages from each other. It’s possible to save time and money by choosing the proper health insurance carefully. Many of these providers compete with each other on price and coverage, improving your ability to find great coverage at affordable prices.
4. Don’t forget about COBRA

COBRA insurance is a U.S. federal government service that provides a continuation of coverage for up to 18 months to employees who have recently separated from their companies.

If you’ve been fired or resigned from your job, COBRA allows you to keep the coverage you’re used to while you look for other employment or health coverage. However, the company often pays most, if not all, of the health insurance’s premium. If you elect to take out COBRA insurance, you have to pay the entire premium amount, which might result in a large out-of-pocket fee.

Look at both state and federal health insurance exchanges created under the Affordable Care Act if you have recently left your job.
5. Coverage is great, but don’t get too much insurance

While it’s important to have peace of mind and ensure everyone who needs health insurance has it, it’s also important not to over-insure. High-end health insurance may cover you against any situation imaginable, but the monthly premiums will be very high.

If you are healthy and rarely go to see a doctor, it may be a better option to purchase a health care plan that has a lower premium. In fact, if one person pays a premium of $300 and never sees the doctor once, and another person pays a premium of $100 but sees the doctor one time for a fee of $500, the second person still pays less overall.
6. No one is too healthy for health coverage

While it may be important to your wallet not to pay for the best coverage if you have a strong track record of good health, it is still important to be covered.

Many people take the opposite stance of over-coverage; they believe that since they rarely see a doctor, they don’t need coverage at all. This is a big mistake. The thing about insurance is that it insures against unexpected life events. If everyone expected to be perfectly healthy all the time, no one would get any coverage; if everyone expected to be constantly sick, everyone would have the best coverage available.

Illness and injury are completely random and cannot be predicted with accuracy. It’s possible to know if you’re likely to be sick or not, but you can’t be absolutely sure. Purchase health coverage, even if it is the most basic plan. It protects you against life’s unexpected events.
7. Don’t miss the health insurance marketplace’s open enrollment periods

Take advantage of open enrollment periods to sign up for health insurance. Often, people wait until the last second to purchase health insurance or wait until they desperately need it.

However, most health care providers offer open enrollment periods when you can reassess your need for health insurance and adjust or purchase coverage as necessary. If you are an employee, your employer’s provider should offer an open enrollment period once a year. If you are self-employed or have recently left your job, the Affordable Care Act also offers an open enrollment period.

Regardless of your own situation, if you miss an open enrollment period, you may have to remain uninsured until the next enrollment period opens, or you may be required to pay an increased amount for taking out insurance during a closed enrollment period.