Which Employer Health Insurance Plan Should I Choose? (Article)


Which Employer Health Insurance Plan Should I Choose?

Health insurance costs are on the rise, so many employers are offering more than one health insurance plan to give employees a choice. But how does one choose the right plan for them?

First, request a fee schedule and benefits summary for each plan. Then carefully compare the monthly premiums, as well as the in-network and out-of-network co-pay, coinsurance, deductible, maximum out-of-pocket, free preventative services, and if a referral is needed to see a specialist. If one of the plans is a qualified high-deductible plan, then you will also want to consider your ability to make tax-deferred contributions and whether your employer is also planning to do the same on your behalf.

Next, consider your life stage. The life stage of the young, awesome, but broke is generally characterized by lower income, but also low general health risks. For this reason, people in this life stage are most likely to choose a qualified high-deductible plan for its lower monthly premiums and ability to contribute to a Health Savings Account (HSA) that helps them save for the next life stage. Middle-agedom is generally characterized by growing incomes, growing families, and responsibility. For this reason, it is common for people in this life stage to choose a conventional plan during childbearing years for its generous benefits, then switch back to a HDHP. Pre-retirees are generally characterized by higher incomes and decreasing responsibilities, but more serious risk of chronic illness and major medical complications. For this reason, healthy people in this life stage are most likely to choose a qualified high-deductible HSA plan for its ability to reduce taxable income and help them save for retirement.

Finally, and just in case you still aren’t sure which plan to pick, ask yourself the following questions and follow the decision tree we’ve provided.

  1. Does only one plan cover necessary medical services?
  2. Do you expect to incur any major medical expenses soon?
  3. Do you have, or are you able to fund significant HSA or liquid cash savings?

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