How to Choose Health Insurance in 6 Steps

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Choosing a health insurance plan that's a good value can be easy with these six steps. Pick the best option by comparing costs, thinking about your health needs and narrowing down your options based on the plan details.

1. Choose the type of health insurance plan

Start by finding out which types of plans are available to you. If you're eligible, choose a plan through your job, Medicaid or Medicare. Otherwise, shop on HealthCare.gov.

  • Medicare:

    • Available if you're a senior over age 65 or you have certain health conditions
    • Good coverage with many plan options
  • Medicaid:

    • Available if you have a low income or a disability
    • Free or low-cost coverage

Choosing a health insurance plan from an employer

Most people get health insurance through their job, which usually provides the best coverage at the cheapest price.

Your choices will be limited to the set of options that your employer offers. This is typically a few plans from the same insurance company. So to choose, you'll probably need to compare coverage, check which doctors are in-network and decide between a low-cost HMO or the flexibility of a PPO.

If health insurance through your job is not affordable or does not provide basic coverage for medical care, compare your job-based insurance to a marketplace plan to decide which is the best deal.

Choosing a marketplace health insurance plan

If health insurance isn't available through your job, shop for plans on HealthCare.gov or your state marketplace.

Through the online portal, you can see all of the plans offered in your ZIP code to start comparing companies, coverage and costs.

Marketplace plans, also called "Obamacare" or Affordable Care Act (ACA) plans, are available from Nov. 1 to Jan. 15 in most states, a period called open enrollment. You can sign up any time of the year if you have special circumstances such as moving, a change in family size or losing other health insurance coverage.

In many cases, how much you pay for health insurance will be based on your income. A subsidy calculator can let you know how much you can save.

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2. Decide how much coverage you need

Most people choose a middle-of-the-road plan that balances the cost of insurance with its coverage for medical expenses.

The most common middle-of-the-road options are called Silver plans if you're shopping on the marketplace. If you get insurance through your job, a midlevel plan is usually between the cheapest and most expensive.

The level of coverage that's the best value is based on how much medical care you expect to need.

  • If you expect to need expensive medical care, it's usually worth it to pay more for a better health insurance plan. This means you'll pay less at the doctor and have a lower cap on your medical spending. For example, if you need surgery or are having a baby, paying for a plan with better coverage will save you money overall.

  • If you're young and healthy, or you don't need much medical care, it's usually a better deal to get a cheaper health insurance plan. These plans still cover the main medical services, but you'll pay a larger portion of your medical costs. This will save you money in a typical year. And if you get really sick, you'll still have the benefits of health insurance such as a cap on your medical expenses.

Comparing coverage on the health insurance marketplace

On HealthCare.gov or a state marketplace, coverage levels are grouped into different levels called metal tiers. This can make it easier to choose a health insurance plan because you can tell roughly how much coverage each plan has.

Bronze

  • Cheap rates and good coverage for preventive care
  • High deductibles mean you could have to spend thousands of dollars before the plan starts paying for most of your health care

Silver

  • Middle of the road for both medical coverage and the cost of the plan
  • A good choice for most people with typical health needs

Gold

  • Cheapest medical care and prescriptions
  • Expensive monthly rates that are only worth it if you have chronic health conditions or need expensive medical treatment

Employer plans can have similar benefit levels to marketplace plans, but you usually won't have the metal tiers to help you classify them.

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Health insurance coverage tip: Plans usually cover most types of common health services such as doctor appointments and emergency care. However, if you need specialized care such as weight loss surgery or a vasectomy, look specifically for how plans cover it.

3. Compare doctors, medical facilities and prescriptions

Choose a health insurance plan that covers your local hospitals and favorite doctors.

Health insurance plans will have a list of in-network doctors and hospitals. Your coverage will either be limited to or better at these in-network providers and facilities.

For the plans you're considering, check to see that you'll have convenient access to medical care. And if you regularly see specialists, such as for heart disease or cancer, look for the plan that gives you the best access to the doctors and facilities you need.

You can also ask your doctor which insurance companies they work with.

Also, choose a plan that covers the specific prescriptions you take. This can help you stay with the exact medication that works for you, rather than having to switch to something similar.

  • For employer plans, the list of doctors and prescriptions is usually available through your human resources department or the health insurance company website.

  • If you're shopping on the marketplace, you can enter your doctor's name and your prescriptions into HealthCare.gov's plan comparison tool to find the best company.

4. Choose a health insurance company

Most people look at both costs and star ratings to find a health insurance company that is both high quality and affordable. The company you select can affect how easy it is to use your insurance, the quality of the customer service and how much you pay.

Company
Editor's rating
Monthly cost
Kaiser Permanente logo
$454
Aetna logo
$450
UnitedHealthcare logo
$546
BlueCross BlueShield  logo
$607
Humana logo
N/A
Ambetter logo
$427

Average monthly cost for a 40-year-old buying a Silver health insurance plan. Company's costs and ratings vary by location.

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5. Pick the best network type for your plan

The type of insurance plan affects your costs and access to medical care. HMOs and PPOs are the two most popular types of plans.

There are trade-offs between the two options, and you'll have to decide if it's worth it to you to pay more for the flexibility of a PPO.

  • HMOs are budget-friendly plans that are usually cheaper but have more restrictions.

    HMOs are good if you're looking for more affordable coverage and are willing to follow the plan's more strict rules. For example, you'll need a referral from your primary doctor before seeing a specialist. And you'll pay the full cost of medical care when the doctor isn't in your plan's network (except in emergencies when you'll have coverage anywhere).

  • PPOs are more flexible health insurance plans that usually cost more.

    PPOs are good if you need frequent specialist care, are managing chronic health conditions, travel frequently or want flexibility about your doctors.

    With a PPO, you'll have coverage for both in-network and out-of-network doctors, though it's usually cheaper to stay in-network. This gives you more freedom about where you get your medical care. You can also make an appointment directly with a specialist, without needing a referral.

Other types of plans, such as EPOs and POS plans, are sometimes available, but they're less popular and less intuitive to use.

6. Look for any extras that tip the scales

Benefits like gym memberships, acupuncture or healthy living rewards can tip the scale as to which health insurance plan is the best value.

Always consider your main medical benefits first. You don't want to let a $100 perk outweigh your coverage for expensive things like surgery or prescriptions.

However, if you're making your final choice between a few good options, the extra benefits can help you decide. Some examples include:

Company
Perks
UnitedHealthcare logo
UnitedHealthcare (UHC) has fitness programs where you can earn rewards for meeting health goals.
Aetna logo
Aetna sometimes has discounts for health and wellness products at CVS, its parent company.
BlueCross BlueShield  logo
Blue Cross Blue Shield (BCBS) has the Blue365 program with discounts for a wide set of products including vitamins, eye exams and fitness gear.
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Help is available if you're struggling to choose a health insurance plan

  • HealthCare.gov advisors are available 24/7 to answer your questions and help you compare plans or enroll in coverage. Call 1-800-318-2596 (TTY: 1-855-889-4325).
  • Agents and brokers can help you choose marketplace plans or find other types of insurance. Find someone nearby with HealthCare.gov's directory.
  • The benefits manager at your job can also help you understand your plan options and answer questions about coverage.

Frequently asked questions

What's the biggest mistake you can make when choosing health insurance?

The biggest health insurance mistake you can make is not choosing a plan during open enrollment. You may not be able to sign up for health insurance after open enrollment, which could mean you'd have to pay the full cost of your medical bills and prescriptions, and miss important benefits of health insurance like free preventive care.

Which health insurance company should I choose?

The best health insurance companies include Kaiser Permanente, Blue Cross Blue Shield and UnitedHealthcare. However, rates and quality can vary based on where you live, so be sure to compare the options in your state.

How do you choose a health insurance plan from an employer?

Compare the levels of coverage for the health insurance plans that your job offers. If you're healthy, you're young or you don't need much medical care, the best deal is a cheap health insurance plan where you pay a larger portion of your medical costs. Those who need expensive medical care or who have chronic illnesses should choose the best coverage that's available. All others can get a plan in the middle that balances the cost of the plan with how much medical coverage it has.


Methodology

The costs of health insurance plans are based on aggregated data from the Centers for Medicare & Medicaid Services (CMS) about private health insurance plans sold on HealthCare.gov. Averages exclude states that use their own health insurance marketplace instead of HealthCare.gov, and costs are for a 40-year-old choosing a Silver health insurance plan.

Company rankings are based on data from the National Committee for Quality Assurance (NCQA), AM Best and the National Association of Insurance Commissioners (NAIC) to consider company performance for customer satisfaction, quality of medical care, financial strength and consumer complaints.

Editorial Note: The content of this article is based on the author's opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.