The Costs of Medical Insurance and Care
If you're like most policyholders, your budget will be a big factor in deciding the type and extent of medical insurance you carry. Comparing different policies in terms of cost is done best if know ahead of time what costs you expect to incur during the year.
Often times, buying a health insurance policy is less a question of what you want than of what you can afford.
Assessing Your Health Care Costs
An important first step in assessing medical insurance policies is estimating the cost of health care without coverage.
While it is difficult to gauge how much your health care expenses will be for any given year or even which services you will require, you can still make an educated guess based on previous needs and medical histories.
If you're relatively healthy, your annual medical expenses may consist of little more than office visit fees.
If, on the other hand you have a chronic condition, or find your medical needs increasing with age, your expenditures estimate could be quite high.
The important thing to remember is to give yourself a little leeway when estimating. Unforeseen problems are the norm.
But these potential costs are only half the equation. The other side, is of course, what you'll pay for the coverage.
Assessing Your Medical Insurance Costs
The annual cost of medical insurance can be a high, and there are a lot of different fees to consider.
The first cost you'll encounter is your premium, the monthly fee for coverage. Premiums can vary quite a bit, from less than $100 a month to many times that, depending on your level of coverage.
The next cost is the deductible, a pre-arranged dollar figure that you'll have to satisfy before the health insurance company begins to contribute any money to your health care costs. This can be a significant out-of-pocket expense, ranging from a few hundred dollars to a few thousand. The lower the deductible, the higher the premium, and vice versa.
If you're generally healthy, and see your coverage as primarily insurance against a big loss, you might want to set the deductible high to keep premiums low. If on the other hand, you're either ill often, or just see coverage as means of helping with the day-to-day expenses of health care, having a low deductible might be worth the additional monthly cost.
The other expenses are co-payments and co-insurance. All medical insurance policies will ask that you agree to one or both of ways of sharing costs with your insurer. (Both require that you pay a (usually) small part of each medical cost.)
Comparing health care costs with insurance costs. The best way to evaluate a medical insurance policy (or two or three) is to compare the annual cost of the coverage against typical annual costs without the coverage.
If a the cost of a policy is many times over what you would reasonably expect to pay without insurance, it's probably more coverage than you need. (Unless it's a very affordable policy, in which case, buy it, by all means!)
If, on the other hand, your health care costs are usually high, consider springing for the extra protection.
Remember: Always err on the side of caution. Insurance is preparation for the unexpected. It's cost should be higher than the cost of services rendered, because it's really intended to cover you on the big stuff.
Learn more about affordable health care
If good medical insurance just seems like too much of a financial burden, keep in mind that there are ways to reduce your monthly premiums, like paying a higher deductible or co-payments or by forgoing "unnecessary" health care coverage, like vision or mental health care. But don't sacrifice too much.
