How to Choose a Health Plan

When you're staring at a list of health plans, the instinct is to sort by monthly premium and pick the cheapest one. It feels responsible. It's also the single most common way people end up paying more. Choosing well takes about ten extra minutes of looking past that first number. (This article assumes you know the vocabulary. If premium, deductible, copay, and out-of-pocket maximum are still fuzzy, read Health Insurance, Explained first.)

The premium is only one piece of what a plan costs you. A low premium usually comes with a high deductible and bigger out-of-pocket costs when you actually use the plan; that's the trade-off built into all insurance. The real question is what the plan will likely cost you over the whole year, all in, not what it costs per month.

Roughly, your total likely cost is the premium across the year, plus the deductible and copays you'd realistically rack up given how much care you expect to need. A plan that looks cheap monthly can lose badly to a slightly pricier plan once you add in what you'd pay at the doctor.

There's no single best plan, only the best plan for your situation. The deciding factor is usually how much care you expect to use:

• Rarely see a doctor, no ongoing conditions? A lower-premium, higher-deductible plan often wins. You pay less every month and you're unlikely to hit the deductible. Just make sure you could cover it if something unexpected happened.
• Take regular prescriptions, see specialists, or manage an ongoing condition? A higher-premium, lower-deductible plan often costs less overall, because the plan starts sharing your frequent costs sooner.

A plan is only a good deal if it covers the care you use. Before you commit, confirm that the doctors you want are in the plan's network and that any prescriptions you take are on the plan's covered list. A cheap plan that doesn't cover your medication, or that sends you out-of-network for your regular doctor, isn't cheap at all.

1. 1Write down each plan's premium, deductible, copays, coinsurance, and out-of-pocket maximum side by side.
2. 2Estimate how much care you expect this year. Be honest about prescriptions, regular visits, and known conditions.
3. 3For each plan, add the year of premiums to the deductible and copays you'd realistically pay. That's your total likely cost.
4. 4Confirm your doctors are in-network and your prescriptions are covered under each plan you're seriously considering.
5. 5If you're shopping on the marketplace, check whether you qualify for help lowering the cost before you decide. It can change which plan wins.
6. 6Pick the plan with the lowest total likely cost that still covers your care, not the lowest premium.

Those few extra minutes are the difference between a plan that quietly drains you and one that actually fits your life. The cheapest premium and the cheapest plan are rarely the same thing.