Health insurance is difficult to understand. There are many options offered by many different insurance companies.
One simple way to compare different health insurance plans is to focus on the Best Case and Worst Case situations you may face when you pay for medical care.
Best Case: you never get sick, injured or need medical attention during a calendar year. In this case you will only pay the monthly bill (premium) to the insurance company. So, in the best case during a calendar year you will spend 12 times the monthly premium for health insurance and nothing else for doctor’s office visits, prescription medicine or hospital services.
Worst Case: the wheels come off of the truck and you get really sick, tragic illness or injury strikes, basically you have bad luck. Or, you may have a baby – which can be expensive. In this case you should assume that you will pay all of the medical costs required by your health insurance plan until you reach the “out-of-pocket maximum” plus 12 times the monthly premium.
The out-of-pocket maximum also referred to as the “stop-loss” is VERY important when selecting a health insurance plan because it limits your financial exposure in the event you have a catestrophic medical condition. This amount varies from one health insurance plan to another. Often a high out-of-pocket maximum is the reason the monthly premium is low. Adding the out-of-pocket maximum and the annual premium helps you standardize different individual or group health insurance plans.
For a very good chart to help you do this comparison, see this article, Health Insurance Premium Comparison.
