Our (Ridiculously Simple) Method for Choosing the Right Healthcare Plan For You

Choosing the right healthcare plan can be intimidating, especially if you’re doing it for the first time. The stakes are high; the options are confusing; there’s often a small window during which you can make the choice before you lose your chance; and the whole thing highlights the merciless jank that is our healthcare system!

Luckily, there’s an incredibly easy, 100% foolproof way to make the decision. Here’s our secret to choosing the right healthcare plan:

First, you put it off until there’s only, like, two days left to pick. Then, you forward all your onboarding documents to your dad’s wife, Carol. She is the perfect person for the task, being both generous and detail-oriented in a way you will never understand. Finally, you pick whichever one she says, and never think about it again until your soul walks the halls of the Duat and Anubis weighs your heart against Ma’at’s Feather of Eternal Truth.

… What’s that?

You don’t have a Carol?! My, how awkward for you.

I suppose that means the task falls to me. Heavy is the head that wears the crown of reading fine print! Today I’ll explain a really easy method for choosing the right healthcare plan. If you’ve never chosen your own plan, or you’re faced with a bunch of new options, it’ll help you quickly identify the best one based on your specific healthcare needs.

Today’s article pertains to the American healthcare system. International readers, I’m releasing you early. Use this time to study up on equally important international adulting tasks: navigating Ryanair’s lost baggage policy, keeping poutine from getting soggy, etc.

Step 1: Determine what you actually need

The easiest way to choose the right healthcare plan is to work backwards. Start by determining what kind of healthcare coverage you want to have. (And don’t sass me with that “universal public” stuff. What do we look like—a country that considers healthcare a fundamental right? What next, clean water and guaranteed housing?!)

As long as your doctor is in your plan’s network, 100% of routine preventative care should be covered. So no matter what you choose, you’ll be able to get annual check-ups, vaccinations, and basic screenings like mammograms and colonoscopies at no cost. (And you should always get them, because you’ve already paid for them! See our complete free medical care checklist here.) So think beyond that free, routine preventative care and consider…

• Do you have existing health conditions? If so, what do you need in terms of support?
• How often do you go to the doctor? Some people go to urgent care like it’s church. Others need their families to hold whole-ass interventions to get them to please, please go get that weird growth checked out. Be realistic about who you are.
• How important is it for you to see a specialist easily? Some plans let you go straight to them, while others make a primary care doctor their gatekeeper.
• Do you have existing medical providers you want to keep? I’ll see any old primary care or dermatologist. But you’ll pry my dentist out of my cold, dead hands—networks be damned!
• Do you have plans for major medical procedures on the horizon? If you’re anticipating something big—like getting pregnant, seeking top surgery, fixing a whack meniscus—that should factor into your decision.

Obviously if you have dependents—like a partner or children—you’ll need to consider their needs as well.

Step 2: Evaluate your financial situation (and risk tolerance)

Fundamentally, choosing the right healthcare plan is a gamble. If you choose an expensive plan, you “win” when and if you actually get sick and use up the value of that coverage (and more). If you choose a cheap plan, you “win” when you don’t get sick and didn’t pay for coverage you didn’t need.

So the question that guides your choice is: How likely is it you’ll get sick in the coming year?

Until Raven Baxter DMs me to assert otherwise, I’ll assume that none of our readers have psychic powers. I don’t either, as evidenced by how rarely you catch me at the racetrack. Many people get sick and run up a bunch of medical bills without any forewarning that it’s going to happen. But sometimes you can anticipate high and low medical spending years. 

My partner and I tend to stick to low-cost, low-coverage plans. But if we get a few expensive yet not urgent tasks in our long-term medical to-do list, we bump up to a fancy plan for a year, and schedule all the allergy tests, surgeries, and sleep tests we want. It’s up to you to make your best guess, based on your past health and your current lifestyle.

Your financial risk tolerance is important too. If you struggle to make ends meet, but you do have an emergency fund or an empty credit card for emergencies, a cheaper plan with a high deductible may be a good choice. But if you’d rather avoid large bills, the predictability of a higher-coverage plan might be worth its bigger monthly price tag.

Step 3: Understand your healthcare options

If you’re like the majority of American adults, you’re getting private health insurance through your employer. There are many kinds of insurance: HMO, PPO, EPO, POS, HRA, HSA, CHI… My god! We’re bankrupting the alphabet with all these three-letter acronyms! I’m not going to go over them all, because that’s a lot of information you may not need.

Most employers offer a handful of options. As part of your onboarding, you’ll almost certainly get a sheet with a table showing the differences in very clear terms. 

Here are the key words to look for:

• The premium is the total cost of the healthcare plan. If you’re getting insurance through your employer, they should cover a large chunk of it.
• The deductible is the amount you must pay before your health insurance kicks in. For example, if you get a $900 bill and you have a $500 deductible, you’ll pay $500, and your insurance will cover the rest.
• Your out-of-pocket maximum is the most money you will pay in a year before your insurance kicks in and covers 100% of any remaining costs. It’s a helpful metric for gauging emergency preparedness.
• Co-insurance is a payment structure in which you and your insurance provider split the bill. For example, if you get something done out-of-network, you may have to pay 20% of the bill, and your insurance will handle 80%.
• Co-payment is like a mini-deductible. It’s the (relatively tiny) amount you’ll have to pay directly to your doctors after each visit, usually between $20 and $60. Because this system sucks and makes no sense, co-pays don’t count toward your deductible.
• The plan’s specialist policy determines how easy or difficult it is to see a specialist.
• Your plan prefers some doctors and hospitals over others. This is called their network. They incentivize you to use “in-network” providers by making you pay more for “out-of-network” bills. It’s worth it to check if your closest ER is in-network. Although sometimes they’re in-network, but individual doctors are out-of-network, because of ummm reasons??????

Step 4: Look beyond for more options

Before you commit to a plan, stop and consider if you have other options.

Start by checking out your marketplace insurance options. Medicare is only an option if you’re disabled or older than 65. But you may have state-subsidized insurance or “Obamacare” (the Affordable Care Act or ACA) options that are worth examining. Healthcare sponsored by your employer is almost certainly cheaper than any marketplace option.

But money isn’t always the only deciding factor when it comes to health. And some employers will consider negotiations for a higher salary if you pursue health coverage elsewhere. You can see all public and marketplace plans by going to healthcare.gov.

Also consider joining your parent or partner’s plan. It’s usually MUCH cheaper to add a dependent to an existing family plan than to insure one person through their own standalone policy. Under the ACA, children can stay on their parents’ plan until age 26. It’s not a permanent solution, and you won’t have full control over choosing the plan, but it can save you a helluva lot of money during a time in your life when you probably need it most.

Keep in mind that if you’re on another person’s policy, they will have some visibility into your medical history via bills and EOBs (“Explanation of Benefits”—those bill-like things that weirdly say “this is not a bill,” and I’m like “okay but then WHY are you wasting my TIME?”).

Step 5: Make your best guess and go for it

Hopefully at this point, you’ve developed a gut instinct for choosing the right healthcare plan among all your options. If you have, don’t overthink it and go for it! Any health insurance is better than no health insurance, so as long as you get it, you’ve done well.

If you’re still unsure, there’s a slightly more involved exercise that can help you decide. Using the data each plan provides, run the numbers on two scenarios.

• Worst case: You have bad health luck this year. You get very sick while on vacation, and have to visit an out-of-network hospital for $30,000 worth of intensive care. (In reality there are ways to mitigate such bills—but we’ll ignore that for now!) How much money would you end up paying under this plan?
• Best case: You have great health luck this year! Other than routine preventative care and existing prescriptions, you have no medical costs at all for the year. How much money would you end up paying under the same plan?

These scenarios will help you understand what it is you’re really paying for, and how much risk you’re accepting or offsetting with those hard-earned dollars.

Our tl;dr for choosing the right healthcare plan

Want to cut to the chase and understand which options strike the best balance of affordability and good coverage? I don’t blame you! Here’s a tl;dr for my fellow fine-print haters.

This advice is true for most (but not all!) people, in most (but not all!) situations. Follow at your own discretion!

• If you’re under 26, have a good relationship with your parents, and they have health insurance, stay on their plan. You can maintain some independence by reimbursing them for your portion of their bill.
• If you’re partnered to someone you trust, they have decent health insurance coverage, and you’re eligible to get on their insurance, get on their plan. Don’t worry if your relationship changes—marriage, divorce, and legal separation are “qualifying events” for seeking a new plan.
• If you’re on your own, but you’re relatively young and healthy, save your money by signing up for a cheaper plan. Use the money you save each month to build an emergency fund that could help in any emergency, medical or otherwise. You’re still covered if your wheels fall off, and HSAs make great investment vehicles!
• If you have complex health needs and/or a family of your own to support, a PPO (preferred provider organization) is the most expensive option, but it gives you the most coverage and flexibility. If the price tag is too high, an HMO (health maintenance organization) is a reasonable middle ground.

The American health insurance system is so nonsensical and labyrinthine I suspect it escaped from the Shivering Isles. If you’re having a hard time with this decision even after reading this, it’s okay! If your workplace has an HR professional, this is exactly the kind of choice they can be trusted to help with. (Though I do think it’s wise to avoid disclosing any medical conditions, disabilities, or family leave plans to them.)

Readers, how do you approach this decision? Have you ever regretted your choice? Personally, I tend to cycle through high- and low-coverage years. That’s mostly worked well for me, though there are always cases where you get sick the first week of January after “downgrading.” That’s life, baby! Please add any insights to the comments below.

And last but not least, a special shoutout to our Patreon donors. Every month they vote on topics for us to cover here on the blog. This month they chose the health insurance question! And we’re so glad they did. If you want a say in what we say, donate to our Patreon with the button below.