Choosing health insurance isn’t just picking the lowest premium. You need to compare what you pay every month, what you pay when you actually get care, and whether the plan covers the providers and prescriptions you use. The cheapest monthly plan can get expensive fast once you need it.
Compare Total Cost
Look at:
- Monthly premium
- Deductible
- Copays
- Coinsurance
- Out-of-pocket maximum
- Prescription costs
- Expected number of visits
Your premium is just the cost to keep the plan active. It’s not the full cost of healthcare. To get a real picture, estimate your likely annual spending: add up 12 months of premiums, then estimate what you’d pay in copays, prescriptions, and coinsurance for a typical year’s visits. Do the same for a bad year where you hit the out-of-pocket maximum. That range shows you each plan’s true financial exposure.
If you need a refresher on any of these terms, the What Is Health Insurance? guide covers each one clearly.
Understand The Plan Types
Plan type affects how much flexibility you have and how costs work:
| Plan Type | Referrals Required? | Out-of-Network Coverage | Typical Premium |
|---|---|---|---|
| HMO | Yes (to see specialists) | Generally not covered (except emergencies) | Often lower |
| PPO | No | Covered at higher cost | Often higher |
| EPO | No | Generally not covered (except emergencies) | Mid-range |
| HDHP | Varies | Varies | Often lower |
HDHPs can be paired with a Health Savings Account, which adds a tax advantage worth understanding before you choose.
Check The Network
Make sure your doctors, hospitals, clinics, labs, and pharmacies are in network.
Use the exact plan name, not just the insurance company name. A provider may accept one plan from an insurer but not another. Search the insurer’s provider directory, then call the provider’s office to confirm because directories can be outdated. Ask specifically about the plan name and the location you’d visit.
If you have a preferred doctor or medication, verify before choosing. For a deeper look at how networks work and what happens when you go outside them, see What Is In-Network Healthcare?
Check Prescriptions
Plans may cover the same medications very differently. A drug may be preferred, non-preferred, require prior authorization, or not be covered at all.
Check:
- Whether the medication is covered
- Which tier it’s on
- Monthly cost
- Preferred pharmacies
- Mail-order options
- Prior authorization rules
- Step therapy requirements (whether the plan requires you to try a cheaper drug first)
Most insurers publish a formulary, a list of covered drugs with their cost tiers. Look up every medication you take regularly before picking a plan. Prescription costs can shift which plan is actually cheapest for you.
Think About Expected Care
Consider:
- Regular prescriptions
- Ongoing conditions
- Planned procedures
- Pregnancy
- Therapy
- Specialist visits
- Kids’ medical needs
- Upcoming surgery or major treatment
If you expect high medical use, a higher-premium plan with lower out-of-pocket costs may be better. If you’re generally healthy and rarely need care, a lower-premium plan with a higher deductible might cost less overall. But you still need to be able to cover that deductible if something unexpected happens.
Know Your Risk
If you rarely use care, a lower-premium plan may look good. But you still need to know whether you could afford the deductible and out-of-pocket maximum if something major happened. Think through two scenarios: a routine year with only a few visits, and a difficult year with a surgery or hospitalization. The plan that holds up in both comparisons is usually the better choice.
Insurance is partly about expected costs and partly about unexpected risk. If your emergency fund can’t cover the deductible on your chosen plan, that is worth factoring in.
What To Do During Open Enrollment
Open enrollment is a limited window, often in the fall for marketplace plans, or around your start date and annual renewal for employer plans. Missing it can mean waiting a full year or ending up uninsured.
Steps to take:
- Gather your list of current doctors, prescriptions, and any planned procedures.
- Pull up each plan’s Summary of Benefits and Coverage (SBC), which every plan must provide.
- Run the total-cost comparison for a typical year and a bad year.
- Confirm network and prescription coverage before deciding.
- Check if an HSA or FSA is available and whether it changes the math.
Frequently Asked Questions
Q: How do I compare health insurance plans side by side?
Start with the Summary of Benefits and Coverage (SBC) that each plan is required to provide. Compare monthly premiums, deductibles, copays, coinsurance rates, and out-of-pocket maximums. Then check whether your doctors are in network and whether your prescriptions are covered and at what cost. Run a total-cost estimate for a typical year and a worst-case year.
Q: Should I choose an HDHP to get access to an HSA?
It depends on how much care you expect and whether you can afford the higher deductible out of pocket. If you’re generally healthy and don’t expect many medical expenses, an HDHP with an HSA can save you money. The HSA’s triple tax advantage is real. But if you have ongoing conditions or take expensive medications, a lower-deductible plan may cost less overall. Run the numbers both ways.
Q: What happens if I miss open enrollment?
If you miss your employer’s open enrollment window, you generally can’t change plans until the next open enrollment unless you have a qualifying life event (marriage, divorce, new baby, loss of other coverage, moving). For marketplace plans, the annual window is typically November through January. Missing it without a qualifying event usually means waiting until the next year.
Q: Can I use any doctor with my insurance?
Only if your plan covers out-of-network providers and you’re willing to pay the higher cost. HMO and EPO plans generally require you to use in-network providers for non-emergency care. PPOs give you the option to go out of network at a higher cost. Always verify that a specific doctor accepts your exact plan before scheduling.
Learn More
- HealthCare.gov: How to pick a health insurance plan
- HealthCare.gov: Your total costs for health care
- HealthCare.gov: Summary of Benefits and Coverage
- NAIC: Health insurance