Getting Started
August 31, 2023

How to Choose a Health Insurance Plan for YOU

Some key questions to ask yourself before jumping into health plan shopping.
Ellen Decareau
A woman with a long-sleeved white shirt holding a red shopping basket.

Key takeaways

Health insurance is super important in everyone's life because it provides financial protection if you ever get sick or injured. But with so many options out there, where do you start? This easy-breezy guide will give you some key questions to consider when shopping for a health insurance plan.

Also shopping for the family? Consider checking out this guide: How to Choose a Health Insurance Plan for Your Family.

1. What are your needs?

Before you start shopping, jot down a list of your medical needs: are you on any medications? do you see a specialist? Don't forget to also write down any doctors you prefer not to switch.

By taking time to think about your medications and doctors you'll be better prepared to find a health plan that fits your needs (versus paying for a plan you don't need or doesn't cover what you do need.)

Three more tips to help narrow down the field:

  • Have a doctor you love? Make sure to find a plan where they are in-network.
  • On a prescription medicine? Check with the health plan's formulary to estimate your cost.
  • No current medical needs? If you're generally healthy and don't see the doctor often, consider a high-deductible plan with lower monthly premium.

2. What's your budget?

Take a moment to consider your overall budget. Ask yourself, "How much can I really afford to pay in premiums each month?" Then factor in any potential out-of-pocket expenses you might have throughout the year. (Remember, that if you have a deductible, you will need to pay for in-network health care costs up to that deductible.) Be realistic with your budget, and do not overlook the costs of healthcare that you might need. To do this, you will need to do a little math.

Note: This section contains a lot of health insurance lingo. If it sounds like a foreign language, skip ahead and come back to this equation.

Take a stab at estimating your yearly healthcare spend

To get a better idea of how much your health care might cost in a year, you can use the following equation:


(Monthly Premiums x 12) + Deductible + Out-of-pocket expenses (i.e. co-pays)*

*Not sure? Consider looking at last year's out-of-pocket costs to get a general idea for what this year might look like.


Now that you have the costs make sure to subtract the pre-tax funds you receive from your employer for your health insurance premiums. Your StretchDollar health benefit will go a long way in stretching your personal healthcare budget.

3. What's the lingo?

Health insurance has its own language. Before you get started, make sure you understand the most common terms.

Let's start with plan types.

Plans on the health insurance exchange typically come in three types with three acronyms that mean nothing if you don't know their definitions. These are HMOs, PPOs, and EPOs.

  • HMO (Health Maintenance Organization)

HMOs usually limit coverage to care from doctors who work for or contract with the HMO. It generally won't cover out-of-network care except in an emergency and generally requires a referral for specialist visits. HMOs tend to have the lowest monthly premiums.

  • EPO (Exclusive Provider Organization)

With an EPO, health care services are covered only if you use doctors, specialists, or hospitals in the plan’s network (except in an emergency) but you don't need a referral like you do with an HMO. It's sort of like an HMO meets a PPO, and the EPO is its offspring. EPOs monthly premiums tend to be higher than HMOs but lower than PPOs.

  • PPO (Preferred Provider Organization)

PPOs offer the most flexibility. You pay less if you use providers that belong to the plan’s network but you can use doctors, hospitals, and providers outside of the network for an additional cost. PPOs generally do not require referrals for specialists and also have a higher monthly premiums than EPOs and HMOs.

Here are also three other terms you should know:

  • Deductible

Think of this like a video game. It's the amount you have to reach (or in gaming terms, the "level" you need to beat) before your health insurance takes over and starts paying. For instance, if your deductible is $2,000, you will need to spend that much before your health insurance plan takes over and covers all of your future costs. Plans with higher premiums tend to have lower deductibles and vice versa. This figure is important to know when considering your total out-of-pocket costs.

  • Co-Payment

This is your ticket admission every time you visit a doctor, specialist, or have a medical test done. Co-pays do not go toward your deductible payment.

  • Premiums

This is your monthly subscription fee for health insurance. You pay this amount each month to your health insurance company, whether you're using their services (going to the doctor) or not. Since preventative care is 100% covered (meaning there is no co-pay) you might as well book that annual visit or mammogram.

Insider tip: Don't rely on provider directories

Have a favorite doc? You'll want to make sure that your doctor is in-network with the insurance plan you choose. Doing so will take a bit more effort than just checking the health insurance carrier's website. Insurance provider directories are often outdated. Better is to give your doctor's office a call and check with the staff to make sure they accept the plan you're interested in. Doing this after you've already purchased a plan can lead to an expensive surprise or unexpected break-up.

Buzz Lightyear sets Woody straight about provider directory accuracy.

Ready, set,!

You're now equipped with the information you need to make a healthier health insurance choice.

Important to know — you may be eligible for a federal subsidy based on where you live and your household income and size. You can find out quickly by entering your information here.

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