The first step to finding the right private medical insurance for you or your family on the individual health insurance market is to assess and anticipate the medical care that you or your family might need in the near-term. The second step is to make sure you understand terms like co-pay, co-insurance and deductable. Understanding the terms used in the medical insurance industry will help you choose the plan with the out of pocket costs structure that makes the most sense for you.

For example, you might think that a basic indemnity plan is your only choice. However, these plans usually mean that you will have to pay a co-insurance amount for a portion of the fees charged for medical services that you or your family receive – and this is after you have paid 100% of fees up to a specified dollar amount. This is what is meant by the term deductable – the amount you pay 100% out of pocket before the insurance plan starts paying their portion of the fees. Co-insurance is a percentage of the fees that you will be responsible for out of pocket, usually 20%. This means that you will be responsible for 20% of the fees charged by doctors and hospitals and other medical service providers for services covered by your indemnity plan.

A more predictable out of pocket arrangement that can work better for families, especially those with small children, is a managed care plan. Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs) are examples of these types of plans. These plans can have higher premiums and lower deductables and your out of pocket costs for covered medical services are usually in the form of co-pays. A co-pay is a fixed dollar amount that you will owe for a specific service, e.g. $15.00 for a routine office visit. To take full advantage of the better out of pocket costs these plans can offer, you have to choose doctors, hospitals and other providers from within an approved plan network. You give up flexibility of choice for lower and more predictable out of pocket costs for covered services.

If you are young, single, healthy and constantly on the move, you might want to look at choices from among high deductable health insurance plans. These plans require you to meet a higher dollar amount before they will start paying and in exchange your premiums are lower. These plans are usually coupled with a health savings account that allows you to save and use money free of federal taxes for medical expenses. These types of plans give you great flexibility in choosing your own doctors and hospitals and other service providers – these are, after all, consumer directed plans.

In summary, first know your medical needs including frequency of medical care, learn the basic terms that will affect your out of pocket costs, and have a basic understanding of the different types of private medical insurance. Doing some basic homework will help you to choose the private health insurance that is right for you or your family.

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