Health Insurance 101 for a First-Time Buyer

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Written by: Vanessa Jerusalimiec (*Amsive Digital)  |  Reviewed by: Shelley Wyant  |  *MHP partners with Amsive Digital on news content


Health Insurance 101 for a First-Time Buyer

Buying health insurance for the first time can seem daunting. You’ll need to decide what kind of coverage you want, find out how to compare plans, and learn new terms you’re not familiar with. If you’re just starting your search for a new health care plan, here’s all the information you need to find the right one.

Understanding Health Insurance

Health insurance plans cover many of your basic health care costs, including hospital care, emergency care, doctor’s visits, and preventive care. Many plans offer added benefits like prescription drug coverage, dental and vision coverage, surgery, and specialty care.

There are several plan types available, including HMO, POS, and PPO plans.

  • Health Maintenance Organization (HMO) plans offer low monthly premiums and higher copayments. Your primary care provider will always be your first point of contact, and you’ll need a referral to see a specialist.*
  • Point of Service (POS) plans offer some additional flexibility. You will still need a referral for specialists, but you’ll have coverage for out-of-network care.*
  • Preferred Provider Organization (PPO) plans have moderate monthly premiums and moderate copayments. You’ll have more flexibility since you won’t need a referral to see a specialist. You’ll also have coverage for in-network and out-of-network care.*

*Information may vary by health insurance company and plan type.

Basic Health Insurance Terms

Are you confused by some of the terms you see when comparing plans? Knowing what these terms mean will help you choose the right health insurance plan:

  • Health plan premium: This is a monthly fee paid directly to your insurance provider.
  • Yearly deductible: Your deductible is how much you'll pay before your plan coverage starts. At the beginning of each year, you’ll pay for your health care services out-of-pocket if you have a deductible. Once you reach the yearly deductible, your insurance coverage begins.
  • Copay/copayment: When a service isn’t fully covered, you may have to pay a copay. Also called a copayment, this is a fixed amount you’ll pay when you access services.
  • Coinsurance: This is similar to a copay, but instead of paying a fixed amount, you'll pay a percentage of the total cost of the service.
  • Out-of-pocket maximum: This is the most you’ll have to pay in out-of-pocket costs for the year. It includes your deductible, copays, and coinsurance.

How Much Does It Cost to Buy Health Insurance on Your Own?

If you don’t have health insurance through your employer, you can buy health insurance on your own. Plan costs vary based on the plan type, your age, where you live, and lifestyle factors like tobacco use.

Understanding the Metal Levels

Health care plans are often placed into three categories – Bronze, Silver, and Gold. This is all about your out-of-pocket costs.

  • Bronze plans have low monthly premiums, but you’ll pay a 40% copay when you access care. This is a great choice if you want a low monthly premium and you rarely access care.
  • Silver plans usually have a 30% copay. These plans have moderate premiums and moderate copays.
  • Gold plans have a 20% copay. If you often access care, this may be a great option. You'll pay a higher monthly premium and have lower coinsurance when you see providers.

How to Select a Health Insurance Plan

You can start your search using the Health Insurance Marketplace. This federal website makes it easy to compare plans in your area based on benefits, price, household size and income. Here's where you can find out if you qualify for a premium tax credit, Medicaid coverage or any other subsidies. You also can go directly to an insurance provider and compare plans offered by plans you trust.

When Is the Best Time to Buy Health Insurance?

For a first-time insurance buyer, the best time to purchase health insurance is during the Open Enrollment Period. Open Enrollment begins Nov. 1 and ends Jan. 15. If you enroll in your new plan by Dec. 15, your coverage will start Jan. 1. You may qualify for a Special Enrollment Period if you lose health care coverage, move to a new city or have other significant life changes.

For more information on individual and family plans in Michigan, contact McLaren Health Plan. We’ll help you find the right plan at the right time for you.