If your monthly premium went up, you may be wondering whether it's time to switch health plans. A higher premium doesn't automatically mean another plan will save you money.
Before changing plans, compare your monthly premium alongside other costs such as deductibles, copays, coinsurance, prescription coverage, provider networks, and out-of-pocket maximums. The plan with the lowest premium isn't always the least expensive option overall.
Key takeaways
- A premium increase does not automatically mean you should switch. Compare total costs, not just the monthly amount.
- A lower-premium plan often has a higher deductible and higher out-of-pocket maximum. If you use care regularly, a higher-premium plan may cost less overall.
- Before switching, check that your doctors, hospitals and prescriptions are covered in any new plan.
- If you receive a premium subsidy, check whether your subsidy amount has also changed. The net increase may be smaller than it looks.
Should I switch health plans if my premium went up?
An increase in your monthly premium may prompt you to review your coverage options. Before switching plans, weigh the cost against your expected medical expenses and healthcare needs for the year ahead. Consider comparing plans if:
- Your premium increased significantly
- Your healthcare needs have changed
- Your preferred doctors or hospitals are no longer in network
- Your prescription costs have increased
- Another plan offers benefits that better match your needs
Before switching plans, consider your total healthcare costs, not just your monthly premium. A plan with a lower premium may seem like a better deal, but higher deductibles and out-of-pocket costs could leave you paying more overall, especially if you need frequent medical care.
What should I compare when my premium increases?
A premium is the amount you pay each month to maintain health coverage, but it is only one part of your total healthcare costs. Before changing plans, consider how much you may pay for care throughout the year by comparing these key features:
- Deductible: The amount you pay for covered services before your health plan begins sharing costs.
- Copays: Fixed amounts you pay for certain services, such as doctor visits or prescriptions.
- Coinsurance: The percentage of costs you pay after meeting your deductible.
- Out-of-pocket maximum: The most you'll pay for covered medical expenses during the plan year. After you reach this limit, your plan pays 100% of covered services.
Why a lower premium doesn't always mean lower costs
When comparing health plans, it's natural to focus on the monthly premium. But the plan with the lowest premium isn't always the least expensive option overall.
Consider this example:
| Cost | Plan A | Plan B |
|---|---|---|
| Monthly premium | $450 | $375 |
| Annual premium | $5,400 | $4,500 |
| Deductible | $5,500 | $9,000 |
| Out-of-pocket maximum | $11,000 | $18,000 |
At first glance, Plan B may seem like the better value because it saves you $900 per year in premiums. However, it also comes with a higher deductible and out-of-pocket maximum.
If you don't expect to use many healthcare services, the lower premium may help you save money. But if you regularly visit the doctor, see specialists, take prescription medications, or need ongoing care, your out-of-pocket costs could add up quickly.
That's why it's important to look beyond the monthly premium. Consider your expected healthcare needs and the total cost of each plan, including premiums, deductibles, copays, coinsurance, prescription costs and the out-of-pocket maximum.
Taking the full picture into account can help you choose the plan that offers the best overall value for your situation.
What coverage should you review before switching plans?
Before switching health plans, take time to compare coverage details carefully. Reviewing provider networks, prescription drug coverage, expected healthcare needs, tax-advantaged account eligibility, and additional benefits can help you avoid unexpected costs and choose a plan that best supports your health and budget.
Provider network: Verify that your preferred doctors, specialists, hospitals, and health systems participate in the plan's network.
Prescription coverage: Check that your medications are covered and review any changes in costs or pharmacy requirements.
Expected healthcare needs: Consider the healthcare services you expect to use in the coming year, such as specialist appointments, ongoing treatments, planned procedures, pregnancy and family planning care or mental health services.
Health Savings Account (HSA) eligibility: If you contribute to an HSA, confirm whether the plan is HSA-qualified.
Additional benefits: Review any additional benefits offered by each plan, such as virtual care services, wellness programs, care management support, travel assistance and vision or dental coverage.
Taking the time to compare these key coverage details can help you determine whether a new plan is the right fit for your healthcare needs and financial goals. A careful review now can help you avoid unexpected costs, out-of-network charges or disruptions in access to the care and providers you rely on.
Which plan may be right for you?
When deciding between plans, think about both your healthcare needs and your budget. A lower-premium plan can save money each month, while a lower-deductible plan may reduce your costs when you need care. The best choice is the one that provides the right balance of predictable monthly costs and potential out-of-pocket expenses for your situation.