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How Do I Know How Much of a Health Benefit I Need?

Making decisions regarding your health insurance can be complicated. it's important to strike a balance between value and coverage, getting the most out of your hard-earned dollars – even if your employer provides a good health care plan. When you are just starting out in the work world and your parent’s insurance plan no longer covers you, you’ll need to make the best choice given your new circumstances.

10 Essential Health Benefits

Fortunately, the Affordable Care Act (ACA) gives us a good starting point. The Act lists 10 categories of what it calls essential health benefits that any qualifying plan must contain.1 Those categories are:

  1. Ambulatory patient services (outpatient services)
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services (those that help patients acquire, maintain, or improve skills necessary for daily functioning) and devices
  8. Laboratory services
  9. Preventive and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care

Additionally, plans that cover children must have dental care available. While employee health plans cover dental care, government plans like Medicare and Medicaid do not. That bias is reflected in the ACA.

If you are new to the health insurance market, the government’s 10 essential health care items is a good place to begin when you are trying to decide what type of plan you will purchase. Most of them are self-explanatory. Some may require a deeper dive to help you decide what you really need if you are looking to cut monthly costs.

Inpatient Outpatient and Emergencies

It’s likely that you are going to need to see a doctor at some point in your life. Getting health insurance that covers basic procedures like a check-up makes good sense. You should also be covered in case of emergencies or when you need to have an ambulance or EMT come for you. Ambulance services can be extraordinarily expensive.

Laboratory services cover the cost of any tests a physician might order. If you get a full check-up, a doctor may order blood work. If you are hospitalized, a doctor may run a battery of tests on you. This seems an essential part of a health insurance plan.

Prescription Drugs

A 2017 report conducted by the American Association of Retired Persons’ public policy arm showed that costs for prescription drugs are rising at an alarming rate. The average price for some drugs in 2015 were three times higher than they were in 2005.2

Some generic drugs you may take like an antibiotic may be manageable. Drugs used to treat common diseases like Type 2 diabetes can become very expensive. Rather than be surprised with a giant bill at the pharmacy, it would be wise to buy health insurance that covers prescription drugs.

Child Services

Plans that cover pediatric care, prenatal care and maternity care may seem like a luxury if you are single, something that you can handle when the need arises. In the past, insurance providers considered pregnancy to be a pre-existing condition. So if you tried to buy health insurance while you or your spouse was pregnant, you would have been denied coverage. The ACA changed all that, and you can receive coverage even if you are already pregnant. Currently, some politicians are investigating removing that part of the ACA.

Weigh Your Options

Most plans on the ACA’s Health Insurance Marketplace will cover the 10 essentials. You may be able to find plans that aren’t on the ACA’s marketplace that are less costly but cover less. You should discuss the decision with someone knowledgeable about the health insurance market and weigh their advice against your adverseness to the risk of going with a cheaper insurance plan.

1 https://www.healthcare.gov/coverage/what-marketplace-plans-cover/

2 https://www.aarp.org/health/drugs-supplements/info-2017/prescription-drug-costs-fd.html

This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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