Employer-sponsored health insurance is an important benefit that many workers rely on to cover their healthcare needs. In fact, according to a recent survey by the Society for Human Resource Management, 46% of employees said that health insurance was either the deciding factor or a positive influence in choosing their current job. However, when it comes time to select a plan during open enrollment, the process can feel overwhelming. With so many options and complex terminology, how do you know which plan is the best fit for you and your family?

In this article, we’ll break down the key factors to consider when comparing employer health insurance plans, including:

• The different types of health insurance plans and how they work
• Important health insurance terminology to understand
• How to evaluate your and your family’s healthcare needs
• Tips for comparing plans based on benefits, networks, and costs
• The importance of taking your time and asking questions during the process

One of the first things to understand when comparing employer health insurance plans is the different types of plans available. The four most common types are:

• Health Maintenance Organizations (HMOs): HMOs typically have lower out-of-pocket costs but require you to choose a primary care physician (PCP) who coordinates your care and provides referrals to specialists. Care is only covered if you see a specialist within the HMO’s network, except for emergencies.
• Preferred Provider Organizations (PPOs): PPOs offer more flexibility to see out-of-network providers but usually have higher out-of-pocket costs. You can see a specialist without a referral, although staying in-network is less expensive.
• Exclusive Provider Organizations (EPOs): EPOs are a mix between HMOs and PPOs. They generally don’t require referrals to see a specialist but do require you to stay within the plan’s network, except for emergencies.
• Point of Service (POS) Plans: POS plans blend elements of HMOs and PPOs, allowing you to choose between staying within the network or going outside the network at the point of service. However, out-of-network care requires a referral from your PCP and may cover less of the cost.

When comparing plan types, consider your preferences around choosing providers and coordinating specialist care. HMOs tend to be the most restrictive but have the lowest out-of-pocket costs, while PPOs provide the most choice but come with higher costs. EPOs and POS plans fall somewhere in between.

Another challenge when comparing health insurance plans is deciphering all the jargon and complex terminology. Here are a few of the most important terms to know:

• Premium: The amount you pay each month for your health insurance coverage. Your employer typically pays the rest.
• Deductible: The amount you must pay out-of-pocket for covered health expenses before your insurance starts paying. For example, if your deductible is $1,000, your plan won’t pay for medical costs until you’ve met that amount.
• Out-of-pocket maximum: The most you’ll have to pay for covered health expenses in a year, after which your insurance covers 100% of the costs.
• Copay: A fixed amount you pay for a covered service, usually at the time you receive it. For example, you might have a $25 copay for a doctor’s office visit.
• Coinsurance: The percentage of costs you pay for a covered service after meeting your deductible. For example, if your coinsurance is 20%, you’ll pay 20% of the cost and your insurance will pay for medical expenses to cover the remaining 80%.

When comparing plans, it’s important to look at all of these cost-sharing elements together. A plan with a low premium but a high deductible could end up being more expensive if you have frequent healthcare needs. On the other hand, a plan with higher premiums but lower out-of-pocket costs might make sense if you anticipate needing a lot of care.

To choose the best health insurance plan, you’ll need to have a good understanding of your and your family’s healthcare needs. Consider factors like:

• How often do you and your family members typically visit the doctor? Do you mostly go for routine checkups and preventive care, or do you have frequent appointments to manage a chronic condition?
• What prescription medications do you take regularly? Look at each plan’s list of covered drugs (called a formulary) to make sure your medications are included and to see what tier they fall under, which determines your cost to pay for medical prescriptions.
• Are you anticipating any big life events or medical procedures in the coming year, such as welcoming a new baby or undergoing surgery?
• What are your preferences when it comes to choosing a doctor or facility? Is it important to you to have a wide network of providers to choose from, or do you place a higher priority on keeping costs low?

The answers to these questions will help guide you toward the type of plan and level of coverage that best fit your needs.

Once you have a grasp on the different plan types and have evaluated your healthcare needs, it’s time to dive into comparing your employer’s specific offerings. Your HR department should provide a summary of benefits for each plan that lays out key details like:

• The provider network: Are your preferred doctors and hospitals included? If not, are you willing to switch providers or pay more for out-of-network care?
• Covered services and exclusions: Look closely at what each plan covers and whether any services you need are excluded or limited.
• Prescription drug coverage: Again, make sure any medications you take are on the plan’s formulary and check what tier they fall under, which determines your cost.
• Cost-sharing requirements: Review the premium, deductible, copays, coinsurance, and out-of-pocket maximum to get a sense of your total potential costs.

Creating a spreadsheet to compare key plan features side-by-side can be helpful. And if your employer offers any decision-support tools, take advantage of them to model different scenarios and estimate your costs under each plan.

Choosing a health insurance plan is a big decision that can have a significant impact on both your health and your finances. Don’t feel like you have to rush the process or make a choice without fully understanding your options.

Take the time to thoroughly review plan materials, crunch the numbers, and think about how each option aligns with your unique needs and preferences. If anything is unclear, don’t hesitate to reach out to your HR representative or the insurance company for clarification.

Selecting a health insurance plan can feel like a daunting task, but by breaking it down into manageable steps and knowing what to focus on, you can confidently choose the best health insurance plan for you and your family. Remember to:

1. Understand the different plan types and how they work
2. Get familiar with key health insurance terminology
3. Evaluate your healthcare needs and preferences
4. Compare plan options based on networks, coverage, and costs
5. Take your time and ask questions