Health Care

Health Care Costs: Understanding and Navigating Insurance Policies

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Health insurance is less expensive than paying for your own care out of pocket, and it provides plenty of benefits. But navigating health plans isn’t always easy. Taking the time to learn the basics can help set you up for long-term success — not just for your health, but for your pocketbook, too.

Understanding Health Insurance Policies

When you buy a health insurance policy, you make monthly payments to a health insurer — such as Medicare or an insurance company — to help cover your medical needs. But different insurers and different plans have specific rules you must follow if you want coverage. For example, many plans require that you choose a doctor or hospital that have signed a contract with them. That’s called choosing a provider “in network.”

A few of the most common types of health insurance plans are:

  • Health maintenance organizations (HMO) — These plans only let you see doctors or visit hospitals in their network. They also require you to choose a primary care provider (PCP) and get a referral from your PCP before seeing a specialist
  • Preferred provider organizations (PPO) — PPOs let you see a specialist without a PCP referral. Your plan also may let you see a doctor or visit a hospital outside of their network. They just may not cover as much of it
  • High-deductible health plans (HDHP) — These plans can be combined with a health savings account (HSA), which lets you pay for certain medical expenses with money that isn’t subject to federal taxes. Most HDHPs also come with lower monthly payments

There are also government health insurance plans. Two of the most common are:

  • Medicare — This insurance program covers people 65 and older, as well as some people with certain diseases or disabilities. Medicare includes coverage for hospitals and doctors. Prescription drug coverage is optional and costs extra
  • Medicaid — This government program provides free or low-cost care to children and adults with limited incomes, and covers the health needs of people with disabilities

You can also buy a plan on the Health Insurance Marketplace®, operated by the federal government and available at, if it’s not available through your employer. Some states run their own Marketplaces.

Tips for Navigating Health Care Costs

To make sure you’re getting the most out of your health insurance plan — including avoiding paying for expenses your insurer might have covered — you first need to understand what’s in your policy.

Here are three tips on getting to know your insurance plan and avoiding health care costs:

  1. Read Your Policy

Even if you’ve had the same plan for a long time, health insurance companies may make changes from year to year that can impact you. Similarly, your needs may change and affect what you need to know about your benefits. For example, if you’re planning to have a baby in the coming year, you’ll likely want to brush up on your plan’s prenatal benefits

  1. Find a PCP

A PCP can help you stay on top of your health — from alerting you to screenings you’re due for to lifestyle changes you may need to make to prevent potential health problems in the future. They can also help you negotiate the health care system

  1. Use Preventive Care

Most plans cover screenings and other preventive care. That typically includes recommended vaccinations, like the flu shot, and tests for cholesterol and blood pressure

Efforts for Affordable Health Care

Learning how to get the most out of your health insurance plan is especially important as health care costs in America continue to rise. Health care costs have increased over the past few decades — from 5% of GDP in 1960 to 18% in 2021.

One of the ways policy makers are working to change that trajectory is through legislation and programs that lower costs. For example, the Inflation Reduction Act — signed into law in August 2022 — is designed to keep health care costs low for small businesses, improve prescription drug coverage and lower drug prices in Medicare.

The Centers for Medicare & Medicaid Services (CMS) is also fighting the rise by growing participation in Accountable Care Organizations (ACOs), which bring together Medicare provider groups with the goal of delivering more holistic, high-quality care while lowering the cost of care.

In addition, the U.S. Department of Health and Human Services (HHS) recently announced actions to protect consumers from junk health plans, surprise medical bills and extra costs that can lead to medical debt. And it released a new report projecting that nearly 19 million older adults will save roughly $400 a year on prescription drug costs when the $2,000 out-of-pocket prescription drug spending cap from the Inflation Reduction Act goes into effect in 2025.

Be Proactive for Your Health

Understanding your health insurance policy before an illness or injury occurs can help ensure you avoid unnecessary health care costs and make the most of your benefits.

It all adds up to living your healthiest life possible.

If you need help finding a PCP, use our directory to find one who meets your needs and sees patients in a location near you.

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