The Guide
Student Health Insurance
Make a Comparison of the Various Health Insurance Options You Have Compiled
Now that you have gathered quotes to compare against the student health insurance policy available through your college, it is time to do a side-by-side comparison. Since most students are conservative when it comes to money management, you might wish to list your options in order of annual premium amount. By now, you should also have decided which factors of a health insurance policy are the most important to your specific situation. When it comes to purchasing a health insurance policy, it is best to not compromise on the things that are of importance to you. Therefore, you might wish to discard the health plan options that do not meet your specific needs.
Now, let's start with the lowest premium plan that is still on your list of potential health insurance policies worth considering. Compare this plan to the next least expensive plan. Is there an obvious reason why the first plan was less expensive? Perhaps it has a higher deductible or a higher coinsurance percentage. Health insurance rates are based on risk factors, such as the odds that the insurance company will need to pay claims. If you select a higher annual deductible, this reduces the likelihood that the insurance company will be required to reimburse you for health care expenses, thus reducing their risk and lowering the monthly premium. If you determine that the difference in cost is probably due to a difference in the deductible or the coinsurance percentages, you will need to make the decision if the difference in the monthly premium is worth the higher deductible. For instance, let's assume that you are looking at a student health insurance plan that is $300 per year less than the next least expensive plan. However, the annual deductible is $1,000 higher on this least expensive plan. In the event of a major illness or injury, the $300 that you saved on the lower cost health plan would end up costing you an extra $1,000 in out-of-pocket medical expenses. Therefore, the cheaper health plan would now become the more costly of the two.
To determine if the difference in deductibles and coinsurance limits justifies the lower priced student health insurance plan, you may need to estimate your expected out-of-pocket medical expenses. This may be easier to do if you are currently under treatment for a pre-existing condition that requires regular prescription medications or office visits. If you are healthy it is more difficult to predict what your health care costs may be during the next year. In this case, you may wish to look at a plan that is more designed to protect you against a catastrophic illness and has higher co-payments for office visits and preventive health care. A student health insurance plan that offers a low co-payment for office visits will likely be more expensive than a different medical plan that has a higher co-payment for office visits. If all other benefits of the plan are equal, it would not make sense to pay an increased premium to save a few dollars on an office visit a couple of times per year.
When doing your price and benefits comparison of the different health insurance plans you have obtained information about, keep in mind that less expensive is not always good. There is likely a reason why this specific student health insurance plan is less expensive. Besides deductibles and coinsurance percentages, there are other factors that may affect the premium of a health insurance policy. If you are looking at an HMO or a PPO plan, the network and availability of physician's may be a factor. Health insurance rates are directly affected by the negotiated rates that physicians charge for seeing members of that specific medical insurance plan. You will also want to look at other limitations associated with the lower cost health plan, such as limits on office visits or maximum dollar amounts on certain covered benefits. This information should be provided in the Exclusions and Limitations section of the health plan brochure.
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