The factors that go into how a Health Care Coverage provider or Insurance carrier determine the cost of a Health Care Plan is a complex issue.  However, it can be greatly simplfied iby viesing it from the consumer's angle and eliminating eliminating the demographic, geographic, morbidity/actuarial and legal/economic issues at play when a health icare plan provider creates a plan. If you just want to know how the basic policy features affect the cost of a health care plan, understand that the following basic rules apply:

1. The higher the Deductible; the lower the Premium;

2. The higher the Maximum Out-of-Pocket (OOP), the lower the premium (be careful to understand how the maximum functions with a Family plan);

3. The higher the Coinsurance (percentage you pay), the lower the premium;

4. The higher the copayments (co-pay), the lower the premium;

5. The more restrictive the Rx Drug plan, the lower the premium;

6. The smaller the choice of Network of providers (HMO, PPO, POS); the lower the premium;

7. The greater the exclusions and Limitations, the lower the premium.

In a nutshell, plans with a low premium generally pay the least on a claim and expose you to the greatest financial risk. Conversely, the highest priced plans typically offer the most coverage and provide the greatest financial protection.

That being said, some companies operate more efficiently, have lower marketing and sales costs, do a better job at investing reserves, etc. This means that the cost of the same plan from different companies may also vary, but the above basic rules still apply and the price difference is likely to be modest.

However, that also tells you that if two plans seem similar and the premiums are more than, say, 5-10% apart, then probabaly not all the differences have been revealed or disclosed to you. Be a skeptic and ask!

The most essential two questions to consider are:

1. How much financial risk (maximum Out-of-Pocket) are you willing to take?; and

2. Can you actually afford to pay the premiums and out-of-pocket expense?

Once you understand how the above seven rules apply to your situation, the final concern is how much control you have over the specifics of your medical care - for example - the selection and access you may have to specialists, when you need them, and how much of the cost may be covered should you choose or require a provider not participating with the plan (as determined, in part, by rules 6 and 7 above).

The following graphs illustrate how the above seven rules actually affect you financially. The red area on the left representing your financial exposure, is greatest when the premium cost is the lowest, as you might expect. Conversely, the right hand side shows that the plans with the highest cost leave little or no significant financial exposure.

Choosing the right policy involves finding an affordable plan that gives you a medium to low financial risk. Note that the shaded orange-yellow area on the second graph below indicates the range where most people choose to balance the cost versus financial risk to obtain the best value.

You may be wondering how much to budget for the cost of a good value plan. As a reference point, you should be aware that the average total health care cost in the USA is now $600.00 per month per person (shared by individuals, employers, and government agencies). People who have been fortunate enough to work for larger companies with fully paid health care for their employees and dependents are often in for a shock.

Be realistic. Setting an arbitrary amount that is too low may buy you more financial risk than coverage, while even if you can afford to pay more, you may be spending more than really makes sense.

There may also be tax consequences. For example, Self-employed and Small Business owners have tax advantages, while the new HSA and HIA plan options and associated savings accounts my actually reduce the after-tax expense substantially for everyone.

Finally, as shown above, the cost of a health care plan largely determines the financial risk inherent in the type of plan you choose. The final piece of the health care plan puzzle is about the critical aspects of your health risks when undergoing treatment. The Quality of Care and Degree of Control that the plans you may be interested in provide to you over the health cared decisions that must be dealt with by someone.

Once you feel you have grasped the basics, you would be wise to consult with a Licensed Certified Field Broker/Agent ( Click Here). This person should be able to offer you a complete array of plan options and help you determine your "sweet spot" where the Cost, Coverage, and Control of the plan you choose meets you needs!