The old adage "you get what you pay for" can certainly hold true for health insurance, so it's no surprise that finding affordable health insurance involves more than simply looking at the price of a policy. Indeed, some of the cheapest plans may end up costing much more over time.

Affordable health insurance versus cheap health insurance

For cost-conscious consumers, it may be tempting to select the cheapest health insurance possible. However, cheap health plans often come with limited benefits and significant out-of-pocket costs. Take, for example, the "mini-med" plans McDonalds offers to employees.

According to the Wall Street Journal, McDonald's charges employees only $13.99 per week for its basic plan. While the price may be right, benefits are capped at $2,000 per year. These benefits don't go far if you consider the average cost of a hospital stay. Aetna estimates a one-day hospital stay to be about $1,700 and the average hospital stay to be five days. As a result, someone covered by a mini-med plan could end up with a hefty hospital bill despite having health insurance.

Rather than selecting a policy based exclusively on price, most individuals and families are better off finding an affordable health insurance plan. An affordable plan is one that features premiums you can afford while providing the medical coverage you need. The right health insurance allows you to use your preferred doctors and services and limit out-of-pocket costs.

Shopping for affordable health insurance

When you compare health insurance quotes, the California Office of the Patient Advocate advises that consumers look for the following to determine whether a plan is affordable:

  • Deductible amounts, including special deductibles for prescription drugs or other services
  • Co-payments or co-insurance that may require you to pay a flat fee or a percentage of the total service cost
  • Hospital fees
  • Limits on specific benefits such as prescription drugs or medical equipment
  • Caps on maximum lifetime benefits
  • Caps on out-of-pocket costs

Also, keep in mind that some health insurance companies may require you to use in-network providers or to get referrals for specialist care.

The California Office of the Patient Advocate states that an HMO, which often places the greatest restrictions on your choice of doctor, is generally cheaper than a PPO or traditional indemnity plan. High-deductible health insurance can also be an affordably-priced health plan option; however, these plans feature deductibles of $1,050 or more. Therefore, these plans are best for healthy individuals who don't anticipate having ongoing health care needs.