Health insurance is one of the most important financial protections you can have, but it’s also one of the most misunderstood. Many people end up overpaying, underinsuring, or choosing plans that don’t fit their needs—simply because the system is confusing. This guide breaks down the most common health insurance mistakes and how to avoid them so you can choose coverage confidently and get better value for your money.
Choosing a Plan Based Only on the Monthly Premium
Many people pick the cheapest plan they see, but low premiums often mean much higher out-of-pocket costs.
Common trade-offs with low-premium plans:
- Higher deductibles
- Higher coinsurance
- Higher out-of-pocket maximums
- Limited provider networks
- Less coverage for specialty services
Always compare the total annual cost, not just the monthly payment.
Not Reviewing the Deductible, Coinsurance, and Out-of-Pocket Maximum
These three numbers determine how much you’ll pay when you actually use the plan.
Deductible
The amount you pay before insurance starts covering major care.
Coinsurance
Your share of costs after the deductible is met.
Out-of-pocket maximum (OOP max)
The maximum you’ll pay in a year before everything becomes 100% covered.
Many people ignore these key details and face unexpected bills during medical emergencies.
Using Out-of-Network Providers Without Checking Coverage
A common mistake is assuming all doctors accept your insurance.
Out-of-network care can lead to:
- Higher costs
- Claims being denied
- Surprise medical bills
- Emergency-only coverage depending on your plan type
Always verify whether your doctors and hospitals are in-network before scheduling care.
Not Checking Prescription Drug Coverage
Prescription coverage varies widely between plans. Many people:
- Choose a plan that doesn’t cover their medications
- Pay higher prices because the prescription is on a higher formulary tier
- Miss available generics or preferred brands
- Overlook prior authorization and step therapy rules
Review the plan’s drug formulary before enrolling.
Ignoring Mental Health and Specialist Coverage
Some plans offer limited:
- Therapy benefits
- Psychiatric care
- Specialist visits
- Telehealth options
Not reviewing these details often leads to higher expenses for essential care.
Missing Out on Preventive Care Benefits
Most plans include free preventive care, but many people don’t use it because they assume everything will cost money.
Preventive services often covered at no cost:
- Annual checkups
- Vaccinations
- Screenings
- Birth control
- Routine lab work
Skipping these benefits can lead to avoidable health issues later.
Not Taking Advantage of Subsidies or Tax Credits
On ACA Marketplace plans, subsidies can dramatically reduce premiums—but many people don’t check eligibility.
You may qualify for assistance if:
- Your household income is within the subsidy range
- You’re not offered affordable employer coverage
- You select a Silver plan with cost-sharing reductions
Skipping subsidies means paying far more than necessary.
Forgetting to Update the Plan After Major Life Changes
Health insurance needs change when you experience:
- Marriage or divorce
- Job changes
- Income changes
- Moving to a new state
- Having a child
- Turning 26 and losing a parent’s coverage
Not updating your plan can lead to coverage gaps or paying for the wrong benefits.
Not Reviewing the Summary of Benefits and Coverage (SBC)
The SBC outlines:
- Covered services
- Deductibles
- Copays
- Coinsurance
- Limitations
- Exclusions
Many people skip this document and end up surprised when certain services aren’t covered.
Missing Open Enrollment or Special Enrollment Deadlines
If you miss enrollment periods, you may:
- Go without coverage
- Pay higher out-of-pocket costs
- Be forced into a more expensive plan
- Lose access to subsidies
Mark your calendar or set reminders to prevent gaps in coverage.