Health insurance is one of the most important forms of financial protection you can have—but buying the wrong plan or misunderstanding key details can lead to unexpected costs, limited coverage, or major frustrations when you need care. Many people focus only on monthly premiums without considering how the plan actually works in real-life situations.
Use this guide to learn what not to do when buying health insurance and how to avoid the most common pitfalls that lead to higher costs and inadequate coverage.
1. Don’t Choose a Plan Based Only on the Monthly Premium
It’s tempting to pick the cheapest plan, but low premiums often mean higher out-of-pocket costs. A plan with a low monthly cost may include:
- High deductibles
- Limited networks
- Higher copays
- Higher coinsurance
- Fewer covered benefits
Always review the full cost structure—not just the premium.
2. Don’t Ignore the Deductible, Copays, and Out-of-Pocket Maximum
Many people are surprised by their medical bills simply because they didn’t read the cost-sharing terms. When comparing plans, examine:
- Deductible: What you pay before insurance starts covering care
- Copays: Set dollar amounts for services
- Coinsurance: The percentage you pay after meeting the deductible
- Out-of-pocket maximum: Your cost limit for the year
The out-of-pocket maximum is especially important—it protects you from catastrophic expenses.
3. Don’t Overlook the Provider Network
Health insurance plans rely on networks of doctors, hospitals, and specialists. Using out-of-network providers can mean higher costs—or no coverage at all.
Before choosing a plan, check whether your preferred:
- Primary care doctor
- Specialists
- Hospitals
- Clinics
are in-network. Network mismatches are one of the most common and costly insurance mistakes.
4. Don’t Assume Prescription Drugs Are Fully Covered
Prescription coverage varies widely between plans. Your medications may fall under different pricing tiers—or may not be covered at all.
Review:
- The plan’s formulary (drug list)
- Tier pricing
- Prior authorization requirements
- Generic vs. brand-name pricing differences
Failing to check this can lead to high out-of-pocket expenses.
5. Don’t Ignore Your Health Needs and Medical History
Choosing the wrong type of plan can make regular care more expensive. For example:
- High-deductible plans may not be ideal if you frequently visit doctors
- PPO plans may work better if you need specialist flexibility
- HMO plans may be better if you prefer lower costs and don’t mind referrals
Your health habits and medical needs should guide your plan choice—not just price.
6. Don’t Forget to Consider Preventive Care Benefits
Most health insurance plans include free preventive services such as annual checkups, screenings, and vaccines. However, not all plans cover all types of preventive services equally.
Review what preventive care is included so you can avoid unnecessary charges.
7. Don’t Overlook Mental Health Coverage
Mental health services are essential, yet many buyers don’t verify coverage before choosing a plan.
Check if the plan includes:
- Therapy
- Counseling
- Psychiatric services
- Substance abuse treatment
- Telehealth options
Coverage quality varies greatly across insurers, so it’s important to understand what’s included.
8. Don’t Forget to Check for Specialist Referral Requirements
Some plans (especially HMOs) require referrals before you can see a specialist. Without a referral, insurance may deny coverage.
If you regularly see specialists—or prefer more flexibility—consider a plan with fewer referral restrictions.
9. Don’t Choose a Plan Without Understanding How Emergency Care Is Covered
Emergency room visits and urgent care can be expensive. Always check:
- Copays and coinsurance for emergency services
- Coverage differences between ER and urgent care
- Whether out-of-network emergencies are covered
- Ambulance coverage limitations
Many people discover gaps only after needing emergency treatment.
10. Don’t Ignore Out-of-Network Costs
Even if a plan covers out-of-network care, the costs may be much higher. Some plans cover none at all.
Before choosing a plan, ask:
- Does it cover out-of-network providers?
- What is the coinsurance rate?
- Are there separate deductibles for out-of-network care?
This is especially important if you travel often or visit specialists.
11. Don’t Overlook Telehealth Benefits
Telehealth is now a major part of healthcare. Some plans offer telemedicine for:
- General consultations
- Mental health services
- Follow-up appointments
- Prescription renewals
If you prefer virtual care, make sure your plan offers robust telehealth coverage.
12. Don’t Forget to Factor in Family or Dependent Needs
If you’re buying coverage for a spouse or children, consider:
- Pediatric care
- Family deductibles
- Fertility or maternity benefits
- Specialist access
- Dental and vision coverage (often separate)
A plan that works for you personally may not work for your entire household.
13. Don’t Ignore Annual Enrollment Deadlines
Many shoppers wait until the last minute or miss enrollment entirely. Late enrollment can leave you uninsured for months—or limit your coverage choices.
Mark reminders for:
- Open Enrollment
- Special Enrollment Period eligibility
- Employer benefits deadlines
Don’t wait until it’s too late.
14. Don’t Forget to Update Your Plan After Major Life Events
Significant life changes should trigger a policy review.
Update your plan if you:
- Get married or divorced
- Have a child
- Change jobs
- Move to a new state
- Lose employer coverage
- Experience income changes (for marketplace plans)
Updating your plan ensures coverage stays aligned with your needs.
15. Don’t Let Your Plan Auto-Renew Without Reviewing It
Premiums, networks, medications, and benefits can change every year. Auto-renewing without reviewing details could leave you with:
- Higher costs
- Fewer in-network providers
- Different deductibles
- Reduced benefits
Always compare your current plan with new options during enrollment.
Final Thoughts
Buying health insurance doesn’t have to be confusing, but making a few common mistakes can lead to major financial surprises. By examining the plan’s full cost structure, reviewing provider networks, checking prescription coverage, and aligning your policy with your health needs, you can make an informed decision that protects both your well-being and your budget.
Smart health insurance shoppers look beyond the premium—they look at the full picture.