The top mistakes people make when choosing health insurance

Health insurance isn’t just paperwork; it’s how you protect your body, your savings, and your peace of mind. The problem? Most people pick a plan when they’re busy, stressed, and staring at jargon. That’s how small choices turn into big bills. This guide cuts through the noise—so you can spot the traps, choose with confidence, and keep your care accessible when you need it most.

The most common mistakes to avoid

1) Choosing on premium alone

What happens: You chase the lowest monthly payment and end up with a plan that costs more the first time you actually use it.
Why it hurts: High deductibles and cost sharing can outweigh the premium savings if you see doctors, need tests, or take brand‑name meds.
What to do instead: Estimate total annual cost (premium + expected out‑of‑pocket) using last year’s usage as a baseline and add a buffer for surprises.

2) Ignoring the provider network

What happens: Your favorite doctor or hospital isn’t in‑network, and suddenly every visit is billed at out‑of‑network rates or not covered at all.
Why it hurts: Out‑of‑network charges can be steep, and some plans offer zero out‑of‑network coverage except for emergencies.
What to do instead: Check your providers and facilities (primary care, specialists, your closest ER) are in‑network before you enroll.

3) Not verifying prescription coverage

What happens: Your medications require prior authorization, have quantity limits, or sit in a high tier with painful copays.
Why it hurts: Formularies vary widely, and a single non‑covered drug can blow your budget.
What to do instead: Search the plan’s formulary for each medication, note the tier, copay/coinsurance, and any restrictions. Ask your doctor about lower‑tier alternatives.

4) Misreading deductibles, copays, and coinsurance

What happens: You assume a copay covers everything, but the service applies to the deductible first, then coinsurance.
Why it hurts: Ambiguity around cost sharing leads to surprise bills for labs, imaging, outpatient procedures, and ER visits.
What to do instead: Map the flow of costs: Does the service have a flat copay? Does the deductible apply first? What’s the coinsurance afterward?

5) Overlooking the out‑of‑pocket maximum

What happens: You focus on premiums and deductibles but forget the most important cap—how much you can possibly pay in a bad year.
Why it hurts: If something big happens, the difference between a 2,500 and 6,000 out‑of‑pocket max can be the difference between manageable and crushing.
What to do instead: Compare out‑of‑pocket maximums across plans and weigh the premium trade‑off realistically.

6) Assuming referrals aren’t required

What happens: You book a specialist directly under an HMO or EPO and later discover the visit wasn’t covered without a referral.
Why it hurts: You pay full price for care you could have covered with one extra step.
What to do instead: Confirm referral rules and streamline with a primary care practice that can process referrals quickly.

7) Forgetting pre‑authorizations

What happens: You schedule an MRI or surgery without prior authorization and the claim is denied.
Why it hurts: Administrative denials are avoidable and time‑consuming to fix.
What to do instead: Ask before you book: Does this require prior auth? Who submits it—provider or patient?

8) Not considering likely life events

What happens: You choose based on today and ignore the next 12 months: a planned pregnancy, a move, travel, or a new job.
Why it hurts: Plan fit changes with life, and mid‑year changes may be limited to qualifying events.
What to do instead: Plan ahead for likely needs (maternity/newborn care, mental health, travel coverage, chronic care follow‑ups).

9) Skipping mental health and therapy coverage

What happens: You assume mental health is covered like primary care—but networks are narrower and benefits differ.
Why it hurts: Out‑of‑network therapy gets expensive fast; telehealth coverage can be a lifeline if it’s included.
What to do instead: Check behavioral health networks, teletherapy options, visit limits, and prior auth rules for psychiatry.

10) Misunderstanding preventive care

What happens: You expect all routine care to be free, then get billed for something coded as diagnostic.
Why it hurts: Coding matters—a “screening” colonoscopy can turn diagnostic with a polyp removal and change your costs.
What to do instead: Confirm what’s considered preventive under your plan and ask providers to code accurately when appropriate.

11) Overinsuring or underinsuring dependents

What happens: You default to family coverage even if a partner’s employer plan is better, or you leave older dependents without needed benefits.
Why it hurts: Mismatched coverage wastes money or reduces access to care.
What to do instead: Compare employer plans side‑by‑side and assign each family member to the best option when allowed.

12) Ignoring telemedicine and virtual care

What happens: You pay urgent‑care rates for issues that could be handled via covered telehealth.
Why it hurts: Convenience and cost savings go unused.
What to do instead: Verify telehealth benefits for primary care, mental health, and after‑hours triage.

13) Not using HSAs or FSAs strategically

What happens: You pick a high‑deductible plan but don’t fund your Health Savings Account, or you over/under fund your FSA and lose money.
Why it hurts: You miss tax savings or forfeit unused FSA funds.
What to do instead: Align account choice with plan type and set realistic contributions based on expected expenses.

14) Overlooking exclusion details and waiting periods

What happens: You need a service that has a waiting period or exclusion (e.g., dental major work, maternity in some private plans, or specific therapies).
Why it hurts: Coverage gaps become clear only when the bill arrives.
What to do instead: Read exclusions and waiting periods for specialty services and riders before enrolling.

15) Not reading the summary of benefits

What happens: You rely on marketing pages and never open the actual Summary of Benefits and Coverage (SBC).
Why it hurts: Critical details (urgent care costs, lab coverage, ER copays, rehab services) are in the SBC.
What to do instead: Scan the SBC line by line for your top five expected services.

16) Missing enrollment and change windows

What happens: You wait too long and miss open enrollment or can’t prove a qualifying life event.
Why it hurts: You’re locked out or stuck with a suboptimal plan for months.
What to do instead: Calendar deadlines and keep documentation for qualifying events (marriage, birth, move, job change).

17) Assuming all emergencies are treated the same

What happens: You go to a convenient ER that’s out‑of‑network or use an out‑of‑network ambulance and face massive bills.
Why it hurts: Emergency coverage rules vary; some protections exist, but not all services or regions are equal.
What to do instead: Know your nearest in‑network ERs, urgent care clinics, and ambulance policies.

18) Forgetting international or out‑of‑area coverage

What happens: You travel and discover your plan offers minimal coverage outside your region or country.
Why it hurts: Medical travel bills can be devastating and must often be paid upfront.
What to do instead: Check out‑of‑area benefits and consider short‑term travel medical coverage if needed.

19) Not evaluating quality and member experience

What happens: You pick on price and land with a plan known for slow claims processing or poor customer service.
Why it hurts: Delays and denials add stress when you’re already unwell.
What to do instead: Look up plan ratings and reviews for claims speed, grievance rates, and provider satisfaction.

20) Failing to re‑shop each year

What happens: You auto‑renew a plan that changed its network, premiums, or benefits.
Why it hurts: Your old plan may no longer be the best fit.
What to do instead: Re‑compare annually—needs change, and so do plans.

How to compare plans the smart way

Build your usage profile

Past year check: Gather how many visits you had, which specialists you see, your top medications, and any scheduled procedures.
Risk buffer: Add a cushion for one emergency visit, one imaging study, and a new prescription—just in case.

Calculate realistic total cost

Annual view: Add annual premiums + expected copays/coinsurance + anticipated deductible spending.
Max exposure: Compare out‑of‑pocket maximums to understand your worst‑case cost.

Validate access to care

Network fit: Confirm in‑network status for primary care, key specialists, preferred hospital, and nearby urgent care.
Pharmacy fit: Check preferred pharmacies and any mail‑order benefits.

Check rules and fine print

Referrals and prior auth: Know when you need them and who handles paperwork.
Exclusions and limits: Note visit caps, therapy limits, rehab days, and durable medical equipment rules.

Common plan types and when they fit

Plan type	Flexibility	Typical costs	Best for
HMO	Low out‑of‑network access	Lower premiums, referrals required	Those with stable care in one network
EPO	Limited out‑of‑network	Moderate premiums, no out‑of‑network except emergency	Those who want direct specialist access in network
PPO	High flexibility	Higher premiums, some out‑of‑network coverage	Frequent travelers or multi‑provider users
HDHP + HSA	Flexible, often PPO/EPO	Lower premiums, higher deductible, HSA eligible	Healthy users who can fund an HSA and handle variability

Sources: Use your local marketplace or employer SBCs to validate specific plan structures and costs.

Cost traps to watch out for

Facility vs. professional fees: Label: One visit, two bills. Hospital‑owned clinics may bill a separate facility fee on top of the doctor’s fee.
Tiered networks: Label: In‑network isn’t always equal. Some plans have “preferred” tiers with lower copays and “standard” tiers that cost more.
Specialty meds: Label: Coinsurance shock. High‑cost drugs often use percentage coinsurance instead of a flat copay.
Imaging sites: Label: Same MRI, different bill. Independent imaging centers can be far cheaper than hospital outpatient departments.
ER vs. urgent care vs. telehealth: Label: Levels of care, levels of cost. Use the lowest appropriate level of care when safe.

A 10‑minute action checklist

List your top five needs: Preventive care, chronic condition follow‑ups, meds, mental health, planned procedures.
Confirm providers: Check in‑network status for your primary doctor, key specialists, and nearby hospital.
Verify medications: Look up each med’s tier, restrictions, and copay/coinsurance.
Check the rules: Referrals? Prior auth? Telehealth included?
Do the math: Estimate annual total cost and compare out‑of‑pocket maximums.
Scan exclusions: Waiting periods, therapy caps, rehab limits.
Pick the right account: HSA for HDHPs; FSA for predictable expenses.
Know your urgent options: Closest in‑network urgent care and ER.
Calendar deadlines: Open enrollment and qualifying event documentation.

Save copies: SBC, formulary, network directory, and customer service contacts.