12 Mistakes People Make When Choosing Health Insurance

Quick Takeaway: Choosing a health insurance plan often comes down to a few minutes during open enrollment, which makes it easy to overlook details that matter. These 12 common mistakes will help you pick a plan that actually fits your health needs and your budget.

Open enrollment shows up every year with the same problem: a stack of plan options, a wall of unfamiliar terms, and a deadline that doesn’t leave much time to think it through carefully. Most people end up picking the plan with the lowest monthly premium and hope for the best.

I’ve seen many people find out the hard way, usually after an unexpected medical bill, that the plan they picked wasn’t actually the right fit. The mistake usually wasn’t laziness. It was not knowing which details actually mattered.

Here are 12 mistakes that come up again and again when people choose health insurance, along with what to check instead so you don’t end up with an unpleasant surprise later in the year.

1. Focusing Only on the Monthly Premium

A low premium can look like the obvious win, but it often comes paired with a higher deductible and higher costs when you actually need care. A $250 monthly premium plan might cost you far more over a year than a $350 plan if you end up needing several doctor visits or a procedure.

Note: Our 7 Common Insurance Terms Explained post breaks down exactly how premium, deductible, and coinsurance interact so you can compare plans more accurately.

2. Ignoring the Deductible and Out-of-Pocket Maximum

The out-of-pocket maximum tells you the actual worst-case cost for the year, which matters far more than the premium if you have a health event. A plan with a $2,000 deductible and a $6,000 out-of-pocket maximum behaves very differently from one with a $6,000 deductible and a $9,000 maximum.

Warning: A plan that looks cheap on the surface can leave you exposed to thousands of dollars in costs if you don’t check this number before enrolling.

3. Not Checking If Your Doctors Are In-Network

Switching plans without confirming your current doctors are still in-network can mean paying significantly more, or starting over with a new provider entirely. Out-of-network care often isn’t covered at all under some plan types, or comes with much higher coinsurance.

Note: Call your doctor’s office directly to confirm network status. Insurer directories aren’t always up to date.

4. Overlooking Prescription Drug Coverage

If you take a regular medication, check the plan’s drug formulary before enrolling. The same medication can be a $10 copay on one plan and require full price out of pocket on another, sometimes a difference of hundreds of dollars a month.

Tip: Search for your specific medications by name in each plan’s formulary before comparing premiums. This step alone can change which plan is actually the better deal.

5. Choosing a Plan Based on What a Coworker Has

A plan that works well for a coworker’s health situation, family size, or budget might not fit yours at all. Healthcare needs vary too much for a one-size-fits-all recommendation to be reliable.

Warning: A recommendation is a fine starting point, but always compare the actual numbers, deductible, network, and drug coverage, against your own situation before enrolling.

6. Skipping the Summary of Benefits and Coverage

Every plan is required to provide a Summary of Benefits and Coverage, a standardized document that makes plans easier to compare side by side. Skipping this document in favor of just the marketing page often means missing important cost details.

Note: The Healthcare.gov marketplace makes it straightforward to pull up this document for any plan you’re considering.

7. Not Considering HSA Eligibility

Some high-deductible plans qualify for a Health Savings Account, which lets you contribute pre-tax money for medical expenses and roll over unused funds year to year. This can meaningfully offset a higher deductible if you’re comfortable managing the account.

The IRS publishes current annual HSA contribution limits, which are worth checking before assuming how much you can set aside pre-tax.

8. Underestimating Your Actual Healthcare Needs

If you know you’ll need a specific procedure, are managing a chronic condition, or are planning for a pregnancy in the coming year, factor that into your decision instead of choosing the plan that looks cheapest on paper for a healthy year.

Tip: Estimate your expected annual costs under each plan, premium plus expected out-of-pocket spending, rather than comparing premiums alone.

9. Missing Open Enrollment Deadlines

Outside of open enrollment, you typically need a qualifying life event, like marriage, a new job, or having a child, to change your plan. Missing the window can leave you stuck with your current coverage, or without coverage at all, for months.

Warning: Set a calendar reminder a few weeks before open enrollment starts each year, so you have time to actually compare plans instead of rushing a decision at the last minute.

10. Not Checking Referral Requirements

HMO plans typically require a referral from your primary care doctor before seeing a specialist, while PPO plans usually allow direct access at a higher cost. If you regularly see specialists, this difference can affect both cost and convenience significantly.

Note: If you value flexibility to see specialists without a referral, a PPO or similar plan type may be worth the higher premium.

11. Forgetting About Dependent Coverage Costs

Adding a spouse or children to a plan can significantly increase the premium, sometimes doubling or more the individual rate. It’s worth comparing whether each family member is better covered under a single family plan or split across separate employer plans if that option exists.

Tip: Run the numbers both ways, one combined family plan versus separate individual plans, since the cheaper option isn’t always the obvious one.

12. Not Reviewing Coverage Annually

Health needs, provider networks, and plan pricing all change year to year. Staying on the same plan by default without comparing your options during open enrollment often means missing a better fit or a lower cost elsewhere.

Warning: Auto-renewal is convenient, but it’s not the same as confirming your current plan is still your best option. Take a few minutes each year to compare, even if you end up staying with the same plan.

A Few More Mistakes to Watch For

• Enrolling in a plan without reading the exclusions section for procedures you might need
• Assuming dental and vision are automatically included in a health plan
• Not asking about telehealth coverage and copays, which vary more than people expect
• Forgetting to update coverage after a major life event like marriage or a new baby

Pro Tips

Estimate your total annual cost, premium plus expected out-of-pocket spending, for each plan before comparing, not just the sticker price.

Keep a running list of your regular doctors and medications so you can check network and formulary status quickly every enrollment period.

Store your Summary of Benefits and Coverage in cloud storage for quick reference when you’re deciding whether to see a specialist or use urgent care.

Set aside part of any HSA tax savings toward your Emergency Fund Guide plan, since a higher deductible plan means you’ll want a bigger cushion available.

Conclusion

Choosing health insurance doesn’t have to be a rushed decision made in the last few days of open enrollment. Checking your network, your medications, your deductible, and your actual expected healthcare needs takes a bit more time upfront, but it can save you from a costly surprise later in the year.

Start by pulling up your current plan’s Summary of Benefits and Coverage and comparing it against at least one alternative this enrollment period. That single comparison usually reveals whether you’re actually on the right plan or just the familiar one.

None of these 12 mistakes require expert-level insurance knowledge to avoid. They just require checking a few specific numbers and details before you commit to a plan for the year.

If you want a refresher on the terms these mistakes reference, our 7 Common Insurance Terms Explained post is a quick companion read before your next enrollment period.

Helpful resources: Healthcare.gov and IRS.gov.