Choosing Health Insurance

How to choose a health insurance plan

If you are fortunate to receive health insurance through your work, your choices for plans will be decided by your employer. You still need to take the time to review each plan to see which will benefit you the most.

♦ No health insurance through your work, you will need to purchase it on your own.

The first option should be to see if you can get Obamacare. Insurance marketplaces (exchanges) sell health insurance.

If you qualify for premium tax credits, you can get health insurance at reduced cost. The catch is that premium credits can only be used for health insurance offered at the marketplaces.

• Don’t assume you won’t qualify. Go through the application process and find out. At the same time you will learn if you qualify for Medicaid.

If you don’t qualify for tax credits, you can still purchase insurance through the exchanges but you pay full price.

• If you will be paying full price, you can also purchase insurance directly from insurance companies. This option offers the most choices but will usually be more expensive.

All major medical health insurance plans with effective dates of January 1, 2014 or later are required to be ACA-compliant. This is true whether they’re sold on the exchange or off-exchange.

What this means is these plans must meet minimum standards set by the Affordable Care Act. These plans must cover pre-existing conditions, provide free preventive care, and not cap annual benefits.

Insurance companies can no longer sell bare-bones plans that pay virtually nothing.

♦ Words of caution: the GOP has proposed allowing insurance companies to start selling bare-bones plans once more under the disguise of “cheaper.”

Insurance agents are eager to sell them because of better commissions.

Consumer Reports calls them "junk health insurance."

Low monthly premium or a low deductible?

As a rule, the less your monthly premium is the more you have to pay when you use health insurance.

Plans with lower monthly premiums generally have higher deductibles. That means you have to pay more upfront before your insurance starts to pay.

• If you are young and in good health you probably are thinking you would like to pay as little as possible for health insurance.

It is possible to do that. All plans have to provide preventive benefits but after that any type of emergency will be expensive.

A cheaper plan will probably also limit you to a small network of doctors.

Use health insurance a lot?

People with serious health conditions often choose plans with higher monthly premiums because they know they use more health care.

• These plans offer lower deductibles and usually lower copay and coinsurance.

• These plans are usually less restrictive and have a larger network of doctors and facilities.

Over the course of a year these plans can result in lower out-of-pocket charges compared to cheaper plans.

Understand the basics

Deductibles, maximum out-of-pocket, copayment and coinsurance are cost-sharing methods insurance companies factor into all plans to shift costs to the patient.

It is best to have a basic understanding of these costs before deciding upon a plan.

Ultimately the plan you choose comes down to how much you can afford to pay every month and how much you can afford to risk.

How to compare

Evaluate yourself and all family members.

• Are you in good health and rarely see a doctor or will you probably need a lot of care?

Weigh what is most important to you and what you can comfortably risk.

Make a checklist to help compare policies

• What is the monthly premium? You have to pay this every month even if you never see a doctor. If you can get a premium tax credit to help, that is great.

• What is the annual deductible?

Individual and family deductibles are reaching mind-boggling highs.

Check this out carefully because insurance companies are shifting more healthcare costs to the patient by requiring more and more things to be applied to the deductible.

A high deductible comes with a high risk.

• How much copayment and coinsurance are your expected to pay?

• What is the maximum out-of-pocket? This is important if you experience a serious health crisis and need to use a lot of health care. Bills can add up really quickly.

The maximum out-of-pocket is the most you have to pay in one year. After your reach this amount your insurance has to pay the rest. The lower the maximum is the better.

• Are your doctors and local hospitals in the plan’s network?

In an emergency you can go to any hospital but you get hit with a big bill if you visit an out-of-network hospital and it is not a true emergency.

It is best to have a plan that includes your doctors and the closest hospital.

• Are there urgent care facilities near you? More and more plans are applying emergency room charges to the deductible. Keeping this in mind, you are more likely to try to go to an urgent care facility over the ER.

A plan has less value if the nearest urgent care is many miles away and closes at 6 pm.

• How does the plan cover lab tests? Is there a separate deductible for laboratory services or do the charges go against the individual deductible?

Any tests not performed for preventive care will get applied to this first. You need to factor this expense into your plan’s overall cost.

• Are you taking an expensive medication? All pans have an approved drug list called a formulary.

Be sure your medication is on the formulary. If it is not, it can be a real struggle to get your insurance company to approve it.

• If you travel a lot you run the chance of needing health care away from home. Consider this carefully because if you have to worry about coverage away from home you may want to look only at PPO and POS type plans.

• Do you expect a big hospital bill in the near future? Knee replacement that cannot be put off or a baby is on the way.  A plan with a high deductible could be a financial disaster.

• Is rehabilitation therapy coverage adequate? Plans can still limit the number of times you can visit a physical therapist.

• Outpatient services – most people overlook this benefit. But an ever increasing number for surgeries are being performed as an outpatient procedure. Having a plan with good outpatient benefits can be a game changer.

Which type to choose?

Health insurance policies come in four basic types. HMO, PPO, EPO and POS. Please refer to Types of Health Insurance for a more expanded explanation of each plan type.

In brief, they are all a form of Managed Care. This means they try to control costs by controlling the providers you see, the procedures you can receive and fees the providers can charge. They do this by contracting with doctors and hospitals to provide services to their members.

This is good for the members in that they have less worry about getting hit with unexpected bills. It is not so good for members in that they have to be careful to follow their plan’s rules.

HMO stands for Health Maintenance Organization. They are becoming the most common plan offered on the exchanges.

They have the most limited network of providers and most restrictive rules.

Most plans require you to choose a primary care doctor. You will need a referral from your primary care doctor to see a specialist.

If used wisely, they can be the least costly.

PPO stands for Preferred Provider Organizations. They were once very common but with healthcare costs rising fast they are quickly disappearing from the individual market.

Larger employers continue to provide PPO plans.

These plans are the opposite of HMO plans.

They have large networks of providers and often times allow you to use providers outside of the network.

You do not need a referral to see a specialist.

EPO stands for Exclusive Provider Organizations. They are a mix between HMO and PPO.

You are required to use the plan's network, but you don't need referrals to see a specialist.

In some ways they are less restrictive than an HMO.

Depending upon where you live, an EPO may have a smaller network than an HMO.

EPOs these days are pushing rather steep deductibles in exchange for more attractive monthly premiums.

POS stands for Point of Service. These plans are not very common.

Like a PPO you are not limited to the plan's network.

You usually need to choose a primary care doctor. You will need a referral from your primary care doctor to see a specialist.

♦ Of the four common types of plans, HMO or EPO plans tend to be cheaper than a PPO or POS.

Many times HMO and EPO plans will have a very limited network of providers.

If you anticipate using health insurance quite a bit it may be worth paying a little more to get a PPO or POS policy just to increase your chances of finding a good doctor in your area or if necessary be able to use someone outside of your local area.

Marriage lasts a year

Whatever plan you choose, you will need to keep it until the next open enrollment. So be sure to take your time when comparing plans.

There are special enrollment periods but as the name implies something special must happen in your life for you to qualify. Simply choosing to stop making monthly premium payments is not such an event.