How do I compare health insurance plans?
Most of the individual and family plans (IFP) along with small group plans have a core of essential benefits (which will be standardized in 2012 under Healthcare Reform). Health insurance companies adjust all the benefits (think of adjusting a slide switch from minimum to maximum benefit) which in turn will affect your monthly premium. Other adjustments health insurance companies use are the deductible and coinsurance.
Within a given area, all the different health insurance plan’s standard rates, offered by the different companies, are amazingly competitive. At first glance this might not seem like the case but upon closer inspection you will notice the little changes that impact the monthly premium. For example, the same plan may offer five different deductibles. The lower the deductible is the higher the premium will be. Some plans may offer only 3 office visits at a set copay while a very similar plan will offer unlimited office visits. The plan with the unlimited office visits will have a higher premium.
The trick is to determine which benefits combined with the deductible and coinsurance best suit your particular situation. For an explanation of the different terms check out Health Terms
High Level Decisions
Not all insurance companies contract with all doctors and hospitals for services. The caveat is in the case of an emergency. All plans will cover emergency services with in their service territory (if the emergency happens in United States you are usually good). If you see a particular doctor or hospital that you just can’t part with, double-check to make they will be covered “In Network” for a PPO plan.
Your total monetary exposure before all plan benefits are covered in full for the year is the sum of the deductible and coinsurance. This is also listed as your Maximum Out Of Pocket expense. If you have a dollar amount that you are comfort with, find a plan that meets the number. For instance, you might determine that you are only comfortable with spending $8,000 in the worst case scenario. Then you would want to select a plan that has a maximum out-of-pocket expense of $8,000 or less.
These are specific elements offered within the plan that you may or may not need. *All plans issued under Healthcare Reform regulations will include preventive office visits at no charge.*
Office Visits: the choices will usually be
A. No office visits offered at copay
B. 2 – 4 office visits offered at copay
C. Unlimited office visits at a copay.
Some plans make a further distinction between a general physician visit and a specialist. If you never see a doctor then a plan with no included visits might be a good route to save money on the premium. Alternatively, if you need to see your doctor on a regular basis, the increased premium for unlimited visits may be a good choice.
Many plans are including a set copay for Urgent Care visits lower than an Emergency Room copay. Urgent Care centers are less expensive than an ER visit and the plan wants you to select the least cost alternative for non-life threatening emergencies. Note if the copay for Urgent Care is after the deductible or if the deductible is waived. If it states the deductible is waived, the copay is being treated like an office visit, but the cost will not go towards meeting your deductible.
Some plans will cover expenses related to maternity after the deductible. If you are a single guy, there is no need to select a plan that covers maternity and pay a higher premium for a benefit you can’t use.
This is also known as cost sharing. Cost sharing starts after the deductible is met and is applied to labs, X-rays, imaging, in-patient and out-patient care. Coinsurance is usually specified by percentage, but can be a set dollar amount.
40% Coinsurance Example: After you accrue medical expenses equalling your deductible, the next dollar will be shared. You will pay .40 cents and the plan will pay .60 cents of each dollar. You will continue to share the expenses until you reach the maximum coinsurance amount outlined in the plan. A maximum coinsurance of $2,000 represents $5,000 worth of medical expenses to you, $3,000 being paid on your behalf by the insurance company.
If your deductible is $3,000, plus another $2,000 in coinsurance, your total maximum out-of-pocket expense would be $5,000. Once met, all the plan benefits are covered in full for the rest of the calendar year.
Coverage for prescription medication will almost always have its own separate deductible. Regardless of your medical expense deductible, the Pharmacy deductible will range anywhere from $250 to $7,500. Some plans will include generic prescriptions at a copay with the deductible waived.
Look for plans with a lower deductible if you have certain brand name medications you use throughout the year. It’s possible you might meet the deductible in the calendar year and then you can purchase the name brand drug at a set copay. If you use no prescription medications you might consider a plan with a high Pharmacy deductible and lower monthly premium.
Health Savings Accounts (HSA)
Under the HSA plan, essentially no benefits are covered until you have met your deductible, which is usually your maximum out-of-pocket expense also. HSA’s can be less expensive than plans that offer a lot of covered benefits from the start, but their lower maximum out-of-pocket expense place their monthly premium higher than other plans. HSA’s have some tax benefits for certain situations but they are not for everyone.
There are other plan elements and conditions that, like other sliding switches, will affect the premium. But these are the big ones to consider when you are weeding through the garden of health insurance plans to make a selection. Contact me if you have other questions or need clarification.
Feel free to generate a bunch of different quotes from the quoting engine on the home page of my web site. I won’t call you and bug you to buy anything.