How Do You Choose a Health Plan?

Couple sitting in their kitchen using computer

When I started my first job out of college, I used my benefits enrollment packet as a coaster for a few months before I opened it in a whirlwind case of spring cleaning. I briefly looked it over before throwing it out.

Why would I want deductions taken off the top of what little I was making just so a doctor could write me an occasional antibiotic prescription for a routine sore throat?

Until recently, I’ve been on my parents’ health plan. Yes, I’m that young. When my fiancée and I got engaged, I needed to start thinking about carrying my own insurance. After all, you can’t be on your parents’ plan once married. Bummer, huh?

So, along with taking the big step toward matrimony, I also started a new job and, with trepidation, opened the new benefits package.

3 Things to Consider During Enrollment

I also visited HealthCare.gov, which gives some great information about how to choose a health plan. There are three things the site notes that you need to consider:

  1. How plan costs are shared between the insurer and you
  2. What your out of pocket costs will be – premiums, deductibles, co-pays
  3. What type of plan is best for you?

1. Cost Sharing

As HealthCare.gov explains, this the breakdown of what you pay and what the plan pays. It categorizes the plans according by precious metals – platinum, gold, silver and bronze. The range across the scoring system goes from the platinum level with the insurance company paying 90 percent and you 10 percent to the bronze level, which is a 60-40 split, with you paying 40 percent of the costs. The website cautions that these categories “have nothing to do with quality of care.”

2. Out of Pocket Expenses

Deductibles, copays and coinsurance and out-of-pocket maximum. These terms can make your head spin but are all important in helping you understand the true cost of your health insurance coverage.

  • Deductible: The amount you pay before your insurer pays
  • Copayments and coinsurance: Your payments for medical services
  • Out-of-Pocket maximum: What you have to pay before your insurance takes over paying 100 percent of the costs

Our open enrollment infographic provides a handy reference in helping you understand these and other insurance terms.

3. Choosing a Plan

Of course, there are many health care coverage options out there. Here are four of the most common:

  • Health maintenance organizations (HMO): According to the Office of Personnel Management (OPM), an HMO is plan that includes a network of providers, services and hospitals who oversee covered services. You choose a primary care physician (PCP) who generally oversees and manages your care. To see a specialist and have that visit paid for, you need a referral from your PCP. According to OPM, you have a copay for visits to your PCP or specialist. Beyond that, there is usually no additional costs for the services. Sometimes if there is an agreement between out-of-network providers and the plan, some of those costs might be covered. This is called a reciprocity agreement. Providers outside your plan are not covered, unless you are seen for Emergency care, which is covered.
  • Preferred provider organizations (PPO): According to HealthCare.gov, this type of plan offers a bit more flexibility than an HMO. You can use out-of-network providers, services and hospitals, but the services will cost more. Staying within the network saves costs, but for those who need a little more flexibility, for instance when one of their physicians is not part of an HMO, a PPO is a good option.
  • Point-of-service plans (POS): With this plan, your primary care provider must be in the network. He or she acts as the true “point of service” for any of your medical needs by providing referrals for other services. Like an HMO, you must use services within the plan’s network.
  • High-deductible health plan (HDHP): At its core, the HDHP covers severe injury or illness. Think of it informally as the security blanket just so you have coverage. However, the out-of-pocket costs are very high. According to OPM, this “is a health plan product that combines a Health Savings Account … with traditional medical coverage. It provides insurance coverage and a tax-advantaged way to help save for future medical expenses.”
  • Health Savings Account (HSA): This is exactly what it sounds like – a savings account. This plan offers incentives for you to stay healthy and may be a good choice for people without chronic conditions. The money deposited into an HSA is pre-tax dollars and earns tax-free interest. When used for a medical expense, it remains tax free. It is perfect for those who don’t have any major health concerns or need consistent visits to health care specialist. You do not need a PCP’s referral.

This is a lot of information, and I’ve only just scratched the surface of what is out there. I spoke with Kristi Speers, director of Managed Care, Banner Health Network. She said there are several other things to consider when choosing a health plan. “If you have an existing medical condition and take specific medications, you want to make sure the plan you are choosing will cover them and at what cost,” she noted. “Also, if you see certain specialists for care and are choosing a PPO or HMO, make sure they are included in the plan’s network. Looking at the medications covered (called the drug formulary) and the participating physicians, is very important for those with chronic conditions or who have preferences.”

She also noted that participating providers often change and these providers might not be reflected in the literature or on the plan’s website. It’s important to call the office to double check that they actually take the plan.

Don’t forget to read the plan’s “Summary of Benefits and Coverage” to find out exactly what the plan covers. More importantly, it says what it does not cover.

So, armed with this information, I now have to choose a plan.

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