When you’re choosing health insurance, your options may seem confusing at first. Silver? Bronze? PPO? The jargon can be daunting! There are a few terms you should become familiar with and some things you should keep in mind when buying a health insurance plan. For instance, what will your copay be and what is the health insurance deductible? Stop guessing how to choose a health insurance plan you need. If you keep these tips in mind you’ll be buying health insurance wisely. It’s always a good idea to get acquainted with the way plans are set up and what you’re responsible to pay before open enrollment which takes place in late fall. If you have a qualifying event, like a new job or if you’ve moved, had a baby, gotten divorced or had any life changes that affect your coverage, you may be able to buy a new health insurance plan today.
Generally speaking, if you don’t expect to see the doctor very often in a year, you’d pick the plan with higher out-of-pocket expenses and a lower monthly premium. You’ll want the more expensive plan that costs more each month if you see the doctor frequently or you buy prescriptions regularly. But it’s more complicated than that and it gets even more baffling when you consider that you may have an emergency medical condition you never considered.
You have the option of bronze, silver, gold and platinum. These divisions have nothing to do with the quality of care, only how much your shared cost will be. The more valuable the metal, the more expensive but may save you money if you see the doctor often during the year.
You will be paying a monthly premium to your insurance company. A premium is the amount you need to pay to stay active in your health insurance plan. Even if you don’t see a doctor at all during your coverage period, you pay this amount every month. Depending on the type of plan, you may also have to pay a deductible and/or copay. It’s a good idea to get an idea of a typical year’s worth of healthcare costs are. What was your deductible last year and did you hit it? List all the times you saw a doctor or if you had any hospital visits. Consider this data, plug it in even when looking at different health plans. Also remember that according to the Affordable Care Act, there is a maximum for out of pocket expenses (around 7K for individuals and 14K for families).
HMO, PPO, POS and EPO are the four types of plans available. Some types allow you to choose any doctor while others limit your choices to a network of doctors.
POS (or Indemnity or Fee-for-service Plan) plans are harder to find and they can be expensive. The pro of this type of plan is that you can get healthcare anywhere and from anyone but the con is that you pay upfront and then get reimbursed for services by the health insurance company.
HMO (Health Maintenance Organization) HMOs are usually cheaper and have no deductibles, but there is a copay for office visits (usually less than $30). With an HMO, you need to find a PCP within network and you must get a referral from that PCP when you need to see a specialist. To be covered, the specialist should also be an in-network provider. With an HMO, there is a maximum on out-of-pocket expenses (not counting copays and monthly premiums). After you meet that max, the insurer pays 100% of expenses.
EPO is similar to an HMO, except you’re allowed to choose your own specialist within the network without a referral from the PCP.
PPO This type of plan doesn’t require that you work with a PCP for referrals. You’re also free to go outside of the PPO’s group of doctors and hospitals. However, if you use a physician from the network you can get up to 100% of the care covered after meeting a deductible while you’re only eligible for 80% for non-network treatment. With a PPO, there is a maximum on out-of-pocket expenses (not counting copays and monthly premiums). After you meet that max, the insurer pays 100% of expenses.
This is the amount you have to pay out-of-pocket before your health insurance picks up the tab (but not for your premium). The average plan’s deductible is $1,318 for single coverage, not including medication copays. You are still responsible to pay copays even after you’ve reached the deductible amount. If you didn’t even approach your deductible last year, you may consider increasing it this year to save some money on your monthly premium. If you surpassed your deductible you may opt for a lower deductible for the new year, which may save you some money.
This is the amount that often gets overlooked by people when they choose their health insurance plan. After you reach this maximum, your health insurance will cover you 100% thereafter. This is important in case of medical emergencies or ongoing treatment that requires continuous care. For instance, if you got hit by a car, your medical expenses can easily surpass $60,000 in doctors visits, surgeries and rehabilitation.
Call your doctor to see which insurance plan he or she accepts. If you like services with this doctor and they do not take the group plan, you may be able to continue seeing this physician with a plan that allows out-of-network doctors. However, note that you may pay more for going out-of-network, depending on the plan. Another option, if you’re not limited by choices from an employer, is to contact the carriers your doctor accepts directly for insurance quotes. Insurers can negotiate better rates for you so why not try getting that rate. You are your best advocate.
Your lower premium options simply expose you to greater risk because deductibles are high (over $1300 for individuals and over $2,600 for families!). You also may be paying more overall (add yearly premium with out-of-pocket maximum to see how much you’re paying for an HMO and compare with a PPO). The less expensive option often costs more in the long-run if you have a medical crisis or prolonged illness that needs ongoing treatment.
Some employers offer this and when they do it’s in conjunction with a high deductible plan. You contribute pre-tax amounts each pay-period. What’s exciting about the HSA is that sometimes your employer contributes money to this account (on average $800 a year). This tax-deferred account is for medical expenses and withdrawals for medical expenses are also tax-free.