Health insurance can be confusing, but to make the right choice for you and your family, it’s important that you understand your options.
Starting a new job is exciting—until you have to wade your way through your employer-supplied healthcare benefit options.
Health insurance can be a confusing field, but to make the right choice for you and your family, it’s important that you understand what each plan offers and how it might be a fit (or not) for your needs.
Here are the top things to consider when selecting a new employer-provided insurance plan.
Understanding Health Plans
There are several major types of insurance plans, each with its distinct benefits and limitations.
- HMOs (Health Maintenance Organization) – These plans limit members to a set network of healthcare providers and rely heavily on the member’s primary care physician (PCP). HMO members cannot see specialty doctors without an in-network referral from their PCP.
- PPOs (Preferred Provider Organizations) – PPOs use a set group of providers, but do allow members to see out of network physicians, typically at a higher out-of-pocket cost. PPOs members do not need a referral for specialty care.
- EPOs (Exclusive Provider Organizations) – Essentially a combination of HMO and PPO-style plans, EPOs do not require a PCP referral for specialized care but do limit members to in-network providers except in cases of emergencies.
- POS (Point of Service) – Another HMO/PPO hybrid but the opposite of an EPO plan, this option may require a PCP referral for a specialist but does cover out-of-network visits (at a higher cost).
- HSA (Health Savings Account) – The type of plan allows you to put money into an account that you can then draw on to pay for approved medical services and your health insurance deductible, with the bonus of some with tax benefits. In-network and out-of-network services still carry different price tags.
- HDHP (High-Deductible Health Plan) – HDHPs have low monthly premiums, but a high deductible and typically do not cover any medical expenses until the deductible is met. These are commonly paired with HSA accounts and also have set network providers.
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Almost every plan requires members to pay something when they seek care. These payments come in the fashion of co-pays, deductibles and co-insurance. Understanding the difference, and when you are subjected to each, will give you a better understanding of how much you can expect to pay for care beyond your monthly premium.
- Co-pays – These are the out-of-pocket expenses you’ll pay for each doctor’s visit or prescription (depending on your particular insurance plan). Co-pays are typically set dollar amounts for each type of service, rather than percentages. Some plans have $0 co-pays for certain in-network services.
- Co-insurance – Some medical services have a co-insurance rate rather than a co-pay. In these cases, the member is responsible for a predetermined percentage of the cost of the service. For instance, if the total cost of the medical services is $150, and your co-insurance is 30 percent, you would pay $45. It is unusual to have to pay both a co-pay and co-insurance for the same service, though in complex situations different co-methods may be used for different parts of the services rendered (such as an ER visit that required bloodwork and led to hospitalization).
- Deductibles – This is the amount you pay before your insurance plan takes over covering the bills. (There are some exceptions where your insurance provider will pay for care before you meet the deductible threshold, such as preventative care and routine doctors visits.)
Different Plans Fit Different Needs
It may seem unnecessary to have so many different types of health insurance plans, especially when they’re only slightly different from each other. While it can be confusing, this approach lets each individual in the health care system choose a plan that best fits his or her current needs, situation and finances. A 23-year-old single recent graduate is going to have very different health care and insurance needs than 50-year-old with a family of four or a couple with a baby on the way.
The biggest consideration when choosing your health insurance plan is your individual situation and lifestyle. Here are some examples of the types of situations each health plan might be a good fit for:
- HMO – HMOs typically have lower monthly premiums and low or no deductibles. For individuals or families without chronic health issues (who typically only visit their PCP for preventative care or run-of-the-mill illnesses) this type of plan is usually sufficient.
- PPO – If you have an existing need to see specialists and do not want to be restricted by a required PPC referral, a PPO may be the better plan for you. People who travel extensively for a living can also benefit from PPOs’ coverage of out-of-network doctors. You’ll pay more for the visit, but you don’t have to worry about coming home if you need an antibiotic while on the road. The higher monthly premium is the price you pay for more freedom and access.
- HSA – HSA plans are popular with expecting parents or parents with young children. In these situations, spending money on healthcare is a given, so the money in the HSA will come in handy.
If you “kind of” fit these situations but not quite, see if your company offers an EPO or POS plan that will let you “mix and match” the features of HMOs and PPOs.
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What to Consider When Looking at Insurance Options
When choosing your health insurance plan, monthly premium cost should be a consideration, but should never be the sole deciding factor. Choosing a cheap plan with limited services often costs more in the end. While a higher monthly cost may take a bite out of your household budget, it could prevent future financial turmoil in the event of a major illness or injury.
When comparing plans, keep the following in mind:
- Higher monthly premiums usually mean lower out of pocket charges and deductibles
- Certain individuals require more preventive care or may need access to specialists
- Logistics matter – make sure the doctors in the network you’re considering are close enough not to be inconvenient when it’s time for a doctors visit
- If you have a current PCP or specialist you want to keep seeing, call them and make sure they except the insurance plan you’re considering BEFORE you make the switch
- If you are on medication, see where it would fall on the plan’s co-pay schedule
Considering any restrictions and what is not covered under a particular plan should also play a major role in your decision. Different plans have different approaches to services like drug rehabilitation, mental health care, chiropractic care and other services that may be important to you. If you anticipate any major life events that will change your family dynamic soon, such as marriage or having children, see how the plan handles adding dependents and what the cost is.
Eventually, you will reach the point of identifying your “need to haves” along with your “nice to haves” and weighing them against the available options.
The Devil is in the Details
With your list of needs, make a comprehensive review of all plans before making a decision. Do not let medical jargon and serpentine plan descriptions deter you. When navigating the enrollment process, InsuranceQuotes.com suggests:
- Check for free preventive services offered by the plan
- Look for hidden perks:
- 24-hour phone support from nurses
- Fitness club membership discounts
- Over-the-counter drug discount coupons
- Get help from your employer or the provider when you do not understand something
- Use caution when sharing your name, Social Security number, Medicare number or credit card information during the process
Choosing your health insurance may seem like a mundane task, but it can have a bigger impact on your life and your wallet than you might think. A plan is not just a plan. Understanding what it does, and doesn’t, cover and any additional side benefits or restricts is important to making an informed decision that will keep you healthy and happy, and able to focus on your new job.