Choosing a Health Insurance Plan
Choosing between health plans is not as easy as it once was. Although there is no one "best" plan, there are some plans that will be better than others for you and your family's health needs. Plans differ, both in how much you have to pay and how easy it is to get the services you need. Although no plan will pay for all the costs associated with your medical care, some plans will cover more than others.
Five Steps to Choosing a Health Plan
- Determine Your Needs
- Understand Your Options
- Match Your Needs to the Benefits Offered
- Understand the Costs
- Consider Other Factors Like Choice, Location, & Quality of Care
Plans change from year to year, so you should carefully consider each plan, using the questions outlined in this web page. If you get health insurance where you work, you should start with your employee benefits office. Its staff should be able to tell you what is covered under the plans available. You can also call plans directly to ask questions.
1. Understand Your Health Insurance Needs
The first step in understanding what to look for is to get an understanding of your particular needs. Are you looking for coverage for just yourself, yourself and your spouse, yourself and one child, or do you need a family plan? This is a fairly straight-forward issue. Next try to assess the health needs for all those you intend to include on your health insurance plan. This is a bit trickier. Are you and the others basically in good health? Are there any pre-existing conditions to consider? Is there a particular need to have access to certain medical specialists or medical institutions?
Ask yourself these questions:
- How comprehensive do I want coverage of health care services to be?
- How do I feel about limits on my choice of doctors or hospitals?
- How do I feel about a primary care doctor referring me to specialists for additional care?
- How convenient does my care need to be?
- How important is the cost of services?
- How much am I willing to spend on premiums and other health care costs?
- How do I feel about keeping receipts and filing claims?
You might also want to think about whether the services a plan offers meet your needs. Call the plan for details about coverage if you have questions. Consider:
Pre-Existing Conditions. A pre-existing condition is a medical condition diagnosed or treated before joining a new plan. In the past, health care given for a pre-existing condition often has not been covered for someone who joins a new plan until after a waiting period. However, a new law—called the Health Insurance Portability and Accountability Act—changes the rules.
- Life changes you may be thinking about, such as starting a family or retiring.
- Chronic health conditions or disabilities that you or family members have.
- If you or anyone in your family will need care for the elderly.
- Care for family members who travel a lot, attend college, or spend time at two homes.
Under the law, most of which goes into effect on July 1, 1997, a pre-existing
condition will be covered without a waiting period when you join a new group plan if you have been insured the previous 12 months. This means that if you remain insured for 12 months or more, you will be able to go from one job to another, and your pre-existing condition will be covered—without additional waiting periods—even if you have a chronic illness.
If you have a pre-existing condition and have not been insured the previous 12 months before joining a new plan, the longest you will have to wait before you are covered for that condition is 12 months. To find out how this new law affects you, check with either your employer benefits office or your health plan.
2. Understand Your Health Insurance Options
Knowing the answers to the above questions will give you a good starting point when deciding what to look for when choosing a good health insurance plan. Next, you need to know about your options. If you're getting group insurance through your employer, your options will be limited to what the company is offering, which may or may not make this decision easier. At a minimum, you've got to understand the difference between an Indemnity Plan and a Managed Care Plan and its variants, which are the two basic types of health insurance plans offered today. See the insurance types overview for more information about different types of health insurance plans.
3. Review the Benefits Each Available Health Insurance Option
Now that you've 1) determined your needs, and 2) understand what plan options are available, it's time to get into the details of each plan and understand the benefitsassociated with each plan.
One thing that's important to understand when researching health insurance benefits is that each policy includes its own set. It's easy to make the mistake of assuming that features or health coverage exists when they don't. However, these types of assumptions not only are wrong, but they could one day leave you facing insurmountable medical bills.
Check to see if which insurance plan best matches the needs you determined in step one. A benefit isn't a benefit if you don't need it. Most plans provide basic medical coverage, but the details are what counts. The best plan for
someone else may not be the best plan for you. For each plan you are considering, find out how
- Physical exams and health screenings.
- Care by specialists.
- Hospitalization and emergency care.
- Prescription drugs.
- Vision care.
- Dental services.
Also ask about:
- Care and counseling for mental health.
- Services for drug and alcohol abuse.
- Obstetrical-gynecological care and family planning services.
- Ongoing care for chronic (long-term) diseases, conditions, or disabilities.
- Physical therapy and other rehabilitative care.
- Home health, nursing home, and hospice care.
- Chiropractic or alternative health care, such as acupuncture.
- Experimental treatments.
Some plans offer members health education and preventive care, but services differ. Ask questions such as:
- What preventive care is offered, such as shots for children?
- What health screenings are given, such as breast exams and Pap smears for women?
- Does the plan help people who want to quit smoking?
4. Review the Costs of Each Health Plan
Now that you've determined the benefits offered, it's important to understand the costs associated with service. No health insurance plan will cover every expense. To get a true idea of what your costs will be under each plan, you need to look at how much you will pay for your premium and other costs.
- Are there deductibles you must pay before the insurance begins to help cover your costs?
- After you have met your deductible, what part of your costs are paid by the plan?
- Does this amount vary by the type of service, doctor, or health facility used?
- Are there copayments you must pay for certain services, such as doctor visits?
- If you use doctors outside a plan's network, how much more will you pay to get care?
- If a plan does not cover certain services or care that you think you will need, how much will you have to pay?
- Are there any limits to how much you must pay in case of major illness?
- Is there a limit on how much the plan will pay for your care in a year or over a lifetime? A single hospital stay for a serious condition could cost hundreds of thousands of dollars.
You can't know in advance what your health care needs for the coming year will be. But you can guess what services you and your family might need. Figure out what the total costs to your family would be for these services under each plan.
Health Insurance Costs Explained
Have you ever taken a moment to have someone explain health insurance costs to you? We know that health insurance costs just keep going up and up, but how do these spiraling costs affect your health insurance coverage? You know the amount you're paying every month for your health insurance premium, so it's easy to know when this cost increases, but what about all the other costs involved with health insurance? Do you know what they mean? Before you're hit with an excessively large medical bill, read the following explanation of health insurance costs.
- Premium. The premium is the amount you'll pay for the benefits covered under your health insurance plan. The premium is typically broken down into equal monthly payments. If you've got group insurance, your employer or a union is probably sharing some percentage of this cost.
- Deductible. If your health insurance policy includes an annual deductible, it's important to understand the details. A deductible is an amount that you are responsible for paying before the insurance company begins paying out claims. As with car insurance, the higher your deductible the lower your monthly premium and vice versa. A family health insurance plan typically includes multiple deductibles.
- Co-Payment. A co-payment is a fixed amount that the insured has to pay each time they visit the doctor. The co-payment amount differs based on the type of health insurance plan you have and typically an HMO will have the lowest co-payment. The co-payment can however, increase for different types of medical service and/or if you go outside the network.
- Co-Insurance. Co-Insurance is the amount of a claim that the insured is responsible for paying, once the deductible has been met. A typical ratio is 80/20 where the insurance company pays 80% of a claim and the insured pays 20%. An insured's percentage will typically increase when he goes outside the network. Also, in situations where the claim exceeds what the insurance company deems 'reasonable and customary' the difference is another form of co-insurance that must be paid by the insured.
If you don't fully understand these health insurance costs have someone explain them to you. These are the things you've got to ask about when requesting quotes, especially online health insurance quotes. When you're comparing quotes from different insurance companies, it's important to know all your costs, not just the premium. Make sure the person preparing your quote clearly defines the deductible amount and whether there is a separate deductible for different types of services, the co-payment amount and the co-insurance amounts. Also ask the person to elaborate on other costs that may not be readily apparent.
5. Other Considerations
Now that you've determined your needs and reviewed the benefits and costs offered by each plan, it's almost time for you to make a decision. The last few criteria you should consider other than costs and benefits are choice, location, and quality. While the idea plan would cover 100% of all your needs, for free, with the best quality care, in reality, you will need to make important tradeoffs between each of these criteria.
Choice. What doctors, hospitals, and other medical providers are part of the plan? Are there enough of the kinds of doctors you want to see? Do you need to choose a primary care doctor? If you want to see a specialist, can you refer yourself or must your primary care doctor refer you? Do you need approval from the plan before going into the hospital or getting specialty care?
Location. Where will you go for care? Are these places near where you work or live? How does the plan handle care when you are away from home?
Quality of Care. Quality is hard to measure, but more and more information is becoming available. There are certain things you can look for and questions you can ask. Whatever kind of plan you are considering, you can check out individual doctors and hospitals.
- Talk to current members. Ask how they feel about their experiences, such as waiting times for appointments, the helpfulness of medical staff, the services offered, and the care received. If there are programs for your particular condition, how are the patients in it doing
- Report cards. Some plans and independent organizations are also beginning to produce "report cards." These reports often include satisfaction survey results and other information on quality, such as if a plan provides preventive care (for example, shots for children and Pap smears for women) or if the plan follows up on test results. Also be on the lookout for magazine articles rating various health plans.
- Accreditation. You can also find out if the managed care plan you are interested in has been "accredited," meaning that it meets certain standards of independent organizations. Some States require accreditation if plans serve special groups, such as people in Medicaid. Some employers will only contract with plans that are accredited.
- Financial Strength. Is the insurance company financially sound and able to pay all it's claims? This is an important consideration for smaller less known plans. Such financial disclosers are usually disclosed/regulated by state agencies as well as 3rd party acrreditaiton services and reports.
- Operational Questions. Ask a plan representative about how the organizatoin screens doctors/nurses, address problems, and other processes meant to sustain and improve the quality of care.