What To Consider When Choosing a Health Plan

Each year millions of workers must choose the health insurance plan they’ll have for the next year. With insurance premiums rising and health plans getting more complex, this can be a stressful decision. It’s important to understand your options when choosing a plan.

To get the best value from your health plan, you need to understand your different coverage options and how they work. Then you need to make a choice that’s based on your personal situation, such as whether you are single or married or have a chronic health condition.

First, it’s important to consider what you get when you purchase health insurance. Insurance helps protect you from high health care costs that you probably could not otherwise afford. It helps you pay for health care and ensures that you have
access to care when you need it. And research shows that having health insurance is closely tied to getting quality, timely care.

Many employers pay for most or some of the premium costs of insurance premiums for their workers. As a result, getting health insurance from your employer is typically cheaper than buying coverage on your own. The Agency for Healthcare Research and Quality, found that the majority of uninsured American families who are not covered by health insurance at work couldn’t afford to buy health insurance.

Sorting Through Healthcare Options

Not all health plans pay for the same services or the same amounts for services. Different health plans may include different doctors, hospitals, and other care providers.

Health plans also vary in how much you will be required to pay before the insurance “kicks in.” Known as deductibles,  these out-of-pocket expenses are often an annual amount that is not covered by your health plan. Each you, it must be paid before the health plan will begin to pay for your family’s healthcare.

Co-insurance, another type of out-of-pocket expense, is the percentage of your health insurance bill that you must pay when you file a claim. This percentage is usually in addition to the deductible.

Many of the common health insurance plans today offer several choices for coverage, based on factors including cost, flexibility and how much of a role you want to play in managing and paying for your own health care.

These include:

  • Preferred provider organizations (PPOs). These plans contract with doctors, hospitals, and other providers but typically do not manage your care. PPOs allow you to see providers outside the network, but you will pay more for your care if you do. These are the most common work-based health plans.
  • Health maintenance organizations (HMOs). Many of these plans focus on preventing diseases and staying healthy. If you join an HMO, you typically must receive all your care from network providers, except in medical emergencies. When you join, you pick a primary care doctor to manage your care. HMOs usually
    have copayments rather than deductibles or co-insurance.
  • Point-of-service organizations (POS). These plans are a combination of a PPO and an HMO. POS plans have a primary care doctor who manages your care but allow you to seek care from doctors and hospitals that are not part of the plan. You pay more for seeking care out of network, however.
  • Consumer-directed health plans. These newer health plans give  you more control over your own health care, both in choosing the care you receive and paying for it. They often require you to pay a substantial deductible (often $2,000 or more) before coverage starts, and are combined with a personal health savings account or another similar product that allows you to pay for care with pre-tax money.

How to Choose a Health Plan that Works for You

Health insurance can protect you from hefty medical expenses that can easily bankrupt you if an accident or illness strikes. It also lets you pay for access to quality and timely care.

Carefully read all of the materials you get during open enrollment season and don’t be shy about asking questions. Understand how each plan works, learn what it does and does not cover, and consider the quality of care. You may want to make a list so that you can easily compare health plans and coverage side by side.

To get the best plan at the right price to fit your needs, consider this:

  • Avoid basing your decision only on the premium. Lower premiums typically mean care comes with higher out-of-pocket costs through deductibles, co-insurance, or co-payments. If you’re young and healthy, low premiums may be a good fit, but if you havea health condition or are older, it may not be. Review all potential
    costs before choosing your health plan.
  • Understand what a plan covers. Read the materials you receive with the following questions in mind: What type of doctor visits, surgeries, and hospital care are covered? Is there a drug benefit? If so, how much does it cover and what will it cost you? Are dental and eye care covered? Are there limits on what you pay
    or what the plan will pay for?
  • Review last year’s coverage and care costs. Determine if it was a typical year, what your out-of-pocket costs were, and if it was a good plan for you after all.
  • Find out if your doctor, hospitals, and other providers are in your health plan’s network. Decide if you are willing to see other providers, and if you aren’t how much it will cost you to go out of the plan’s network for care?
  • Look for ways to save money under the plan. Check to see if you can get cheaper prescription drugs if you order them by mail. If you have diabetes or another chronic illness, find out if the plan lowers copayments on medicines to keep your condition in check. Some plans even offer cash or incentives for you to get checkups or join disease management programs.

Picking the right health plan takes some time and effort. Even if you don’t have a choice of plans, you need to know how your plan works. Asking questions and checking out your options isn’t only good for your health, it can be good for your wallet too.

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