By Michael Ciardella
It can be difficult to ensure you are selecting the plan that makes the most sense for you and your family; from both a benefit and a cost perspective. You’ll encounter different plan types and names; the most common types of health insurance plans are HMOs, PPOs, EPOs and POS plans. The kind you choose will help determine your out-of-pocket costs and which doctors you can see.
PLAN TYPE:
If you choose an HMO or POS plan, which often require referrals, you typically must see a primary care physician before scheduling a procedure or visiting a specialist
POS and HMO plans may be better if you don’t mind your primary doctor choosing specialists for you.
If you prefer more freedom and the ability to go directly to specialists, a PPO or an EPO is probably a better choice for you. An EPO may help keep costs low as long as you find providers in-network. An EPO is an in-network only plan. A PPO might be better if you see doctors that don’t participate in any carrier networks or you just like to have the peace of mind of knowing you can go to any provider you want.
NETWORK:
It is a critical step in the process to look at the provider network for each plan offered. Even plans within the same carrier can use different provider networks.
Some networks are state-specific only, some regional, and other provide national access. Understand the network that is attached to the medical plan(s) that interest you.
OUT-OF-POCKET COSTS:
Understanding your out-of-pocket costs is extremely important in choosing a health plan. While comparing plans, look for a summary of benefits. A summary of benefits should clearly lay out how much you’ll have to pay out of pocket for services. If you are looking at Individual & Family plans online, the summary of benefits should be readily available. If you are working with a broker, she/he will be able to provide one to you. If you are getting coverage through an employer, your benefits administrator should be able to provide one to you.
When comparing different plans, analyze your and your family’s medical needs. Look at the amount and type of treatment you’ve received in the past. It is impossible to predict all future medical expenses, but you can work with what I refer to as the “knowns”; the known costs that you and your family will incur over the upcoming year. How many times do you know there will be a doctor visit? A prescription filled? Lab work? X-rays? We don’t have to worry about preventive care here, since that should be covered with no out-of-pocket cost on non-grandfathered plans. By knowing how much care and what type of care you will incur over the next year, you are in a much better position to determine what you will pay in out-of-pocket costs.
What are out of pocket costs? As the consumer, your portion of costs consists of the deductible, copayments and coinsurance.
At this point, you will want to determine if a plan with lower out of pocket costs and a higher premium is better for you. Some reasons to consider a plan with lower out of pocket costs:
- You have frequent doctor visits.
- You visit the ER frequently.
- You take prescription medications on a regular basis.
- You have a planned surgery coming up.
A plan with higher out-of-pocket costs and lower monthly premiums might be the better choice if:
- You can’t afford the premium for other options offered.
- You are in good health and rarely see a doctor.
While comparing plans, look for a summary of benefits. A summary of benefits should clearly lay out how much you’ll have to pay out of pocket for services. If you are looking at Individual & Family plans online, the summary of benefits should be readily available. If you are working with a broker, she/he will be able to provide one to you. If you are getting coverage through an employer, your benefits administrator should be able to provide one to you.
PREMIUM:
The last step is to compare premiums. Assuming you know which plan type you want, that the provider network is sufficient, you should then compare premiums while also considering the out-of-pocket costs that will be incurred. It makes sense to look at these things together; whether you are paying the entire cost of the plan or your employer is paying a portion. For example, Plan A will cost you $3,600 in premium for the year and you will definitely incur out-of-pocket costs of $2,000 based on the plan design. Plan B has a higher premium, but much lower out-of-pocket costs; so, this plan will cost $4,200 per year, but you will only have $800 in out-of-pocket costs. It can be argued that you would be better off paying a higher premium because it could potentially result in a $600 annual savings.
Choosing the right plan isn’t easy and there is a lot to consider. Whenever possible, consult with an insurance professional that can help walk you through the process and ensure you are selecting the plan that makes the most sense for you and your family.
