It’s open enrollment time already?
It seems like the time to pick a new health plan comes faster each year. And each year it feels more challenging to determine what you will need and what you can afford as the healthcare landscape changes and insurance plans evolve their options.
We’ve canvassed some of the major health insurance websites and condensed some of their best wisdom on what you should consider when shopping for your next healthcare plan to help you in making the selection process a good one.
Consider Your Health Needs
One of the biggest decisions in choosing your plan is determining if a low monthly premium (payment), or a lower annual deductible makes the most sense for you. For younger, healthier people who are single or without kids, a plan with a high-deductible might be a good option. This will allow you to pay lower monthly premiums, but provides you with coverage in case you have a bigger illness or injury during the year.
A deductible is the amount you pay out of pocket before your insurance plan begins to pay. While the deductible may look like a huge sum on paper, but if you don’t plan to see the doctor very often it may be a good way to keep the cost of your care low over the entire year by reducing the amount that comes out of you paycheck each month.
For families with young kids, or those who are planning to start a family be sure to check out the pediatric or maternity benefits that come with any plan you are considering.
If you have a chronic condition, take regular medication, or see your doctor frequently, you will want find a plan that covers your needs. Depending on your situation, this may include a plan with a lower overall deductible but higher monthly payments that allows more access to doctors, specialists or other options that you may need.
Consider Your Tax-Free Opportunities
If you know you will have regular or notable healthcare expenses in the next year and your plans offer them, it’s a great idea to take advantage of federally regulated Flexible Spending Accounts (FSA) or the newer Health Savings Accounts (HSA). FSAs have a higher annual spending limit and allow for tax-free payment of your out-of-pocket expenses a wide range of medical and dependent care expenses. Be aware that you have to use whatever you save in an FSA by the end of the year or the funds are lost. HSAs have a lower annual limit and a number of restrictions, but allow you to keep and roll-over the funds you save into the following calendar year. Be sure to do your research and determine your predicted out-of-pocket healthcare expense accurately before determining which account option is best for you.
The Affordable Care Act can also have an impact on your tax rate and those who are insured through their employer or their own private healthcare plan can avoid paying additional income tax each year.
Have a Doctor You Love?
If you have a primary care physician, specialist or healthcare facility that you already love and want to stay with during the year, make sure the plan you are considering has them in their network. In-network care will cost you less and will also alleviate the need for additional paperwork down the road.
PPOs include networks of providers that you can choose from that have pre-negotiated rates with the insurance carriers. You will usually pay less to see the providers that are in-network of your PPO. If you opt to see a provider or hospital outside of the network, the PPO will only cover a percentage of the cost of your visit –about the same amount they would have paid if the provider was in-network, with the remainder coming out of your pocket. Unlike an HMO, you will likely have more options in choosing your doctor, specialist, hospital or urgent care. But you may also pay slightly higher rates than an HMO for the privilege.
HMOs are more restrictive than most PPOs and will typically assign you a primary care physician (PCP) as part of your plan. Most referrals to a specialist will require that you see your PCP first who will help determine if and which specialist you end up seeing. HMOs usually require you stay in-network, but the advantage is that premiums can be a little lower than a PPO.
Don’t Forget the Formulary
If you regularly take prescription medicine it’s important to understand if those drugs are covered under the plans formulary. Sometimes, as specific prescription brand may be covered but at a higher rate than you were previously paying. And other times, the brand name may not be covered, but the generic version will be. Also consider where you have your prescriptions refilled to save a little extra in those co-pays. Warehouse stores (like Costco and Sam’s Club) and grocery stores can have lower co-pays than your neighborhood drugstore where you are paying more for convenience. Bottom line: Be sure to do your homework to save yourself from surprises when you arrive to pick up your medication.
Understand What You Will Be Responsible for Paying
Many consumers don’t completely understand the nuances associated with the health plan they ultimately choose. What looks the most comprehensive, or the least expensive on the surface may ultimately increase the amount of out-of-pocket expense you end up having to pay at the time of service.
Premiums are the amounts you pay monthly to a health insurance company for coverage. Deductibles are what you pay for covered services before your health plan begins to pay. Coinsurance is the percentage of health care expenses you pay after your deductible has been met. Your health plan pays the rest up to any benefit or up to a maximum amount.
It Really Does Pay to Stay Healthy
Many plans – both HMOs and PPOs – will pay for basic preventative care. They do this because it’s much more cost-effective to help their members stay maintain their health than lots of ER visits and long-term care. Because of this, many plans will offer 100% coverage for preventative wellness related services like flu shots and annual exams. Be sure to take advantage of these opportunities to save yourself some cash and stave off those illnesses and injuries that can slow you down.