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| 7 Things to Consider When Picking a New Health Insurance Plan |
Whether you’re young, single, and healthy, or have a chronic illness and a family to take care of, one thing remains constant: No matter your situation, the health insurance coverage you choose can and will impact your daily life and your budget. If you understand that, you may feel like you’re ahead of the game, but that doesn’t mean it’s easy to figure out what plan will serve you best.
The main problem is that there are over 900,000 variables for individuals to consider when shopping for a plan – benefit design and reimbursement, affordability, the financial risk of injury, and future service offerings, just for starters, according to Jay Silverstein, CEO of Picwell, a company using predictive analytics and big data to match consumers to their ideal plans. “Choosing a health plan is a little bit like throwing a dart at a dartboard,” says Silverstein. “Frankly, no one has the time, or should be expected for that matter, to become an expert on health insurance just to pick a product.”
7 Things to Consider When Picking a New Health Insurance Plan
Well said. While you wait for healthcare companies to embrace and utilize the kind of technology that Picwell has created to make choosing a plan easy, there are still a few things you can look at in-depth on your own to make your plan shopping as painless as possible. The best strategy, according to Silverstein, may be picking two or three key things from the below list that are the most important to you and making sure your health insurance plan aligns with your needs in those categories.
#1: Monthly premium
Your monthly premium for your health insurance plan refers to the amount paid to an insurance company for your plan on a monthly basis whether you use medical services or not. “Health plans typically trade-off monthly premiums for risk-sharing and choice,” says Adam C. Powell, Ph.D., health economist and President of Payer+Provider Syndicate, a management advisory and operational consulting firm focused on the managed care and healthcare delivery industries.
“Plans with lower monthly costs tend to have higher costs when care is needed and may cover treatment at fewer healthcare providers,” says Powell. “Plans with higher premiums typically cover more of the cost of care and have more provider options.”
The bottom line here is that while a low premium plan might sound good for your monthly cash flow, it isn’t always the best decision. If you go the route of a low monthly premium plan, Powell says out-of-pocket costs will likely be higher, and you’ll want to have some sort of savings or account in place to be able to defray the costs of care when you seek it so you don’t go into serious debt.
#2: Deductible
One major aspect of your out-of-pocket cost for care is your deductible or the amount you owe for health care services before your health insurance plan begins to pay. So if a deductible is $3,500, for example, Silverstein says your plan won’t pay for anything until you’ve met your $3,500 deductible for services that apply towards the deductible. And where is that $3,500 going to land? All on your plate says, Silverstein.
That’s why both he and Powell say it’s extremely important to examine your personal savings funds before making the leap into a low premium, high-deductible plan, particularly if you don’t bring home a high salary to offset this kind of sudden medical expense. “Cheaper plans have lower initial costs, but also often have higher deductibles and co-payments when the plan is used,” says Powell. “If there are not enough savings to cover the deductible, it may be difficult to pay for care when it is needed.”
One way to protect yourself against going into debt to meet your deductible, says Powell, is to look into a Health Savings Account, which often funnels money, tax-free and directly from your paycheck (when possible), to be used for eligible health services.
“High deductible health plans place the greatest amount of risk on the consumer but have the added benefit of making the consumer eligible for a tax-advantaged Health Savings Account,” he says.
The moral of the story here, Powell says, is to understand that paying less monthly could mean that you’ll have more to shoulder later in the form of a higher deductible. It is important to note, however, that for 2015, according to the government’s website, there’s a $6,350 maximum for individual out-of-pocket costs for in-network services ($12,700 for families). Even if you choose a high-deductible catastrophic plan, the government says out-of-pocket costs can not top this limit.
#3: Provider network
According to Powell, many health plans have one or more provider networks. When it comes to those plans and their provider networks, you really have to know your preferences, your preferred doctors – if any, and your finances. Why? Well, if your provider is not in one of the networks in your plan, Powell says that care from that provider may not be covered. What’s the consequence here? Again, it boils down to your finances.
“If your provider is not in a preferred tier, your care may cost more,” says Powell.
The best bet here, Silverstein says, is to figure out whether your current doctors and preferred hospital are within a given plan’s provider network. In an ideal situation, they both would be, because that’s how you’re going to access the most affordable care with the doctors you know. “If cost is the biggest factor for you, then you want the coverage that’s going to minimize your out-of-network exposure,” says Silverstein.
Additionally, Silverstein says it’s also always a good idea to inquire about when contracts are expiring, he says, as health care companies are always changing their networks. A change in provider network could mean it’s time for you to change your health plan.
And then, to complicated things further, Powell says that health insurers have brought a number of lower-cost plans to market by contracting with limited groups of doctors willing to accept less money for their services. “These doctors often accept lower payments with the hope that they will make up the difference in volume,” says Powell. “These plans, known as ‘narrow network plans’, offer substantial savings, but also a rather limited number of healthcare provider options.”
If you’ve determined that the savings with this kind of a plan might be substantial for you, Powell says it is important to check that your doctor is in the network or that you are comfortable with seeing doctors who are in the event your doctor isn’t in-network. Otherwise, the savings won’t be something you can even cash in on, and you would have been better served with a health plan with a wider network.
#4: Prescription drug coverage
Only you know your body and what medications work best with your system, healing you when you’re sick or keeping you going every day if you have chronic conditions like diabetes or asthma. But when it comes to prescription drugs, not all healthcare plans are created equal, and again, you could end up having to make a trade-off – either paying out-of-pocket for your preferred drugs or choosing less preferable medicines, if you don’t look closely at what a given plan covers.
“Prescription drug coverage comes in multiple flavors,” says Powell. “Some plans cover only generics, and some plans cover branded drugs.”
Powell advises individuals to consider the medications they currently take – and those they may begin taking within the next year – while choosing their next health insurance plan.
Silverstein says it’s smart to also keep an eye on what’s coming and going from the market as well, so you know if something you’re on will be discontinued or become a generic and what options you have for coverage of those replacement prescriptions under a given plan.
#5: Children and dependents
While there’s a lot at stake for young, healthy single individuals choosing healthcare plans, people with families or those planning to start a family have perhaps even more risk. And for Powell, it’s absolutely essential that individuals consider their family’s current needs and spending habits when purchasing a plan.
“If your family needs a lot of care each year or a baby is soon expected, it may make sense to pay higher premiums to get a lower deductible,” he says. “If your family rarely uses care, low premiums and a high deductible may be the best combination.”
Silverstein brings up another point for blended families or those who might support a child or dependent that lives out of state. “If you have a child that doesn’t live in the same state as you and they’re on your plan, you want to make sure that they’re covered to receive care where they live,” he says. Again, a lapse in coverage for an out-of-state child could mean higher bills and out-of-pocket costs, so be sure to read the fine print of any plan closely.
#6: Travel
Say your job has you in different cities every week. You might be asking yourself, “What’s my best recourse for insurance?” Well, it turns out that frequent travel isn’t all that important to choose a plan.
“Emergencies are pretty much covered, even if you’re not in your home state,” says Silverstein. But where the location could be an issue for you in receiving affordable care is if you spend a prolonged period of time out of your permanent place of residence, say if you’re a retiree that spends five months out of the year in another state.
“Check what type of plan you have because you could be responsible for the cost of your care while you’re in that alternate location,” he says.
#7: Chronic illness or family history of chronic illness
Generally speaking, if you’ve been diagnosed with a chronic illness and have been dealing with it for years, or if you have a strong family history of a particular chronic disease, it’s probably not a good idea to roll the dice with a lower-cost upfront plan, as you’re going to need frequent care to stay healthy.
“People with chronic conditions like diabetes or heart failure have a firm grip on their medications and how often they seek treatment,” says Silverstein. That being said, Silverstein says that chronic disease sufferers shouldn’t just blindly take on maximal plans but shop around to see if any plans offer special programs for certain diseases.
Another thing to consider, he says, is whether a given plan has an affiliation or relationship with a top-notch facility for whatever your ailment may be.
“Certain hospitals are known for their expertise in certain areas,” he says. For example, “If you’re diabetic, maybe you want to make sure you can seek care at your area’s top program under your plan without it being out-of-network. It’s always about minimizing that out-of-network exposure to keep costs down.”
