Most people choose a health plan – usually an HMO or PPO – as an option from their employer. However, if you buy private insurance or enroll in a government-funded program such as Medicaid or Medicare, you may have the opportunity to choose among several health plans.
If you do have a choice, you should identify which of the health plans meets your health coverage needs. Your employer, health insurance agent, or government agency can provide written information about available plans. You also can find information online about the health plans in your community.
The following five steps may help you choose the health plan that is best for you:
Step 1: Determine which health plans provide coverage in your area.
Since health insurance is regulated by the states, you will need to pick a health plan that provides coverage where you live. Some plans may be state-wide, but others may be local to your county or city. If you choose an HMO, for example, you must use the HMO’s network of doctors and hospitals, which may only be located in a small area.
Step 2: Decide which health plan offers the benefits you need.
Make a list of healthcare needs for you and any family members who will be covered by the health plan. Try to figure out if you will need prescription drugs, well-child care, mental health services, pregnancy coverage, or ongoing treatment of a chronic illness.
Having a chronic illness can affect your health insurance coverage. Some health plans may accept you conditionally by providing a pre-existing condition exclusion period. Although the health plan has accepted you and you are paying your monthly premiums, you may not have coverage for any care or services related to your pre-existing condition.
A Dr. Mike Health Reform Reminder: One of the hallmarks of the Patient Protection and Affordable Care Act signed into law in March 2010 is the elimination of pre-existing condition requirements imposed by health plans. Effective September 2010, children (below age 19) with pre-existing conditions may not be denied access to their parents' health plan and insurance companies will no longer be allowed to insure a child, but exclude treatments for that child's pre-existing condition. Starting in 2014, this provision will apply to adults as well.
Step 3: Find out if your doctor and other healthcare providers are in the health plan’s network.
Your doctor may not be part of every plan network in your community. To find out if your doctor is in a health plan’s network, call your doctor’s office and check the health plan’s provider directory. Before making your decision, you should check with your doctor’s office to make sure she has not left the network.
Step 4: Compare the cost of the plans.
Based on your healthcare needs, you will have to decide about monthly premiums and out-of-pocket expenses, such as deductibles, copayments and co-insurance. If you are buying your own insurance, you will pay the full amount of the premium. If you get health insurance from your employer, you will pay a percentage of the premium.
Most health plans have out-of-pocket expenses that can vary greatly. The annual deductible can range from several hundred dollars to very high amounts, such as $5,000 or more. Most HMOs and PPOs have copayments for doctor visits in the network, and PPOs often have co-insurance of 20% to 30% for out-of-network services.
Usually, if you choose a plan with a high annual deductible, your monthly premiums will be lower. And, if you choose a plan with a low annual deductible, your monthly premiums will be higher. If you are young, healthy, take no prescription medications, and use few healthcare services, you may want to select a plan with a high deductible and low monthly premiums. However, if you or a family member has a chronic illness that requires medication and frequent doctor visits, you may want to choose a plan with a low annual deductible and a higher monthly premium.
For example: Arthur R. is a 34 year and self-employed. He is in excellent health and does not take any medications. His wife also is healthy and has few healthcare needs. The couple wants to join a PPO that will allow them to see a doctor out-of-network. All of the PPO choices in their community have a $20 copayment for doctor visits and a 25% co-insurance for out-of-network services. A plan with no deductible has a monthly premium of $1007 and a plan with a deductible of $2500 has a monthly premium of $634.
The premiums for the plan with no deductible will cost the couple $12,084 for the year, but except for copayments, all their healthcare costs will be covered. The premiums for the high deductable health plan will cost them $7,608 for the year, but they will be responsible for all their health expenses up to $2,500. Since they are healthy and only anticipate 4-5 doctor visits in the coming year (which would cost them about $100-$200 out of pocket), it makes sense for them to select the high deductible option.
Step 5: Compare the quality of the plans.
There are resources to help you determine how well a health plan performs. It’s important for you to know about such things as complaints, customer service, access to the providers you want to see, and the quality of the care provided by the plan’s healthcare professionals.
Your state insurance department, Medicare, and the National Committee for Quality Assurance (NCQA) are good resources.
- Your state insurance department should have information about health plans licensed in your state. Some states have tools that let you see how each health plan ranks based on quality measures. For example, Vermont has a Consumer Guide to Health Plans that provides information about consumer satisfaction and quality of care. You can link to your state’s health insurance department on the website of the National Association of Insurance Commissioners.
- Medicare maintains a list of all Medicare approved health plans that includes a quality rating for each health plan based on feedback from plan members.
- NCQA is a not-for-profit organization that reviews and accredits health plans. The NCQA “stamp of approval” is a reliable indicator that a health plan is well-managed and delivers high quality care and service.