October 6, 2009
It's open enrollment season, the time when millions of workers will choose the health insurance plan they'll have next year. With premiums for health coverage offered by employers rising, it may feel more like open season on your wallet. That's all the more reason you should understand your options.
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. My agency, 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 Out the Options
During open enrollment season, people can choose among different health plans. This can be confusing. Not all health plans pay for the same services or the same amounts for services. Different plans can include different doctors, hospitals, and other care providers.
Plans also vary in how much you'll pay before your insurance covers you. These are called out-of-pocket costs and they usually are in the form of deductibles or co-insurance. The deductible generally is an annual amount that is not covered by your health plan. It must be paid before your health plan starts to pay for your care.
Co-insurance 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.
Picking a 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.
That's why I urge you to read the materials you get during open enrollment season and ask questions. Understanding how your plan works, learning what it does and doesn't cover, and considering the quality of care a plan provides are good ways to choose a plan.
My agency has developed a survey that provides information on consumers' experiences with health plans. The data are collected by different organizations, including the Federal Employees Health Benefits Program and Medicare. Some health plans also collect data and provide it to consumers. You should check to see if your plan provides this information.
To get the best plan at the right price to fit your needs, consider the following:
- Avoid basing your decision only on the premium. Lower premiums typically mean care comes with higher out-of-pocket costs through deductibles, coinsurance, or copayments. If you're young and healthy, low premiums may be a good fit, but if you have a 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.
I'm Dr. Carolyn Clancy, and that's my advice on how to navigate the health care system.
Choosing a Health Plan (Transcript) Podcast Help
Agency for Healthcare Research and Quality
Questions and Answers About Health Insurance: A Consumer Guide
National Committee on Quality Assurance
HEDIS & Quality Measurement
U.S. Office of Personnel Management
Federal Employees Health Benefits Program
Current as of October 2009