What Do You Want from a Health Plan?
Health plans come in many varieties, each with its own pros and cons. To pick the one that’s best for you, you need to know what you want from a health plan. It may help if you ask yourself the following questions.
How Much Healthcare Do You Use?
Consider how much healthcare you and your family used last year, and how much you paid for it. Add to that any new healthcare expenses you think you may have next year. For example, are you expecting a baby? Are you planning knee surgery?
Everyone’s answer to how much healthcare they use will be different. If you or a family member have a chronic illness, you may require a lot of regular treatment. You may be at risk for hospitalization. In that case, you may want a health plan that will cover most of your medical expenses with low cost sharing. (Cost sharing is the portion of healthcare costs that you pay.) For that, you may be willing to pay a higher premium, a cost (usually monthly) to maintain coverage. But if you’re a healthy, single young adult, you may hardly ever see a doctor. Then, you may want low premiums, even if you have a high deductible (the amount you have to pay for care before your insurance starts to pay).
How Big a Deductible Can You Afford?
Many plans these days have high deductibles. At first, they may be attractive because the premiums are lower. But suppose a serious illness or accident strikes. Could you pay the deductible? You have to take stock of your own financial resources to know the answer. If you couldn’t afford the deductible, or if it would be a financial hardship, then a high-deductible health plan might not be for you.
Bear in mind that the government lets you set up a health savings account (HSA) if you have a high-deductible health plan. An HSA has tax advantages that can help you stretch the dollars you contribute to the account. Any money you take from it isn’t taxed if you use it for qualified medical expenses. For more information on HSAs and similar plans, see the article in this issue on Flexible Spending Plans. You may also be interested in our FH® Insurance Basics article on High-Deductible Health Plans.
High monthly premiums for plans with low deductibles may be a burden. But many employers contribute a share of the employee’s premiums. And, depending on your income, if you apply for coverage in the Health Insurance Marketplace, you may qualify for a premium tax credit that lowers your premium.
What Prescription Drugs Do You Take?
Each health plan has a list of covered prescription drugs called a “formulary.” Before enrolling in a plan, make sure your drugs are on the formulary. If you take a number of medications, you may want a plan that has a generous prescription drug benefit. For example, the plan that best serves you might have lower drug copays than other plans. (A copay is the fixed amount you have to pay for each healthcare service.)
Do You Have Doctors You Prefer?
If you already have relationships with doctors you trust, you’ll probably want to keep seeing them. When considering a plan, make sure the doctors and facilities you prefer are in the plan’s network. That’s the group of providers (such as doctors and hospitals) that have agreed to accept your insurer’s contracted rate as payment.
Do You Want a Wide Choice of Providers?
You’ll probably want to have providers who are close to where you live and work. Does it matter to you to be able to choose among a wide variety of different providers? If it does, then you’ll want a broad network. Those plans typically require higher premiums.
But if provider choice is not that important to you, then you may prefer the lower premiums associated with a plan with a narrower network that gives you a more limited choice of providers. See our FH Insurance Basics article on Narrow Networks.
Before choosing between plan options, you should look through their provider directories (usually available through the plan’s website) to see how they compare in terms of provider choice in the service types that are most important to you—such as pediatrician or chiropractor.
Suppose a wide choice of providers is very important to you. Then, you may want a plan that will pay benefits even if you go outside the network. Preferred Provider Organization (PPO) and Point of Service (POS) plans will do that. But you’ll still spend more for out-of-network care than you would for in-network care. Two other types of plans, Health Maintenance Organization (HMO) and Exclusive Provider Organization (EPO), typically won’t pay anything for out-of-network care unless it’s an emergency. See our FH Insurance Basics article on Types of Health Plans.
Whom Do You Want in Charge of Your Care?
In an HMO and a POS plan, you choose a primary care physician (PCP). That PCP is the gatekeeper for your care. Unless it’s an emergency, when you need medical attention, you go to the PCP first. That doctor either treats you personally or refers you to specialists in your network.
If you’re used to seeing a PCP, and like a PCP’s guidance, this arrangement might be for you. But you may want the freedom to see specialists directly without a referral. Then, you might prefer a PPO or EPO, which allow you that freedom.
Keep asking yourself what you want from a health plan. The more you find out, the better choice you’re likely to make.