How To Choose A Health Insurance Plan

In a perfect world, health insurance wouldn't be such a big deal. We'd be healthy, happy, and it wouldn't really matter whether we have opted for bronze-level coverage over silver. Of course, reality isn't too kind to those fantasies. We all need health insurance, but what kind exactly? It's not always easy to tell – even after the recent steps taken to help make the process less confusing. We're still left with a wide range of policies cove
ring different things and costing different amounts of money. Choose the wrong one, and you could be left covering a giant hospital bill, or overpaying for protection you'll never need.

Read on, and we'll go over a few of the key points you need to mull over while picking a plan, hopefully leaving you a little wiser and ready to go find your perfect policy.

Common Coverage:

We'll actually kick this list off by letting you know about a few things that just about any plan you choose will have. Insurance sold on the Health Insurance Marketplace (each state's one-stop shop for insurance) is currently required to cover a core set of services, including emergency care, hospitalization, maternity costs, prescription drugs, and preventative health services such as cancer screenings or immunizations, among others.

There are some exceptions to that rule. Some older plans, which are renewable even after changes to healthcare policy, don't cover the same things. Catastrophic insurance is another exception, as it's only really applicable in very specific circumstances (more on that later).

Some plans will also emphasize certain services over others. For example, some programs can offer a personalized health care plan that emphasizes preventative medicine while still including every other essential component. Be sure to search around for any opportunities that might be a particular fit for your needs.

What Are All These Metals About?

Since most plans actually will cover most of the healthcare you're likely to need, the real struggle is often figuring out how much of that coverage is necessary.

While each state's health insurance marketplace is different, all will still have four basic levels of policy: bronze, silver, gold, and platinum. Each level differs in terms of "actuarial value", or the percentage of health care costs that the plan will cover.

As you might guess, that value increases with each level. Bronze will soak up an average of 60% of your healthcare expenses while platinum will cover an average of 90%. Those values are balanced by premiums or the monthly cost paid to your insurer.

Choosing A Plan:

Picking which tier is right for you requires some juggling. On one hand, you have potential healthcare costs; on the other, you have monthly expenses. If you expect high healthcare costs (say, if you suffer from a chronic illness, or if you have known risk factors), then it may be worth aiming for a complete coverage – even if it bites into your monthly income, those costs can wind up being a fraction of those incurred by a lengthy, partially covered hospitalization.

If you're by and large healthy, then bronze or silver might make more sense. Catastrophic insurance is also an option for younger people, or for older people with a hardship exemption (i.e. recent homelessness). While catastrophic plans might not cover all the services that other plans do, they come with very low premiums, and offer good protection in the event of a major, unforeseen health crisis.

Sticking With A Doctor:

If you'd like to stay with a particular physician, then pay extra attention while picking a policy. Not every doctor accepts the same types of insurance. While some marketplaces list offices that accept given policies, they're not infallible. Checking with your insurer, as well as your physician, is the only way to be sure that you're using the right plan.

The Bottom Line:

Ultimately, there are only so many hard and fast rules for finding the right policy. Selecting one generally means a careful examination of what you need, what you don't need, and what you can or can't afford. So take your time, read up, and never be afraid to ask for particulars – after all, it's tough to think of anything more important than your health.

3 things to know before you pick a health insurance plan

Choosing a health insurance plan can be complicated. Knowing just a few things before you compare plans can make it simpler.

  • The 4 “metal” categories: There are 4 categories of health insurance plans: Bronze, Silver, Gold, and Platinum. These categories show how you and your plan share costs. Plan categories have nothing to do with quality of care.
  • Your total costs for health care: You pay a monthly bill to your insurance company (a "premium"), even if you don’t use medical services that month. You pay out-of-pocket costs, including a deductible, when you get care. It’s important to think about both kinds of costs when shopping for a plan.
  • Plan and network types — HMO, PPO, POS, and EPO: Some plan types allow you to use almost any doctor or health care facility. Others limit your choices or charge you more if you use providers outside their network.

Remember that plans also may differ in quality. For the 2017 plan year, is introducing a pilot program to present health insurance plan quality ratings (or 'star' ratings) for some plans. Plans in Virginia and Wisconsin will feature the quality ratings this year. Learn more about quality ratings.

How to Pick a Health Plan in 15 Minutes or Less

Health insurance is complicated. According to a study of one Fortune 100 company, roughly 80% of workers chose health plans that cost more over the course of the year than their alternatives would have. But how do you make the right choice? Here's the easy way to evaluate your options, even if you're short on time.

1. Call your doctor (4 minutes)
The first thing to do is to ensure that your doctor accepts your new insurance plan. This is crucial, and here's why: By directing plan participants to a limited group of hospitals and doctors, insurers can negotiate discounted rates on everyone's care, the same way Costco can buy in bulk and offer members discounts. These health care providers make up your insurer's so-called network.

If you go a doctor who doesn't have an agreement with your insurer, you may have to pay out-of-network rates for your care, which are typically twice as expensive in-network rates, according to benefits consulting firm Mercer.Plus, if you go outside your network, some Affordable Care Act protections do not apply. For example, under the ACA, you pay nothing for preventive care like annual physicals, vaccinations, and some counseling services—but only if you receive the care from an in-network health care provider.

Likewise, the ACA requires insurance plans to have an out-of-pocket maximum, a cap on the amount of money you have to spend each year (after that, your insurer pays the rest). In 2016, the highest possible out-of-pocket maximum is $6,850 for individuals and $13,700 for families, and plans often set lower limits. But when you go outside your network, your medical costs do not count towards that out-of-pocket limit. Some plans have a separate out-of-pocket maximum for out-of-network care, which offers you additional protection, but that max is usually higher.

Insurer websites typically let you check whether your primary doctor is in-network before you enroll in a plan. But if you're considering several insurers, that can take time, and the insurers' directories aren't always up-to-date. So if you have only one or two doctors, just call the offices and ask whether they are in-network. As long as you have other options, eliminate any plans that your doctors don't accept.

2. Estimate your health care needs (4 minutes)
Before you choose the best insurance plan, you need an idea of what your typical health care costs are. You should be able to find a list of your medical claims on your current insurer's website. But here's a quicker way to benchmark your spending. Just answer these two questions:
What was your deductible last year?

Did you hit it?
A deductible is the amount of money you must spend out of pocket before insurance covers a portion of the bill. A decade ago, slightly more than half of all employer health plans had deductibles, according to the Kaiser Family Foundation (KFF). Today, 81% of plans do, averaging $1,318 for single coverage.Once you've hit your deductible, all you will owe is a co-pay or co-insurance. Your insurer picks up the rest for in-network care. Co-pays are flat dollar amounts. On average, they run $24 for primary care visits and $37 for specialty care, according to KFF. With co-insurance, which is becoming more common, you pay a percentage of the cost of your care—on average, 18% of the bill for a primary care visit and 19% for a specialty care visit.

Here's the upside: You will usually pay lower monthly premiums if you agree to a higher deductible. A good rule of thumb is that if you didn't come anywhere close to hitting your deductible last year, you can probably choose an even higher deductible this year and save on premiums, says financial planner Rick Kahler. Just make sure you have the savings to pay the full deductible if you or a member of your family needs care.
But if you surpassed your deductible or came close, paying more for a plan with a lower deductible might save you money overall if that means owing just co-pays or co-insurance earlier in the year. In that case, check each plan's cost-sharing rules.

3. Weigh risk vs. reward (7 minutes)
Do this simple equation to compare plans: Multiply each plan’s monthly premium by 12, then add the out-of-pocket maximum, says Katy Votava, founder of health insurance consulting firm Goodcare. That’s how much you could pay in total if you suffered a medical crisis this year. “We forget what insurance is," Votava says. "It’s to protect against catastrophe.”

Consider the average PPO plan vs. the average high-deductible plan. PPOs—the most common plan offered by employers—let you see doctors in- and out-of-network but charge the highest premiums. High-deductible health plans have individual deductibles over $1,300 and family deductibles over $2,600—but much lower premiums.When you do the math, though, you'll find that the plans with the lowest premiums carry a hidden risk—more of your money is on the line if you ever get sick.

In the above example, if you incur no health care expenses all year (remember: preventive care is fully covered in network), you'd save $277 in premiums by choosing a high-deductible plan over a PPO. However, a medical crisis or unexpected illness could leave you paying $444 more if you run up against your out-of-pocket max.

But there's another factor to consider. If you choose a high-deductible plan, your employer will often tip the scales by contributing money to your health savings account (HSA), a tax-advantaged account for medical expenses. An HSA has spectacular tax benefits: You contribute pre-tax money right out of your paycheck, your savings grow tax-free, and withdrawals you use to pay for medical expenses are tax-free. And unlike with flexible spending accounts, all HSA money rolls over year to year. But you must have a high-deductible plan to open an HSA.In 2015, 55% of employers contributed to workers' HSAs, $809 on average. For a single tax filer in the 25% bracket, that's a freebie that's equivalent to $1,079 of post-tax money. In this situation, you are typically better off with a high-deductible plan. Best-case scenario, you save $277 on premiums; worst-case scenario, you save $365 in total out-of-pocket costs.

How to Pick a Health Insurance Plan

Buying health insurance for the first time can be a daunting task. The good news is that there is more financial assistance for health care coverage than ever before, and you can’t be denied coverage. The answers to some frequently asked questions can help you understand the real costs of a health care plan and choose a policy that suits your needs.

Should I pick a low monthly premium or a lower annual deductible?

If you’re like most young people and you’re fairly healthy, you probably want to shell out as little as possible in monthly premiums but still secure comprehensive coverage in case of an accident, sudden illness or a change in circumstances, like becoming pregnant. Just be aware that the less you pay for your monthly premium, the higher your annual deductible. That means you have to pay more out of pocket toward your health care before the plan kicks in. A cheaper plan may also limit you to a small selection or network of doctors.

“A young person might be inclined to do that, thinking, ‘Let me just get a high-deductible plan; I hardly ever go to the doctor. I just want this in case of an emergency and to make my mother happy,’” said Karen Pollitz, a senior fellow at the nonprofit Kaiser Family Foundation, adding, “That’s fine — I think young people can do that.”

What if I have a chronic condition and use my health plan a lot?

People with chronic conditions often opt for more expensive plans because they know they use more services, want a lower deductible and access to broader networks with more doctors and subspecialists, and possibly smaller fees for each service. These patients pay more in monthly premiums, but generally will have lower out-of-pocket charges.

What if I have a prescription for a drug I take all the time?

If you take medication on a regular basis for a condition like asthma or allergies, you will want to check that your drugs are covered under the health plan’s formulary, or you may face very steep costs.

How do I know whether to pick an H.M.O., an E.P.O., a P.P.O. or a P.O.S.?

Most health plans these days are designed as managed care plans, which means the insurer has negotiated discounted fees with a network of doctors, hospitals, labs and other providers. That means patients have to seek care from the network and may not always be free to choose just any doctor they want.

Health maintenance organizations, or H.M.O.s, are the most restrictive plans. That means your care is covered only if you get care from a provider selected by the H.M.O. “You will only be covered when you seek care from a doctor, hospital, lab or other provider that is in the network,” said Ms. Pollitz. E.P.O.s, or exclusive provider organizations, follow similar rules.

Preferred provider organizations, or P.P.O.s, also have their own networks of doctors for you to choose from, but they also will cover you at a lower rate if you want to use an out-of-network doctor or hospital. Out-of-network doctors and hospitals can bill whatever they want, Ms. Pollitz warned, “and the plan will only pay a percentage of what it thinks is reasonable. You owe the balance.”

Point of service plans, or P.O.S.s, are hybrids that combine elements of both H.M.O.s and P.P.O.s. These plans may require you to name a primary care provider to coordinate your care.

The one exception to the restrictions imposed by a managed care plan is a medical emergency, in which case a patient typically can go to the closest available emergency room and all or most of the cost of care will be covered.

What is a high-deductible plan?

There are also some high-deductible plans that allow you to squirrel away pretax dollars in a health savings account, or H.S.A., that you can draw from to cover health expenses. But these require you to pay for a lot of your care before they kick in.

When you’re shopping around and comparing the prices of plans, it’s critical to find out about all of the costs involved in coverage. You must pay your premium every month, or your coverage will be discontinued. But there are other fees as well, which are called “cost sharing.”

What if I have a major medical emergency?

You are protected on the high end by a maximum limit on your out-of-pocket expenditures per year, which will be capped at $7,150 for 2017 for most plans. That peace of mind, said Ms. Pollitz, is what insurance is really all about.

What other extra costs do I need to know about?

Co-pays are flat fees you pay each time you get a medical service. You may also be required to pay a percentage of the cost of a service. You may also have different annual deductibles for different types of care (such as hospital care, laboratory tests or pharmaceuticals). All the costs are detailed in a document called the “summary of benefits and coverage,” or S.B.C.

What if I only need an annual flu shot and birth control pills?

Make sure you choose a plan that offers what is called “minimal essential coverage,” which means it complies with the requirements of the Affordable Care Act and covers free preventive care like an annual checkup and birth control.

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