In my discussions with my clients and referral sources, it has become quite apparent that most people don’t understand what to look for when choosing a health plan. Basically, there are 4 things to look for: Type of plan, Network, max out of pocket, and total cost of healthcare. I will go through each of these in order of complexity.
- Type of Plan
There are 2 basic types of plans: HMO and PPO. There are also hybrids called EPO (Exclusive Provider Network). HMO is managed care where what you doctor says doesn’t always go. The HMO can dictate how a particular condition is treated. A PPO is a network of doctors where the insurance company has negotiated rates and that is it. Doctors have the freedom to treat you as they see fit. EPO is basically a smaller network PPO, but can have elements of managed care depending on the insurance provider. While I prefer a PPO for my family, one type is not necessarily superior to another.
Basically, this is about what doctors are in your network (size does matter). Also, it involves where you can get coverage in network. Some networks only have local doctors so if you travel out of state and want access to in network healthcare out of state, keep this in mind when choosing your plan. Some states only have managed care plans available on their public healthcare marketplace, so even if you are eligible for a subsidy, you may want to go to the private marketplace to get your insurance. If you choose a plan with a small network, understand that out of network coverage will double or triple coinsurance and max out of pocket amounts.
- Max out of pocket
This is exactly how it sounds. This is the maximum amount you will pay in a year before the insurance company will cover you at 100%. This should be one of the major criteria that is evaluated when choosing a plan. Can you afford a $6000 expense in 1 year or will it send you to bankruptcy? What amount can you afford in a year? Also, remember that the out of pocket max increases for out of network coverage so understanding who is in your network of doctors is important.
- Total Cost of Healthcare
This is one of the most important things to evaluate. Everyone seems to focus on the cost of insurance. If you don’t have any medical expenses, this is understandable. But if you have conditions where you need prescriptions, frequent care, or hospital visits, evaluating your estimated medical costs for the year is extremely important. Do you see a doctor often where a copay might be important? Do you need a lot of monitoring where a diagnostic allowance would be helpful? Do you take a brand new/expensive drug where a drug copay is important?
Evaluating these costs and adding them to the insurance premium amount will predict which plan will provide you the lowest overall cost for a given year.
When working with my clients, I educate them on each of these items. Also, when it comes to evaluating the total cost, I work with my clients to determine their medical costs and then use a spreadsheet to show which plan is best given the information. The feedback I get from clients is pretty much the same everytime: “No one has ever done this for me before. Thank you.” This makes my clients confident that they have chosen the right plan for them.
As always, more to come… Please call me at 630-204-7486 if you have any questions.