5 tips for choosing a health insurance plan.
There’s a lot of confusion out there when it comes to health insurance, with no one-size-fits-all solution. Whether you get health insurance from your employer during annual enrollment or you’re shopping on the individual market, the jargon and acronyms used by many insurers and details about cost and coverage and prescription drug benefits can feel so overwhelming.
You might even be tempted to throw in the towel and randomly choose a health plan. Don’t give up. It’s important to understand your health plan to avoid picking the wrong one.
If you have sidestepped major injury, illness, or catastrophic events up to this point in your life, consider yourself fortunate. The reality is that at any point—at any age—you can find yourself breaking a bone, getting in an accident, or getting sick and needing to rely on your health insurance.
If you choose the wrong plan, it can cost you in some serious medical bills. It’s your hard-earned money, and isn’t the whole point of having insurance to protect you from a financially catastrophic event? Do you want to take that risk?
1. Look at the big picture.
When trying to estimate what you’ll be spending on health insurance, it’s not as simple as zeroing in on one or two aspects. How much coverage should you buy to make the most of your premiums? What medical services will you need?
According to John Chabot, Surest VP of Sales, Key Accounts, “You can’t just add up premiums and out-of-pocket maximums and think, ‘Which plan comes out best for me?’ There’s a lot more to the equation.”
That equation—when it comes to traditional health insurance plans—might include:
- Deductibles: What you need to pay out of your pocket for health care services before your benefits plan starts paying for covered services
- Coinsurance: A percentage of total covered medical services and prescription drug costs you pay after you meet the deductible
- Copays: Prices, or flat fees, you owe at the time of service
- Premiums/paycheck deductions: The amount you pay to have health insurance coverage
- Out-of-pocket maximum, or limit: The most money you’ll pay in a given year for the health care benefits your health plan covers
If you want to make an educated guess of what you might be spending on health care costs for yourself and your family, you have to look at the big picture of what you will pay, as well as unanticipated out-of-pocket expenses.
For example, those who have the choice between a high-deductible insurance plan and other health insurance options might figure the high-deductible plan makes the most sense, particularly if they’re healthy. They might rationalize that, even if there were a worst-case scenario, they’d have health coverage, pay the deductible toward their medical bills, and call it good for the year (that is, if the deductible itself doesn’t present an economic hardship).
Not so fast.
“Because people pay a lot up front [to reach the deductible], a high-deductible health plan can provide a false perception of security,” Chabot explains. In actuality, they’re not off the hook in any given year until they reach their deductible and their out-of-pocket maximum. (And their coinsurance, if their insurance plan includes that as well.)
“Health employee benefits are supposed to be a benefit,” he says. “How much of a benefit is it to put a $6,000 deductible in front of someone?"
2. Don't underestimate the value of choice.
If you have a relationship with your doctor and it’s important to you to stay with that provider, find out if your doctor is in-network before selecting a health plan (choosing an out-of-network provider can potentially cost more). Remember: Networks can change from year to year.
“It’s rare that a policy will stay the same,” Chabot says. “Carriers are always updating their policies to be compliant with regulations. Carriers can raise the out-of-pocket year over year to manage the total cost of care. It’s not viable to keep things the same and keep prices the same.”
It shouldn't be challenging to determine who is in- or out-of-network.
“If you have a kid in college, or you’re traveling, you should be able to find out who is in-network by changing the ZIP code in an app or on a website,” Chabot says.
If seeing the same doctor isn’t crucial and you don’t mind switching, go with a plan that thinks outside the box. With the Surest plan, for example, you can search based on condition, then see that prices are lower for what we consider higher-value options, such as those based on quality, efficiency, and overall effectiveness of care.
“If you know you need speech therapy for a child, you can search 'speech therapy' and find information about location, how much it will cost, and how it will fit into your budget,” Chabot explains.
Plans that give members options are invaluable, he says. “It’s about personalizing and accommodating choices and what’s most important. You should be able to choose what makes the most sense for you and your family.”
3. Find a plan that invests in the future.
Health insurance is finally evolving.
“There have been very few advancements or significant changes in health insurance in the last 20 years,” Chabot says. Why is that? After all, he points out, we aren’t driving cars with 20-year-old technology, or calling friends on 20-year-old phones.
That’s changing now that technology and data are playing bigger roles in the health care space. Through digital innovation, health care benefits are easier to understand, the user experience is straightforward, and solutions can actually help members improve their health at the lowest cost. More and more insurance companies are looking for ways to become more efficient, but that’s not really going to get to the root of the problems plaguing the health insurance industry, Chabot says.
"The core of the problem is the actual plan design," he explains. "The plan design allows the technology to do what it does."
He recommends choosing a health plan that invests in technology, research, and data.
4. Lean into price visibility.
Whether you’re determining if prescription drugs are included in your coverage, wondering if there are restrictions for pre-existing conditions, or trying to estimate costs based on past experiences, do you have an idea of what you’ll be paying? Look at the drug formulary, or list of generic and brand-name prescription drugs covered by your plan. (Many times, the formulary is listed on the website.)
Look at a benefits summary to see how much you’ll pay for prescription drugs.
- Is there a way to see prices for common medical services like virtual visits, your annual physical, a mental health visit, or an MRI? Or is your plan going to leave you guessing?
- Can you see treatment options in advance, giving you the opportunity to shop around and compare costs?
- Can you see where you might save money based on provider and location selections?
5. Ask questions.
If you’re wondering how a plan will affect you or your family, don’t be afraid to talk to your Human Resources department, broker, or agent about your questions or concerns. (It’s an area they specialize in!)
- What are the special perks that come with the plan?
- Do you anticipate family changes in the coming year (planned surgery, new baby, etc.)? Does your plan include extra health programs?
- Can you customize your benefits?
- Does your insurance carrier have a good reputation?
- Where can you call or look when you need help?
Knowledge is power. By knowing basic information about how plans work and what you should consider, you can feel more prepared to select the health plan that works best for you.