All of us have gotten sick at some point in our lives. For the majority of us in the U.S., we’re not able to afford paying out of pocket to access healthcare without some kind of protection or support. For those of you that have access to health care through insurance provided by your employer, a government program, or even purchasing directly through the health insurance company, it can be very confusing when they offer a long list of options to choose from. We will break down the process into seven steps for choosing the right health insurance option for you.
STEP 1: Must-Haves
There are usually two “must-haves” that should be considered when choosing a health insurance plan. Are you currently seeing a physician, and are you currently taking any prescription medications? If the answer is yes to one or both, then there should be a way for you to look online via a “provider directory” and check if your doctor is in-network. There should also be a way to look up the medication you use on the health plan’s formulary. A formulary is a list of prescription medications that is covered by your health insurance plan. If you can’t find the provider directory or formulary, call the health plan directly and ask their customer service line. These are questions that their customer service department receives frequently.
STEP 2: Premium
A health plan’s premium is the monthly cost of the health insurance plan. You should be aware of the range of premiums you could expect to pay minus any contribution from another party (e.g., your employer or a government qualified subsidy). However, I would not recommend selecting a health insurance plan due to premium alone. You should feel comfortable being able to pay your portion of the premium from the remaining narrowed list of options. If you feel that none of the remaining options are affordable, you may want to reconsider how necessary it will be keeping your doctor or if there are alternative medications that may be on the formulary of an option with cheaper premium.
STEP 3: Member Liability
Member liability refers to how much you would need to pay, in addition to monthly premiums, for every time you access healthcare. For example, this could be when you visit your doctor, your therapist, have your blood and other lab tests performed, go to the urgent care or ER, receive services at the hospital, or pick up your medication. A health insurance company usually uses the following methods for member liability:
- Copay: When your contribution is a fixed dollar amount that you pay for every visit, service, or item.
- Coinsurance: When your contribution is a percent of the cost that the healthcare provider is allowed to bill for a healthcare visit, service, or item.
STEP 4: Deductible
A health insurance company may set a dollar threshold amount for member liability that you must pay before your health insurance contributes to payments toward healthcare services. This means you may need to pay 100% of the amount allowed to be billed for healthcare services until you have paid the amount of the deductible. Once the deductible amount is reached, your member liability is then only the copay or coinsurance with the health insurance plan paying the rest. Primary care physician copays and sometimes specialist copays are usually considered as an exception to the deductible, where you will only need to pay the copay amount and the health insurance plan will pay the remainder of those related services.
STEP 5: Geographic Areas of Coverage also known as Market Service Area
The Market Service Area is where the insurance company filed to be licensed to sell healthcare coverage through a health insurance plan purchased. The health insurance company may have healthcare providers in-network that are outside of the market service area, but you should check the health plan’s provider directory for all areas you expect to access healthcare to ensure there are healthcare providers willing to accept your health insurance. Otherwise, you may be on the hook for paying most or all the amount charged by the out of network healthcare provider.
STEP 6: Flexibility of Plan or Network Type
There are multiple variations of health plan provider networks that you can choose from. The most prevalent that you will see are Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), and Exclusive Provider Organizations (EPO). In general, an HMO tends to have a lower premium but more nuances to accessing care. HMO plans require a customer to select a primary care physician (PCP) at time of enrollment, and the HMO usually requires the PCP to authorize a list of non-emergent services (i.e., services not related to the ER) before the customer receives related care. HMO also does not cover payments received by healthcare providers that are not in-network (i.e., out of network providers).
A PPO tends to cost more than a HMO but does not have as many restrictions as a HMO. For instance, a PPO does not require a customer to select a PCP. A customer can also choose to go out of network as long as that healthcare provider agrees to see that patient as out of network. The out of network provider may submit a claim to the health insurance plan for reimbursement, but it’s possible that you may need to pay the out of network healthcare provider directly and then submit a claim to the health insurance company to be reimbursed all or partial of the amount paid. In general, it is more expensive to see an out of network provider than seeing an in-network provider.
An EPO is a hybrid of a HMO and PPO, where a customer does not need to select a PCP but cannot go out of network for services. EPOs are usually priced lower than a PPO but may be more than HMOs.
STEP 7: Maximum Out of Pocket (MOOP)
Consider the MOOP as the worst case scenario of how much you would need to spend on your healthcare for the year, assuming 100% of the service and items needed were covered by your policy. The MOOP would be the maximum member liability you would need to pay in addition to your monthly premiums. If you have a health insurance policy with dependents (i.e., spouse and/or children), the MOOP limit may be different from an individual total and overall family total. When the MOOP limit is reached, the health insurance plan will pay 100% of the allowed healthcare costs, including member liability, for the rest of the policy year. Once the new policy year starts, the dollars spent towards those limits reset to $0.
Everyone has different healthcare needs. Reflect on how much you know you need to access healthcare now and how much you may need to access within the next year to help understand which option of the 7 considerations align with your needs. Are you willing to pay more for flexibility and better coverage, or are you willing to take the risk of not needing as much in exchange for a lower premium. Picking the wrong plan may cost you more money and headache in the long run. At the same time, you likely can predict the future as well as you can reflect on the past. The better prepared you are before committing to a choice, the better off your year may be.
