Choosing a plan

Choosing an Insurance Plan

As you shop for insurance, it can seem overwhelming to filter through the options. You may have dozens of different plan options, from different insurance companies, with different names, different numbers and different benefit designs to evaluate before you can decide what will be best for your unique circumstances and needs. Having a good foundation to understand what all of this information means to you, and how it will affect your ability to use your insurance over the plan year (the year for which the insurance is effective), is critical to making the best decision for you to be able to access the highest quality care, with the fewest problems and with the lowest possible cost.

Several factors are important to consider when making this important decision:

1. Determine which plan type best meets your needs: Depending on whether you only see healthcare providers infrequently, and then stick to a primary physician for diagnosis and coordination of your care, or if you routinely see multiple specialists, the type of plan you choose will impact your ability to continue to receive healthcare services in the manner you prefer, as well as the cost.

HMOs require that you use only in-network physicians for your care, which limits your flexibility but typically is more affordable. A PPO allows you use either in-network or out of network providers, but generally have higher out-of-pocket costs. POS plans are a combination of the HMO and PPO models and permit the use of out of network providers, but usually require you to choose a primary care physician within the network and get a referral from that physician before seeing any specialist.

2. Check to see if your providers are in-network: While some plans do permit you to receive care from out of network providers, it is less costly to remain in network whenever possible. When selecting a plan, check to see that your primary care physician and specialists are in its provider network. You can find this information on each insurance company’s website, usually by clicking on an icon that says something like “Find a Doctor”. It is also a good idea to contact your providers directly and confirm that they do, in fact, accept the plan you’ve decided to enroll in, since provider directories may not always reflect those providers who are in, or out, of a certain network.

3. Check out the prescription coverage. Make sure whatever medications you take on a regular basis are still covered this year, and that the cost to you didn’t change. This information is included in a plan's listing of medications, also called the formulary, and may be available online. New medications are constantly being developed and added to insurance plan formularies, which can result in changes to “preferred” medications, programs requiring the use of generic medications, when available, and more.

It is also important to understand what each of your medications will cost. Most insurance plans categorize their formulary in tiers, with different costs associated with each tier. For example, Tier 1 usually has the medications with the lowest cost to you, while Tier 4 medications can be very expensive. Some medications also require pre-authorization before the insurance will pay for them, and the formulary will specify if this, or any other conditions, apply to the covered medications.

4. Re-enrolling: Many people are happy with the insurance that they have, and simply re-enroll in the same plan each year. However, most plans will have changes in the benefits and coverage levels from year to year – some of which can be significant. Pharmacy benefits and covered medications may have changed, or a class of service, like chiropractic care, might no longer be included or have higher out of pocket costs for you.

It’s also important to take stock of your needs, as they may have changed. You may have an adult child who is no longer on your plan, or have been diagnosed with a new condition, requiring specialists and medications. It’s important to be sure you know what your plan covers so you have a realistic understanding of what services you’re entitled to and what the costs will be.

5. Estimate your costs: Frequently, people look at the amount of the monthly premium alone when making a decision about how affordable a plan is, but there are many other factors that can increase the cost of a plan. If your chosen plan has a deductible then, except for preventive services, you’ll need to pay for your healthcare costs until the deductible has been met. If you think you’ll use a reasonable amount of healthcare over the coming year, it’s a good idea to divide the deductible by 12 (each month of the plan year) and add that amount to your monthly premium. This approach will give you an idea what your actual costs will be in the event that you do need healthcare. For example, if your monthly premium is $250, but you have a $2,500 deductible, you would need to pay $3,000 in premiums over the year, and $2,500 to meet the deductible before any services (except for preventative) would be covered. This works out to about $458 per month for the year that you would need to pay to receive these services. Another cost that should be considered is the co-pay for any known prescriptions or regular provider office visits.

6. Tax free savings: If you do know that you’ll have specific and ongoing costs for the year, like prescription or office visit co-pays or co-insurance, or a deductible to satisfy, you can consider opening a Health Savings Account that will allow you to deposit funds, pre-tax, directly into an account to be used for your qualified medical expenses. These plans can result in significant savings, due to the pre-tax nature of the deposits, but have rules that must be adhered to. If you are considering one of these options, be sure that you budget properly, as many of these tools don’t allow you to carry a balance from year to year, and that you know what you can use the funds for.