Here are three basics to guide you in choosing a health insurance plan. Two you probably have thought of, and one you might not have.
1. The premium
Like auto loans and home mortgages, the “monthly” is usually the first thing health insurance purchasers focus on. “Can I afford a comprehensive $500 a month policy? Or should I take the low cost plan?” Of course, you must have the cash flow to cover the premium. And if you can buy your insurance with pre-tax dollars, that will be a big help. However, the real cost of health care is not the premium.
2. The out-of-pocket costs
Co-pays, co-insurance, deductibles and stop loss ceilings can drastically affect what you pay for health care.
Co-pay is the fee you pay for the initial appointment with your primary care doctor, usually around $25. The co-pay for a specialist such as a dermatologist or urologist is often higher, typically $35-50.
The co-insurance is the portion of the costs for a procedure or operation you share with your insurance carrier. For example, if an operation costs $10,000, and you have an 80-20 coinsurance, the insurance pays $8,000 and you have to pay the other $2,000.
The deductible is the amount you have to cover before the insurance carrier pays anything. Many insurance plans will let you chose different amounts or your plan may specify the amount. For example, you have a $300 personal deductible and a $1,000 family deductible. If you increase that deductible to $1,000 for yourself and $2,500 for the family, your premium would be lower.
So the real cost of health care is the total of your premiums, the deductible, the co-pays and the co-insurance. The stop loss is the total amount you would have to pay, even if your actual costs go beyond that.
3. The network
The number of insurance plan options has risen dramatically. The Affordable Care Act has created insurance exchanges that add to the already numerous private, employer-based and government plans (Medicare and Medicaid). More insurance carriers are offering bronze/silver/gold plans with low cost-high risk and high cost-low risk options. If you are a 20-something in good health, you might want to roll the dice. If you are 50 with a chronic health problem requiring frequent doctor visits and expensive prescriptions, you might choose a plan with a higher premium, but potentially lower out-of-pocket costs.
Insurance carriers are also offering plans that while they may lower the cost, also limit your options. There was a time that you might have thought that if you had a policy with Blue Cross Blue Shield, you could go to any doctor and any hospital you wanted – and that the insurance would cover your cost. Don’t be so sure. Of the many Blue policies only five are accepted at the Medical University of South Carolina. A major employer in Charleston offers four plans, but two of them require participants to get their care at just one hospital system.
Be sure the doctors – and the hospitals – you prefer are in the network. Or you may be offered only partial coverage, perhaps 50-60 percent of the costs instead of 80 percent (referred to as out-of-network benefits) – or even denied any coverage at all if you went to another physician or hospital emergency room.
It’s open enrollment season and a good time to check what a new plan or your current plan covers. And make the choice that’s best for you and your family.