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Do You Know How to Choose a Health Care Plan?

Selecting a health care plan used to be an easy and straightforward process. But as the need for health insurance grows and as many employers cut back or eliminate their employee coverage altogether, many individuals are forced to pay out of pocket for their own insurance. With this new responsibility also comes the need to educate ourselves on what kinds of health care plans exist and which ones fit our financial and health needs.

Since many health insurance companies offer open enrollment during the month of November, we decided it would be a great time to talk to the experts about what questions need to be asked and answered before signing on a new plan.

Toni Frawley is the Director of Corporate Product Development at Health Alliance Plan (HAP), which is a nonprofit health plan in Michigan serving 576,000 members and 2,800 employer groups. HAP is a subsidiary of the Henry Ford Health System, one of the nation’s leading regional health care systems.

Frawley helped us look at some of the basic points to consider when choosing a personal health care plan for you or for your family.

EDUCATION

First and foremost is to educate yourself, says Frawley. From premiums and copays and from PPO’s to HMO’s, when it comes to health insurance, there is an entire dictionary of terms and concepts that need to be understood before signing on to a plan. HAP has recognized the need for consumer education and has developed a website which is complete with a glossary of terms as well as an online assessment tool which determines your health and financial needs and provides you with a selection of health care plans to choose from. For more information on how to utilize this tool go to: www.hap.org.

CHOOSING A COMPANY

Once you’ve understood the basic language, next is choosing a health insurance company. But since there are so many on the market, choosing the right one is a daunting task.

“First, look at the health insurance company’s provider network and determine how vast their list of hospitals and doctor base is. Find out if your favorite hospitals and medical professionals are included in their network,” says Frawley.

Next, she suggests looking at the overall mission of the health insurance company because this will drive where they place their coverage dollars. Do they focus on prevention such as early mammography and routine detection tests or do they focus on treating an illness once it has manifested? Also find out if their customer service meets your needs. For instance, can you speak to a live person when you have questions about your plan and coverage? All of these questions will help you filter through many of the companies and narrow your decision.

CHOOSING A PLAN

Once you have focused it down to a few different companies, Frawley then recommends determining how much you can afford based upon your health and financial needs. “Take into account how many times a year you visit a doctor and for what reasons. This will help decide how much your monthly premium and your deductible can be,” says Frawley.

A rule of thumb for most health insurance plans is that the higher the deductible, the lower the monthly premium and the lower the deductible, the higher the monthly premium, says Frawley. HAP has plans that are on either end of the spectrum and some that fall in the middle as well.

Also, keep in mind what your annual prescription drug needs are since many plans offer medication plans that vary greatly in their coverage and copayments. Other services to consider are whether maternity care or mental health benefits are included into the package. Many of these extra services may not be included in a basic plan but can be added on for additional fees.

ALTERNATE PLANS

A popular trend is to create a health savings account which allows you to set aside money into a health account that will pay for future expenses, says Frawley. In order to create a health savings account, you must be first enrolled in a High Deductible Health Plan (HDHP), which is also referred to as a “catastrophic” health care plan that does not cover the first few thousand dollars of your medical bills.

Many employers are also getting creative as they grow tired of dealing with health insurance companies and the expenses of offering benefits, says Frawley. Some employers have instituted “defined contribution” plans which give the employee the money to purchase a health insurance plan that suits their needs. This option frees up the employer responsibilities but also sends the message to the employee that covering health care costs is still a primary service the employer wants to provide to its staff.

Even though the face of health insurance is changing dramatically, one reality that doesn’t show a sign of change anytime soon is the necessity for health care coverage.

For Frawley, hearing repeated stories of accumulating medical debt from a simple accident like breaking an arm is all too common. Just a quick medical condition can cripple you into years of financial hardship and send your credit rating scores pummeling downward.

Shopping around for a health care plan can be overwhelming but fortunately there are more choices to choose from than ever before so that everyone can find a plan that suits their health and financial needs. From family plans to solo plans and from catastrophic coverage to full coverage, with some education and investigation, you’ll too discover a plan that is just right for you.

Health Insurance Terminology

The health insurance industry is practically defined by acronyms and terms not common to most people. Here are some common terms to know according to www.healthinsurance.org.

Health Maintenance Organization (HMO): Health Maintenance Organizations represent “pre-paid” or “capitated” insurance plans in which individuals or their employers pay a fixed monthly fee for services, instead of a separate charge for each visit or service. The monthly fees remain the same, regardless of types or levels of services provided, Services are provided by physicians who are employed by, or under contract with, the HMO. HMOs vary in design. Depending on the type of the HMO, services may be provided in a central facility, or in a physician’s own office (as with IPAs.) HMO’s generally require the patient to get a referral from their primary care provider in order to see a specialist.

Indemnity Health Plan: Indemnity health insurance plans are also called “fee-for-service.” These are the types of plans that primarily existed before the rise of HMOs, IPAs, and PPOs. With indemnity plans, the individual pays a pre-determined percentage of the cost of health care services, and the insurance company (or self-insured employer) pays the other percentage. For example, an individual might pay 20 percent for services and the insurance company pays 80 percent. The fees for services are defined by the providers and vary from physician to physician. Indemnity health plans offer individuals the freedom to choose their health care professionals.

In-network: Providers or health care facilities which are part of a health plan’s network of providers with which it has negoiated a discount. Insured individuals usually pay less when using an in-network provider, because those networks provide services at lower cost to the insurance companies with which they have contracts.

Open-ended HMOs: HMOs which allow enrolled individuals to use out-of-plan providers and still receive partial or full coverage and payment for the professional’s services under a traditional indemnity plan.

Out-of-Plan (Out-of-Network): This phrase usually refers to physicians, hospitals or other health care providers who are considered nonparticipants in an insurance plan (usually an HMO or PPO). Depending on an individual’s health insurance plan, expenses incurred by services provided by out-of-plan health professionals may not be covered, or covered only in part by an individual’s insurance company.

Preferred Provider Organizations (PPOs): You or your employer receive discounted rates if you use doctors from a pre-selected group. If you use a physician outside the PPO plan, you must pay more for the medical care. Most PPOs allow you to see a specialist, or services, within the network without a referral from your primary care physician.

Primary Care Provider (PCP): A health care professional (usually a physician) who is responsible for monitoring an individual’s overall health care needs. Typically, a PCP serves as a “quarterback” for an individual’s medical care, referring the individual to more specialized physicians for specialist care.

Network: A group of doctors, hospitals and other health care providers contracted to provide services to insurance companies customers for less than their usual fees. Provider networks can cover a large geographic market or a wide range of health care services. Insured individuals typically pay less for using a network provider.