Whether you are buying insurance on your own or your company is offering you a selection, you need to know how much health insurance you can afford each month, what amount you can pay out of pocket if and when medical needs arise, and what kind of services you are comfortable with.
When there were only one or two insurance plans to choose from, medical decisions were left entirely up to doctors and other health professionals. Now, employers and health plans require patients to participate in making those choices to help keep costs down.
Common Points Among Plans
Generally, health plans will cover only those products and services they deem as “medically necessary,” such as medicines and emergency surgery. But, they will generally not cover cosmetic or other elective or unnecessary surgery, though exactly what insurance companies deem as "unnecessary" is sometimes challenged. Most insurers will not provide treatments they consider experimental, though what the medical profession considers standard (as opposed to experimental) care sometimes differs from an insurers' point of view.
Virtually all plans require patients to pay a portion of the bill, called a co-payment, which is usually a small amount. There is usually also a cap on how much you will be required to pay out in a year. This is a particularly important detail because a single injury can run into the tens or even hundreds of thousands of dollars.
Different Types of Plans
There is a large and bewildering array of health plans out there. But, most of them fall into three basic categories: indemnity, managed care, and health savings accounts.
Indemnity or Fee-for-Service Plans
These plans allow you to select any doctor or hospital you like, and the insurer pays a percentage (eg, 80%) of what they consider "usual and customary" charges. If you choose a provider who charges more than the insurance company’s limit—a frequent occurrence in metropolitan areas and their suburbs, you pay the difference.
Customarily, you also have to pay a deductible, for example, the first $300 of medical costs per year, before the plan kicks in. On the other hand, there is also a maximum amount you could be required to pay for medical care in the course of a year.
Managed-care plans include health maintenance organizations (HMOs) and preferred provider organizations (PPOs). These plans are frequently less expensive than fee-for-service plans, but they permit a more limited choice of doctors and hospitals. Increasingly, however, providers are facing the fact that they must participate in multiple insurance plans to stay in business, which is increasing the choice of providers.
Managed care plans may provide payment only for doctors, labs, clinics, and hospitals within the plan’s network. They usually require a co-payment for each visit—the amount of which is designed to encourage members to use less expensive services. The co-payment for a visit to a doctor’s office, for example, is less than for a visit to the emergency room. Some plans require that you select a primary-care doctor, whose referral you must obtain before the plan will cover you to see a specialist. Some will pay a percentage of visits to specialists outside the network, but again, the aim is to remain “in network.”
Health Savings Accounts (HSAs)
With a health savings account, you can save money for medical costs and not be taxed on this account.
The Aetna HealthFund, for example, is a HSA that is actually a kind of bank account. Under this plan, you pay a low premium and are allotted $1,000 or $2,000 a year to be spent on health services as desired. The plan includes various discounts, routine care, and co-payments, depending on which package an employer chooses to offer its employees. Unused money rolls over to the following year. This plan reverts to traditional managed care with caps on out-of-pocket expenses if the fund is depleted and after a high deductible (eg, $1,500-$3,000) is met.
Questions to Ask Before Making a Decision
While it is difficult to predict what care you will need in the future, there are questions you can ask to help you select the best plan for you:
- Are the deductibles and annual maximum payments within your reach? How much will your employer pay toward the coverage?
- If your income changes for any reason, will you still be able to afford the plan?
- Do you want to make decisions about whom you will consult, or are you more comfortable leaving that kind of choice to your primary physician?
- What kinds of permissions and referrals do you need to access various kinds of care, including emergency room treatment and surgery?
- Does the plan you are considering provide comprehensive treatment for chronic conditions?
- Are your current doctors in the plan? If not, how much will you have to pay to see them ?
- If the need arises, do you wish to be admitted to a certain hospital? Will the plan allow this?
- Does the plan provide information on the quality of its doctors and hospitals? If not, can your employer help you obtain this information?
- How wide is the choice of doctors in the plan, and how many are accepting new patients?
- Do you foresee any changes in your life—marriage, starting a family, travel, retirement—that will change your needs? Is the plan flexible enough to meet those changes?
- To what extent are the services what your family needs? Look carefully at the benefits for routine well-child care, dental and vision services, and cancer screenings. Mental health and substance-abuse coverage varies widely among plans.
- Does the plan cover other healthcare options that you use such as acupuncture or chiropractic therapy?
- Reviewer: Brian Randall, MD
- Update Date: 11/30/2011 -