How to Choose a Health Insurance Plan

​A Harvard study published in the American Journal of Medicine reports that 62 percent of household bankruptcies filed are due to medical bills. What is even more alarming is that 78 percent of those households had health insurance. While the cost of healthcare continues to rise, health insurance plans intended to control costs have been unable to do so. Since the passage of the Affordable Care Act, many Americans have needed to learn about a product that is unfamiliar to them. Below are tips to consider when choosing a health insurance plan.

---

Plan Type
There are several types of plans, and each plan offers a different coverage option. Health maintenance organizations (HMOs) and exclusive provider organizations (EPOs) limit the doctors and hospitals that the participant may access under the plan’s network. There is generally no coverage for an out-of-network provider. With an HMO, a participant designates the primary care physician (PCP) and must have a referral to visit a specialist. Preferred provider organizations (PPOs) and point-of-service (POS) plans offer in- and out-of-network coverage but the policyholder usually pays a higher amount for using out-of-network providers. With a POS, a participant must have a referral to visit an out-of-network provider. A high deductible health plan (HDHP) generally has lower monthly premiums because all costs accumulate to the much higher deductible with no copays. In 2014, the minimum deductible requirement is $1,250 for an individual and $2,500 for a family. An HDHP can be paired with a health savings account (HSA) or health reimbursement account (HRA) to pay for the eligible medical costs. A HDHP plan is considered catastrophic incident insurance rather than traditional insurance with coverage that includes routine office visits and prescription copays.

Benefits and Costs
While individuals usually consider the monthly premium for their health insurance, they don’t always include the costs associated with the plan benefits. Policyholders should evaluate their anticipated annual medical needs—including regular check-ups, office visits, lab work and prescriptions as well as the cost for each of these—when trying to get an accurate picture of one’s healthcare cost.

Provider Coverage
Look into the extent of network coverage prior to purchasing a health insurance plan. Insurance carriers sometimes limit the network to control their costs, and this affects access to local providers.

Control Costs
The Affordable Care Act created guidelines about the cost a participant can incur with an insurance plan. The maximum out-of-pocket limit for any plan in 2014 can be no more than $6,350 for an individual and $12,700 for a family. In 2015, the amounts change to $6,600 and $13,200 respectively. Policyholders can reduce their monthly premium by increasing the deductible, limiting the network to fewer doctors and hospitals, and adding certain exclusions such as fertility, bariatric and cosmetic procedures.

Transparency in the Medical Marketplace
Patients view doctors and other healthcare professionals with a high level of esteem because they are the experts in relieving the pains that ail us. We have not been taught to question or consider cost when it comes to our health. Question an item on a medical bill and you will get lost between the transferred calls and hold music. Health insurance has done nothing if not mask the true cost of healthcare because patients are no longer responsible for shouldering the burden of the majority of the cost. Individuals should demand transparency in healthcare pricing. Knowing the actual cost of healthcare is the first step to accomplishing change and controlling the true cost of healthcare

This information is provided with the understanding that the association is not engaged in rendering specific legal, accounting, or other professional services. If specific expert assistance is required, the services of a competent, professional person should be sought.

Provided as a public service by the Pennsylvania Association of Community Bankers.