Choosing The Right Health Insurance Plan

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Choose the Right Plan

Choosing a health plan is not the easiest task in the world. Or the most enjoyable. But going without health coverage is a bigger risk than most people can afford. What if you get injured and require surgery? The cost of a hospital stay can be as much as $600 a day. What if you or your significant other becomes pregnant? Even through a clinic, the price of prenatal care and delivery can exceed $ 5,000.

Health coverage is designed to help these situations to assume the risk of paying your medical bills. A good plan provides you with necessary funds to cover hospital and physician expenses associated with a serious illness, !l!u~ preserving your savings and other ,assets so, it's important that you put some time and effort into deciding which plan is best for you and your family.

Although there is no one "cream of the crop" plan, there are some plans that are better than others for your specific needs. Health plans tend to vary, both in cost and the ability to get the services you need. Although no plan will pay for every health care cost that you may incur, some will cover more than others.

Health insurance plans are usually indemnity (fee-for service) or managed care. But, as we've discussed earlier, there are other ways to obtain health insurance, including:

• workers' compensation benefits for occupational disabilities
• Social Security disability benefits
• Medicare, if you are eligible
• work-related benefits through employer-sponsored plans
• health coverage under any statutory plans

Any of these programs may offer you enough health coverage so that you would not need to buy standard policies. However, that will usually not be the case.

When considering a health plan, you should try to figure out the total cost to you and your family, especially if someone in your family has a chronic or serious health condition.

Indemnity and managed care plans differ in their choice of providers, out-of-pocket costs for covered services, and how bills are paid. Indemnity offers you more choice of doctors (including specialists, such as cardiologists and surgeons), hospitals, and other healthcare providers than managed care. In addition, indemnity plans pay their share of the cost only after they have received a bill.

Managed care plans usually have agreements with certain doctors and hospitals to provide services at reduced costs. With this type of plan, you will have less paperwork and lower out-of-pocket costs.

Over the past decade, the distinctions between indemnity and managed care have blurred. Indemnity plans offer managed care-type cost controls, and managed care plans allow their members to use providers that are not within the plan's network

Indemnity Plan

With an indemnity plan, you can use any doctor or hospital you wish. You or they send the bill to your insurance company, which pays part of it. Under most plans, you have to pay a deductible before your insurance company will pay.

Once you meet the deductible, most fee-for-service plans pay a percentage of the usual, customary and reasonable charge (UCR) for a service.

Your insurance company usually pays -SO percent of the cost and you pay the co-payment (co-insurance), or the other 20 percent. If a doctor charges more than the company's UCR rate, you will have to pay the difference.

Managed Care Plans

If you decide that an indemnity plan isn't for you, you may want to look into one of three basic types of managed care: PPOs, HMOs and POS plans.

A PPO or Preferred Provider Organization is the closest thing to an indemnity plan. A PPO contracts with doctors, hospitals and other providers who have agreed to accept lower fees for their services. If you choose a doctor within the network, you will pay a lower co-payment. You also may go outside the network if you choose. However, if you do go outside the network, you will have to meet the deductible, and your co-payment will be higher due to higher charges for services outside the network.

HMOs provide you with a list of doctors from which to choose a primary care doctor, who will coordinate all your medical care. Your primary care doctor will be responsible for referrals to specialists. Some HMOs require you to pay a co-payment for each visit. But many HMOs don't require you to pay anything.If you belong to an HMO, it will cover only the costs for doctors in that HMO. If you go to a doctor outside the plan, you could end up footing the bill.

Point-of-Service (paSs) Plans are similar to indemnity plans in that you can still get some coverage if you go outside of the plan. Although a P~S requires you to choose a primary care doctor from the plan's network, he or she can make referrals outside of the network, and your plan usually pays all or most of the bill.

In addition, a P~S allows you to refer yourself to a provider outside the network and still find some coverage-that is, if you are willing to pay co-insurance.

Group Policies

Many people get their health insurance-indemnity or managed care-as an employee benefit through their job or the job of a family member. Health insurance first became an employee benefit in the US. during World War II.

"Many companies found that offering healthcare coverage was an effective way to attract scarce workers without violating the wartime freeze on salaries," said Kathleen Sebelius, insurance commissioner for the state of Kansas. 'Mer the war, full health care coverage soon became an expected benefit of big-business jobs."

You can usually join or change group health plans once a year during open enrollment. But once you make a decision, you have to stay with that plan for at least a year.

Individual Policies

If you are self-employed or if your company does not offer group policies, you can buy individual health insurance. The policies often cost more than group policies-but it's usually better to be safe with coverage than sorry without it. Especially when one major medical expense can make one, two or even 10 years' worth of premiums pay for themselves.

If you belong to a union, professional association, or social or civic group, which usually have health care coverage you could be eligible for health coverage they provide for members.

Medicare and Medicaid If you are 65 or older, you are probably eligible for coverage under Medicare, the federal health insurance program run by the Health Care Financing Administration. If price is the problem, you might want to look into Medicaid. This type of program provides medical assistance to low income families (especially families with children and pregnant women), and disabled people. In some cases, if you are covered under Medicaid, you are required to join a managed care plan-so check with your county's Social Services Department to learn more.

Preexisting Conditions

You'll also want to investigate whether or not the plans you are considering at exclude coverage for preexIsting conditions. Most insurers would prefer not to pay for treatment for a preexisting condition, such as an ulcer or a gallstone and others will cover the condition, but not until after a waiting period (usually six months to a year).

Your insurance company may also restrict certain benefits for a set period of time. For instance, it may not cover any expenses related to pregnancy until your coverage has been in effect for one year. So, if you or your spouse is planning to become pregnant, you'll want to get your health coverage sorted out as far in advance as possible.

Plan Benefits

What kind of plan is right for you and your family? Only you know for sure. The plan that is "best" for your next door neighbor may not be the "best" plan for you and your family.

In addition to basic benefits, you might want to find out if the health plan you are considering covers:

• physical exams and health screenings . care by specialists . hospitalization and emergency care . prescription drugs
• vision care
• dental services

The Department of Health and Human Services Agency for Health Care Policy and Research (AHCPR) also recommends looking into how.a plan handles the following:

• care and counseling for mental health . services for drug and alcohol abuse . obstetrical-gynecological care and family planning services
• care for chronic (long-term) diseases, conditions or disabilities
• physical therapy and other rehabilitative care
• home health, nursing home, and hospice care
• chiropractic or alternative health care, such as acupuncture
• experimental treatments

If health education and preventive care benefits are important to you, you might want to ask about services such as, shots for children, breast exams, Pap smears, or programs to help quit smoking.

Making the Right Choice

When comparing coverage, it is vital to look into a plan's limitations, exclusions and reductions too determine which expenses are not covered. For instance, many policies will pay only for treatment that is deemed "medically necessary" to restore you to good health. These policies often will not cover routine physical examinations or plastic surgery for cosmetic purposes. Additionally, some plans limit or won't pay for programs for chronic disease, or various medicines or equipment.

What You Will Pay

As we discussed earlier, your health insurance won't cover you for everything. If you opt for a reimbursement-style program, you'll also have to choose a deductible and at other times you'll have to pay a copayment.

In order to get a true idea of what your costs will be under each plan, you need to look at how much you will pay for your premium and other costs. You can't possibly know what your health care needs for the coming year will be, but you can guess what services you and your family might need.

To figure out what the total costs to you and your family would be for services under each plan, it makes sense to ask the following questions:

• Are there deductibles you pay before the insurance begins to cover your costs?
• After you have met your deductible, what portion of your costs are paid by the plan?
• Does this amount vary by the type of service, doctor or health facility used? .
• Are there copayments you must pay for certain services, such as doctor visits?
• If you use doctors outside a plan's network, how much more will you pay?
• If a plan does not cover certain services or care that you think you will need, how much must you pay?
• Are there any limits to how much you must pay in case of major illness?
• Is there a limit on how much the plan will pay for your care in a year or over a lifetime? (A single hospital stay for a serious condition could cost hundreds of thousands of dollars.)

Some people choose a deductible in the thousands of dollars-making theirs, in essence, a catastrophic insurance policy. In this case, you'd absorb all the everyday costs of medical care, from doctors visits to prescriptions. But, if you got seriously ill, you'd be covered. If you are single and healthy, this could wind up saving you money.

You'll also want to investigate what the insurance company considers usual, reasonable and customary charges, if at all possible. That's because the charges a company considers normal for a particular medical procedure in a specific geographic area are the maximum it will pay. If the charges are higher, you'll be responsible for the difference.

Another way you can save money on your premiums is by paying them annually. It's worth looking into how much the service fee is for monthly payments-and inquiring about a discount for prepayment.

Even if you don't get to choose the health plan yourself (for example, your employer may select the plan for your company), you still need to understand what kind of protection your health plan provides. The more you learn, the more easily you'll be able to decide what fits your personal needs and budget.

Applying For Insurance

To get an accurate quote for health insurance, you will have to rill out an application -completely and correctly. If you lie on the application, the company can not only deny you coverage for a problem down the road, it can rescind the policy entirely. And, most companies can get your medical information anyway through a non-profit association called the Medical Information Bureau (MIB).

The MIB was formed in 1902 by a group of doctors who were also medical directors at several large insurance companies. Because their insurance companies had lost significant dollars to dishonest applicants, they sought a means to centralize health-related information on individual applicants :I?d reduce the potential for fraud.

The application will ask for your age and health history. In addition, insurance companies often ask your doctor for your medical records, and they may require you to undergo a physical with one of their doctors, or even get additional blood tests. (However, they cannot ask you for an HIV test, unless you are also applying for disability income insurance and then it has to be with informed consent.)

In completing the application, you will have to let the insurance company know about preexisting conditions-even if you're getting coverage through a new plan at work The company will want to know what illnesses and health problems you have had during the last couple of years (possibly longer).

Your age is an important factor in pricing and obtaining insurance. Many insurance companies have age bands, when it comes to costs for coverage. For instance, everyone 21 to 25 may fall into one price range. Everyone 26 to 30 would cost a bit more to insure each month. And so on.

Insurance companies prefer to write policies for young, healthy people, and they prefer to stay away from older, less healthy ones. So, it pays to pick a good plan when you're relatively young. and stay with it, if you can.

Some companies also allow you to change your mind after you purchase health insurance, but only if the policy has a free look or review period, which typically ranges from 10 to 30 days. So, you'll want to read your policy as soon as you get it.

You may even want to ask your phar1llacist and your doctor how different plans are handled before you sign on the dotted line-or sign your check Your regular providers should be tpore than happy to ten you which companies and which plans are easy to work with, and which ones make life difficult for providers and patients.

Choosing a Doctor

Whatever type of plan you choose, you will need to select a doctor, whether it's from a network list, a preferred list, or on your own. If you are in a managed care plan, ask your plan for a list or directory of its providers. They may also offer help in choosing a doctor that's right for you.

Once you have the names of doctors who interest you, you should check them out. The AHCPR provides the following list of suggestions:

• Ask plans and medical offices for information on their doctors' training and experience.
• Look up basic information about doctors in the Directory of Medical Specialists, available at your local library. This reference has up-to-date professional and biographic information on about 400,000 practicing physicians.
• Use '2\.MA Physician Select," which is the American Medical Association's free service on the Internet for information about physicians.
• Find out whether the doctor is board certified. Although all doctors must be licensed to practice medicine, some also are board certified. This means the doctor has completed several years of training in a specialty and passed an exam. Telephone the American Board of Medical Specialties at 1.800.776.2378 for more information.
• Find out if any complaints have been registered or disciplinary actions taken against the doctor. To find out, call your State Medical Licensing Board.
• Find out if any complaints have been registered with your state Department of Insurance. (Not all departments accept complaints.)
• Set up a "get acquainted" appointment with the doctor. Ask what charge there might be for these visits, if any. Such appointments give you a chance to interview the doctors-for example, to find out if they have much experience with any health conditions you may have.

Summary

Choosing the right health coverage comes down to asking a lot of questions. These questions will generally fall into two categories: first, how the plan responds to various medical conditions and needs, and second, what limitations and exclusions the plan uses to control costs. In this chapter, we've offered some of the specific questions to ask.

It can be tough to find someone who will answer these questions at a specific insurance company or HMQ In some cases, you may need to talk to a broker or agent. In others, you may have to spend some time on the telephone finding the right person.

You may not want to do all this research for six or eight different plans-but most insurance decisions boil down to two or three options. If you fmd yourself wondering whether to choose a flexible managed care plan or a cost-saving indemnity plan, the decision is probably worth an hour or so and a couple of calls.

If you get your health coverage through work, contact your human resources manager. He or she should be able give you information on the coverage and plans available through your employer. Or, you may wish to call the plan directly.

In the end, though, the decision will usually be yours. It's the way that the insurance and health care industries are moving. Self-service coverage means asking questions for yourself