Which Health Insurance Plan is Best For You?
April 07, 2017Recently, healthcare in America has been a rather newsworthy topic. Congress failed in their attempt to repeal and replace Obamacare. Large insurers are dropping out of the exchanges and premiums are rising rapidly.
I’ll leave the fixing to our “leaders” in Congress, but most people don’t purchase their insurance through the exchanges. They have coverage through their employers. When you consider how expensive health insurance premiums are for individuals and families who have to purchase their own coverage, employer-paid medical insurance is a very valuable benefit. In fact, when discussing early retirement packages with employees, the #1 concern – by far – is what health insurance coverage they will have after they leave their employer and how much it will cost.
Taking the time to understand what your employee benefits package offers so that you can choose the best plan for your needs could be time well spent. When open enrollment comes around, carve out some time to evaluate your options. These are some of the things you may see when you look through your options:
Medical Coverage
Medical plans are usually either the indemnity or managed care type. (You may be offered both.) You’ll want to know how the plans differ so that you can choose the one that’s best for you.
Indemnity Plan
An indemnity or fee-for-service plan lets you choose any medical provider. Either you or the provider sends the bill to the insurance company, which pays part of it, usually after you’ve met your annual deductible. Once the deductible has been satisfied, indemnity plans typically pay 80 percent of the cost of covered services, while you pay the remaining 20 percent. The plan may pay for medical tests and prescriptions, but it may not pay for some preventive care, like check-ups.
Managed Care
The oldest form of managed care plan, the health maintenance organization (HMO), offers members a range of health benefits, including preventive care, for a set monthly fee. There are different types of HMOs. In a staff or group HMO model, doctors are employees of the health plan and you visit them at central facilities. In an individual practice association (IPA) or network, the HMO contracts with physician groups or individual doctors who have private offices.
Some HMOs require no payment for doctor visits while other HMOs require a small co-payment (typically $5 to $20) for most services. If you belong to an HMO, the plan only covers the cost of charges for doctors in that HMO. If you go outside the HMO, you usually pay the bill.
Many HMOs offer an indemnity-like option known as a point-of-service (POS) plan. In a POS plan, members can use providers outside the plan and still be covered to some extent. If the HMO physician chooses to refer a patient outside the network, the plan pays all or most of the bill. If you choose to go to a provider outside the network for covered service, you may incur greater expenses than just the co-pay.
Although a part of managed care, a preferred provider organization (PPO) closely resembles an indemnity plan. A PPO has arrangements with doctors, hospitals and other providers who have agreed to accept lower fees from the insurer for their services. PPO doctors can make referrals to other physicians and plan members can self-refer to non-PPO doctors as well.
If you go to a doctor within the PPO network, you generally pay the plan’s standard co-payment. If you choose to go outside the network, you may have to meet the deductible and pay a co-payment based on higher charges. In addition, you may have to pay the difference between what the provider charges and what the plan will cover.
Dental Coverage
Like health plans, dental plans also follow a fee-for-service or managed care model. In a fee-for-service plan, your monthly premiums cover a portion of your dental expenses. Generally, this type of plan will pay 100 percent of the cost of preventive services, 80 percent for common restorative services, and 50 percent for major treatments, such as crowns and orthodontics.
Under a managed care plan, you’re required to choose from a pool of screened dentists and pay a co-payment for treatment. The co-payment amount can vary according to the procedure. While preventive procedures usually are performed without co-payments, more advanced procedures will have higher co-payments, and there may be limitations on coverage of certain major procedures within a given period of time. Some plans are flexible, offering services through an HMO or PPO option.
Vision Coverage
Most vision plans offer coverage for comprehensive eye exams as well as for lenses and frames. The cost of the plans generally depends on how frequently the services are used and at what level the deductible is set. You may have the option to pay an additional premium for added coverage (for things like extra or special pairs of glasses and hard and soft contact lenses). Non-insured discount plans for exams and lenses are available as an alternative to insurance and can provide retail discounts of up to 40 percent.
The bottom line here is that your employee benefits package is worth a whole lot more than you probably think it is. Don’t be one of the people who takes it for granted and just checks some boxes. Find out which health plans and options your employer offers and then study them to determine which provides your family with the greatest benefits. Your employer’s human resource representative or health plan administrator can provide information to help you match your needs and preferences to the available plans. Look at the pros and cons of each option presented to you and make the best choice for your family.
Do the same thing each year. Don’t assume that just because your current plan worked last year that it’s still going to work this year. There is a lot of change in this area on an annual basis, so keep your eyes open for what might be a better choice.