CHOOSING INSURANCE: FACTORS IN DECIDING ON HEALTH, DENTAL, & VISION

7 KEY FACTORS IN CHOOSING INSURANCE

While there are probably dozens of questions and concerns when it comes to insurance coverage. When we are speaking specifically of health insurance, there are seven key factors that are the most relevant and essential.

If you are an employee, you may be offered a few choices by your company. Comparing plans and health coverage might be relatively simple.

As an employer looking to offer coverage to employees, however, making a decision among all the dozens of providers and plans they offer is a much more involved often onerous task.

Self-employed individuals or people without employer-sponsored health insurance. Shopping for and deciding on the best medical coverage for themselves and possibly their families can be confusing and just as difficult.

Fortunately, the key factors one should consider when choosing and purchasing health insurance, along with dental and vision plans, the following items are the most essential:

1. PLAN TYPES

Of these, the most common are:

HMO – HEALTH MAINTENANCE ORGANIZATIONS

HMOs typically limit coverage to care providers working for or under contract with the HMO. These plans generally will not cover out-of-network care except in emergency situations or with approved out-of-network referrals in some cases. In addition, many HMOs require members to live or work in their service area to be eligible for coverage.

PPO- PREFERRED PROVIDER ORGANIZATIONS

Most PPOs contract with healthcare providers to create a network of participating providers. Unlike a typical HMO, you can make use of providers outside of the network, however, you pay less by using providers that are part of the plan’s contract network. Visiting healthcare providers and facilities outside of the network will incur higher fees.

EPO – EXCLUSIVE PROVIDER ORGANIZATIONS

Often called a "hybrid" plan, an EPO is a type of health insurance. It only covers the cost of services from doctors, specialists, and hospitals in its network. EPOs may or may not require referrals from a primary care physician and the premiums are typically higher than those for HMOs, but lower than most PPOs.

POS – POINT-OF-SERVICE

HMOs and POS plans are similar, but POS plans allow you more freedom. Under certain circumstances, to get care out-of-network as you would with a PPO. Like HMOs, many POS plans require you to have a PCP referral for all care whether it’s in or out-of-network.

HDHP/HAS – HIGH-DEDUCTIBLE HEALTH PLANS AND HEALTH SAVINGS ACCOUNTS

HDHP plans have much higher deductibles than most traditional insurance plans, however, their monthly premiums are usually lower. Thus, HDHPs will result in higher healthcare costs until the deductible is met.

HSAs, or health savings accounts, can be combined with HDHPs. This money can be used to pay medical bills tax-free. The IRS specifies specific requirements for HSA-qualified plans. However, there is no restriction on what type of managed care they can use.

2. MONTHLY PREMIUM

This is the amount you pay for your health insurance every month. In addition to your premium, you typically must pay other costs for your health care. Out-of-pocket expenses include deductibles, copayments, and coinsurance.

For those individuals who qualify for subsidized coverage through the state’s health exchange marketplace, known as Covered California, it is possible for them to qualify for lower monthly premiums through tax credits.

3. OUT-OF-POCKET EXPENSES

Out-of-pocket costs include copayments, deductibles, coinsurance for covered services plus costs for any other services that aren’t covered by a healthcare plan:

CO-PAYMENTS: A fixed amount a member must pay for a covered health care service after the deductible is paid.

DEDUCTIBLES Before an insurance plan begins to pay for covered health care services, this amount must be paid. Most insurance companies will cover the rest after the deductible has been paid.

CO-INSURANCE: The percentage of costs of a covered health care service a member pays after the deductible has been paid.

4. PRESCRIPTION DRUG COVERAGE

This coverage is the amount health insurance or plan pays for prescription drugs and medications. Most plans offer some degree of coverage to help pay for prescription drugs and medications and all the plans included in Covered California cover prescription drugs.

This aspect of any health plan is considerably more important if you or a family member requires ongoing medications due to health issues.

5. HEALTH SAVINGS ACCOUNT (HSA) ELIGIBILITY

HMOs and PPOs are more suitable for most people, especially those with families. However, a certain individual may be able to save significant amounts of money over time by opting for an HSA.

According to an article from Investopedia,

“The main benefit of a health savings account (HSA) for many people is the ability to save on taxes. An HSA account is a tax-advantaged account, which means that holders of HSAs enjoy certain types of tax benefits. For example, you can claim a deduction on your tax return for your HSA contributions regardless of whether or not you itemize your deductions. You can also claim a tax deduction if someone other than your employer makes a contribution to your HSA.”

To be eligible for an HSA, you must meet the following requirements, as defined by the IRS:

On the first day of the month, you must be covered by a high-deductible health plan (HDHP). Other than what the IRS permits, you have no other health coverage. You are not enrolled in Medicare, TRICARE, or TRICARE for Life. Dependents cannot be claimed on another person's tax return. You haven’t received Veterans Affairs (VA) benefits within the past three months, except for preventive care. If you have a disability rating from the VA, this exclusion doesn’t apply. You do not have a health care flexible spending account (FSA) or health reimbursement account (HRA). Alternative plan designs, such as a limited-purpose FSA or HRA, might be permitted.

6. PROVIDER NETWORK

An insurance plan’s network consists of the facilities, providers, and suppliers that the health insurer or plan has contracted with to provide various, covered health care services. The network of a particular plan is the basis for the terms “in-network” and “out-of-network” when referring to specific healthcare providers.

While some plans have relatively small networks and limited geographic coverage, others have networks that are nationwide and composed of multitudes of contracted participants.

7. ADDITIONAL BENEFITS

Aside from basic healthcare provisions, many plans work to provide additional benefits that may include such things as wellness programs, gym membership discounts, free counseling sessions, legal consultations, and intuitive online portals for tracking claims, making appointments, and even speaking with health care providers through video chat tools.