How to Choose the Right Healthcare Plan

You may not have as many options if you get your health insurance through your employer. However, if you are self-employed or have recently lost your job, you may need to navigate the healthcare marketplace to obtain health insurance. Even if your employer provides health insurance, you can use the marketplace, but it is unlikely to make financial sense.

If you’re ready to start shopping for a health insurance plan, your first stop should be HealthCare.gov.   Open enrollment runs from November 1 through January 15. However, you may qualify for a special open enrollment if you have experienced a qualifying life event such as losing your job. Once open enrollment begins, enter your zip code into the platform. If your state has its own marketplace, you will be automatically sent there. Otherwise, stay in the federal marketplace.

Comparing Types of Health Insurance Plans

The sheer number of acronyms used in healthcare makes it overly complicated. When you’re looking at plans, you should be able to compare them based on their summary of benefits. It is sometimes easier to look at what is not included in the plan rather than what is.

Examine your family’s medical expenses over the previous year or two before shopping for plans. How much money did you spend on healthcare, and on what did you spend it? Do you make the most of your preventative healthcare benefits? Do you have any high-priced prescriptions that your plan must cover? Did you seek emergency care? Are there certain providers or hospital systems you prefer?

HMO vs. PPO vs. EPO vs. POS

Provider networks are the group of doctors, hospitals, and other healthcare providers who have agreed to offer special negotiated rates to enrollees in a specific insurance plan. By negotiating with providers, insurance companies keep their costs down and can sometimes offer you lower out-of-pocket costs as a result.

Health Maintenance Organizations (HMO):

You typically work with your primary care provider with an HMO plan. Your primary care physician (PCP) will coordinate all your care and provide a referral if you need to have special procedures or see a specialist. You generally need to stay within the network to have your medical services covered, except in an emergency. This is important to keep in mind if you are traveling somewhere that is out of your network.

If you are comfortable with these restrictions, HMOs typically offer lower out-of-pocket costs. The premiums in an HMO tend to be lower than in other plans, and there is commonly a low to no deductible for you to meet before qualifying for coverage.

Preferred provider Organization (PPO):

Like an HMO, in-network care is generally less expensive than out-of-network care, but unlike an HMO, with a PPO, you do not have to stay in the network. Since you can go out of network, in most cases, you do not need a referral to have a procedure or see a specialist. In some cases, you may need pre-authorization.

Premiums tend to be higher for PPOs because of the flexibility to see both in-network and out-of-network providers. In addition, unlike HMOs, there is commonly a deductible to meet before coverage begins.

Exclusive Provider Organization (EPO):

Like an HMO, an EPO requires users to stay within the network to qualify for paid services, except for emergencies. However, unlike HMOs, you generally do not need a referral for procedures or to see a specialist, as long as they are in the network. You may have to get pre-authorization before undergoing certain procedures.

Overall, EPOs have lower out-of-pocket costs than PPOs and no required referrals, but the requirement to stay in-network limits your freedom to choose providers.

Point of Service Plan (POS)

A point of service plan is a combination of an HMO and a PPO. You can see in-network and out-of-network providers, but in-network care tends to be less expensive. As with an HMO, your primary care physician will coordinate your care. You will need referrals to have procedures and to see specialists.

POS plans generally have more provider options than HMOs, but they still require referrals from your primary care doctor to go out of network, have a procedure, or see a specialist.

Check the Healthcare Plan Network

Because being in-network and out-of-network affects whether services are covered or not, it is critical to determine whether the providers you prefer to see are in the network. Once you’ve narrowed down your options, contact your doctor’s office to ensure they’re in the network of the plan you’re considering. If you do not have a preferred provider, check the plan’s network to ensure that it is large enough to provide you with options if you require more specialized medical care.

Check the Costs

There are several costs associated with healthcare, including:

• Deductible: The amount you are responsible for before your health insurance begins to pay. The deductible resets yearly. Generally, higher premium plans have lower deductibles and vice-versa.
• Premium: The premium is your monthly payment for health insurance. You will be responsible for paying the premium whether you use the insurance or not.
• Copay: A copayment is the amount of money you are responsible for paying for each service. Your copay may vary depending on the service. For example, you may have to pay a different copay every time you see your primary care physician, receive emergency services or get your prescriptions filled.
• Coinsurance: Coinsurance is the percentage of healthcare costs you pay, with the rest paid by your health insurance. Coinsurance rates generally apply after you have met your deductible.

You should be able to find this information in the summary of benefits for the plan.

Final Steps

Once you have looked at the types of plans, verified whether your doctor and hospital choices are in the network, and looked at the out-of-pocket costs for the plan, look at the services covered by the plan. For example, check to see if services such as physical therapy, mental health care, and fertility treatments are covered.

There is a wide range of insurance options. Naturally, you want to be insured to cover medical risks that you cannot afford to take. But, at the same time, you do not want to be over-insured. Consulting with a wealth advisor can help you determine how much risk you are able to take.