How to Choose a Health Insurance Plan that Works for You

photo: brykmantra

Whether you’re lucky to have health insurance through an employer or shopping for a private policy, wading through the maze of insurance plans can get your blood boiling.

Among the many options you have are indemnity insurance plans, which give you more flexibility in choosing doctors and hospitals, but cost more in premiums and co-pays. There are managed-care plans where your costs are lower if you use in-network doctors – higher if you go out of network. Then there are health maintenance organizations, or HMOs, where you don’t get much of a choice: all of your medical care comes from an in-network doctor, at an in-network facility. And let’s not forget consumer-directed plans, where high deductibles are coupled with a pre-tax health savings account. (We’ll give you more details on each type of plan below.)

How do you choose the plan that’s right for you? Taking stock of your health care needs is a good start, but you’ll also have to consider the costs, the appeals process if you need to fight a claim and the level of customer service you’ll expect to get.  Keep in mind, once the new health care law kicks in, how you shop for a policy will also change. In the  meantime, here’s how to shop for health insurance now.

Start with a self exam

When shopping for health insurance, “people fail to look at themselves first,” says healthcare consultant Michelle Katz. Your personal situation is the most important factor determining the plan you need: If you’re a 22 year-old male chances are you won’t need a plan with great prenatal care, but a 35 year-old female may want a plan that covers mammograms.

Examining all aspects of the health plans you are comparing is particularly important for anyone looking to purchase insurance on the private market. Web sites that aid in the search include eHealthInsurance.com and MyInsuranceExpert.com. Both are free for consumers and make money by referral fees for each policy they help sell.

Be patient

With private insurance, schedule a lot of time to find a policy and fill out the application, which can be more than ten pages long.  Some experts suggest starting the process three months in advance, especially if you’re busy and only have a few hours a week to spend on the search.

The good news is, your committment to a private insurance plan is typically month-to-month, which means you can switch to another if the one you first picked doesn’t work out for you. With employer-provided health insurance, you can switch plans once a year during open enrollment, or after a life-changing event such as marriage, divorce, the birth of a child, and so on. The big catch with private insurance is, of course, that you may not get approved for the coverage you select. (That will change once the new health insurance law comes into effect.) With employer-provided plans, meanwhile, coverage is guaranteed.

Evaluate the costs

When trying to figure out if you can afford a plan consider the maximum out of pocket annual expenditures, which include the deductible and co-payment you’ll pay for doctor visits, says Sam Gibbs, a senior vice president at eHealthInsurance.com.

Do a provider check-up

Let’s say you found an ideal plan that you can afford and has the coverage you need. The final step is to check the provider’s record. Does it have a smooth appeals process, are customer service representatives readily available, do claims get processed quickly? The National Association of Insurance Commissioners provides contact information for all state insurance regulators, where you can look up further details on a provider. “A lot of times each state’s Web site has a special section that lists the insurance companies that are in the dog house,” says Katz. “It’s such a valuable tool to see what problems people are having.”

Health Insurance Plan Basics

High-Deductible Plans

If you are relatively healthy and don’t go to the doctor that much, you may benefit from this fairly new type of health coverage known as a consumer-driven plan. These policies are characterized by high deductibles – often several thousand dollars per person – which are basically dollars that have to come out of your own pocket before insurance kicks in. With a high-deductible plan, you also qualify for a health savings account, where you sock away cash for current and future medical expenses on a tax-free basis. The good news is, the HSA money you don’t spend during the year rolls over into the next – and keeps piling up year after year if unused.

Indemnity Plans

These plans offer great flexibility in your choice of health care – you can see pretty much any doctor you like, at any medical facility – but, not surprisingly, come with steep out-of-pocket costs. Once common in many employers’ health plan line-ups, these days indemnity plans are becoming increasingly hard to find.

Managed-Care Plans

With a managed-care plan you have a personal care physician (PCP) who basically manages your care: you need a referral in order to see a specialist, with few exceptions. (Some plans, for example, don’t require a referral to see a gynecologist or obstetrician.)  Your costs are relatively low, as long as you stay in network. Fail to get a referral, however, or go out of your network, and you’ll be hit with a special out-of-network deductible and co-pays, which can be not-so-healthy for your budget.

HMOs

Health maintenance organizations, or HMOs, are the most restrictive plans when it comes to the doctors and medical facilities they cover. They also are the least expensive – as long as you stick within your HMO. Go out of network, and in many cases you’ll have to foot the bill yourself.