How to Choose A Health Insurance Plan
What Health Insurance Plan to Pick from an Employer
Health insurance is big business, so you want to make sure you get your money's worth. Picking the correct health insurance plan can save you money in the long run. The important thing is find out as much as you can about the plan before hand and ensure the plan you pick fits your needs correctly, or you may wind up with an unpleasant surprise later on.
Health Insurance Terms
When reviewing health plans, obviously you want to compare premiums, but there are other factors you need to consider as well. When you review health plans, you are usually given some basic items to compare:
The monthly premium: the monthly charge for health insurance
Annual deductible: how much you have to pay out of pocket before the insurance company starts to pay
Co-pay and co-insurance amounts: co-pays are the portion you have to pay to your doctor for health care services. This is in addition to any deductible.
Co-insurance is the portion you have to pay after your deductible is met. This is usually a 80/20 percentage.
ER and hospital charges: this is usually stated as inpatient and outpatient co-pays
Prescription Drug coverage: this states how much you pay for generic, mid tier and brand name drugs. Prescription drugs may come with a separate deductible as well.
When considering premiums and deductible, remember to take into account how much the plan will cost for the entire year. For example, say plan A has a premium of $100 with a deductible of $500, and plan B has a premium of $150 with a lower deductible of $250, which is cheaper for the year? Plan A is cheaper: the monthly premium ($100 x 12=1200) plus deductible ($500) is $1,700; whereas Plan B costs $2,050,($150 x 12=1800) plus deductible ($250) = $2,050.
We will take three different kinds of people, and determine what kind of health plan they should select.
Type A patient rarely gets sick, rarely sees a doctor. He should choose a plan that has the lowest monthly premium, even if the deductible is higher, his chances of having to use his deductible are small.
Type B patient occasionally gets sick, has one or two prescription drugs she has to take on a regular basis. She should a choose a plan with a mid-range premium and deductible, depending on how much she wants to pay out of pocket.
Type C patient has a chronic illness (diabetes, high blood pressure, hypertension) and has numerous prescription drugs she has to take on a daily basis. She should pick a plan that has a lower deductible, and a low deductible for prescription drug coverage. Picking the lowest deductible possible means she will have to pay for less out of pocket.
The Difference between HMOs and PPOs.
You may be given the option to choose between an HMO and an PPO plan. What's the difference? With an HMO, you have to see your primary care physician in order to get a referral to a specialist. So you wind up paying two co-pays, one to see the primary care physician, and one to see the specialist. Keep in mind, HMOs discourage their physicians from givine referrals to keep costs down, so if you think you may need a specialist, go with the PPO.
Outpatient and Inpatient
Some health insurance plans cover inpatient procedures differently from outpatient procedures, or sometimes not at all. And what's the difference between inpatient and outpatient?
Most people assume since they stay overnight in a hospital that they are considered inpatient. Not true. The rules vary, but generally to be considered inpatient, and have your medical services billed as inpatient, a person must be in the hospital for more than 23 hours. More often than not, a patient is treated as an outpatient.
Many procedures are considered outpatient, such as X-rays, MRIs, cataract removal, hip replacement, nose jobs and laser vision correction. Today, hospitals report that more than 60 percent of all surgeries are done on an outpatient basis, and experts estimate that by the year 2017, that number will reach 75 percent.
Before picking a health plan, check to make sure they cover outpatient procedures, and if so, at what percentage. Twenty percent may not sound like much, but at today's health care prices an MRI that costs $3,000 can run you $600.
In conclusion, find out as much as you can about the various coverage plans from your human resources department so you can make an educated decision you can live with.
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