Health insurance: the two-word phrase guaranteed to spark confusion, fear, and a desire to change the subject. Lots of Americans are confused about health insurance plans and more than 30 percent have avoided or postponed care because of costs.
How did we get here?
By the 1930s, the US had employer-sponsored (aka private) insurance. Before that, Americans paid for medical care out of pocket as costs came up. Then in 2010, the Affordable Care Act entered the group chat. Reminder: the ACA was aimed at getting more people insured by expanding Medicaid (coverage for people whose income is under a certain amount), making sure people got insurance regardless of employment, and requiring that insurance companies cover people with pre-existing conditions. Its critics say that the ACA has hiked up taxes and isn’t all that affordable. But more than 2.5 million Americans signed up for it during a special enrollment period earlier this year.
But it still exists, right?
Yep. In June, the ACA was upheld by the Supreme Court. And open enrollment for ACA marketplaces starts again on November 1st. Whether you’re getting your insurance from an ACA marketplace or through your employer, it’s time to take the fear out of picking a health insurance plan.
Lead me to the light.
First, get your dictionary ready for this journey. As you’re picking a plan, these terms might pop up:
Premium: The monthly fee you pay to an insurance company.
Deductible: The amount you have to pay towards your medical bills before your insurance company starts picking up the tab (if your plan has one). So if your deductible is $2,000, you’re on the hook for that much, on top of your monthly premium. Then insurance raises its hand.
Copay: Thought you were done with payments? Think again. This one’s the flat fee you could pay for covered medical services. Preventative care, like annual physicals, may be fully covered by insurance (meaning no copay).
Coinsurance: Still. Not. Finished. Once you hit your deductible, you still have to pay a certain percentage of your medical bills. So if coinsurance is 20 percent, a $100 doctor’s bill would cost $20 once you hit your deductible.
Can’t get enough? We Skimm’d more insurance terms here.
Got it. So what are my options?
Some common plans are HMO, PPO, EPO, and POS.
HMO (Health Maintenance Organization) only pays for health care that’s in-network, meaning hospitals and doctors that insurance providers have negotiated deals with. Monthly premiums are usually low, but these plans require you to get a referral from your primary care physician (PCP) to see a specialist.
PPO (Preferred Provider Organization) includes care that’s both in and out of network, but you’ll pay a higher monthly premium...because you have more options. You'll end up paying more for out-of-network care though. Good news: You don’t need to get a referral from your PCP to see a specialist.
EPO (Exclusive Provider Organization) only pays for in-network coverage except in an emergency situation. But like PPOs, you don’t need to get a referral from a PCP to see a specialist. Premiums are higher than HMOs but lower than PPOs.
POS (Point of Service)—disclaimer: does not stand for piece of sh*t—also shares features with both HMOs and PPOs. They have slightly higher premiums than HMOs, but you can see out-of-network providers (and sometimes get those visits reimbursed). Like HMOs, you’ll need to get a referral from your PCP to see a specialist.
Which plan should I choose?
Depends who you are. Some scenarios to consider include...
If you’re not picky about your doctors…An HMO or EPO plan might work well for you. Your policy won’t extend to out-of-network docs, meaning fewer options. But you'll pay lower monthly premiums...meaning more money in your wallet to pay for things you do have strong opinions about.
If you have Zocdoc bookmarked…You might want to go with a PPO or POS plan. These plans give you a wider range of options, because you’re not restricted to in-network care providers.
If you live in a rural area…A PPO is probably your best bet. With limited local options, you might be forced to go out of network, but your plan will cover you.
If you’re willing to negotiate… Here’s a little insider info: If your insurance is supposed to cover something, but you can’t find in-network physicians who fit your needs, it’s possible to work out a Single Case Agreement (SCA). It’s a contract between the out-of-network provider and the insurance co that allows you to pay in-network prices
If you’re young and healthy…You might be into an HDHP plan, which stands for High Deductible Health Plan. These tend to have lower monthly premiums but higher deductibles, meaning you have to pay more out of pocket before your insurance kicks in, but you won’t be paying high monthly fees if you’re rarely going to the doctor anyway.
This is a lot. I just want the cheapest plan.
Not as straightforward as it sounds. It’s easy to be tempted to simply choose the plan with the lowest monthly premium. This might net out to be the cheapest upfront choice, but it’s important to assess the risks. If you go with a low premium, high deductible plan, you should make sure that you can cover the out-of-pocket max—the most you could pay for medical expenses in a year—in a worst-case scenario (think: surprise diagnosis or accident). For HDHP plans in 2021, the out-of-pocket max is $8,550 for an individual and $17,100 for a family.
Is there any way I can save money here?
There is quite literally something called a health savings account (HSA). And meet its cousin, the flexible savings account (FSA). You can contribute pre-tax dollars to them (up to a certain point) to save and pay for things like medical expenses and prescriptions. With an HSA, any money you don’t use in the account rolls over to the next year, but with an FSA, it might not (only some employers offer a grace period and only up to a certain amount). You might think that given the guaranteed rollover feature, everyone would choose an HSA—but in order to qualify for an HSA, you have to enroll in an HDHP. Are you sick of acronyms yet?
How should I be calculating my expected medical expenses to help choose a plan?
Healthcare.gov has a calculator to help with that. In general, you should consider your health upkeep and the types of services you need annually. Some services might not be covered, regardless of your plan. For instance, elective surgeries like LASIK or cosmetic surgery aren’t usually covered. Mental health services can be covered, depending on your plan and provider. Maternal health care and birth control is generally covered—though thanks to a recent Supreme Court decision, employers can now opt out of providing birth control coverage on moral or religious grounds. And if you’re planning for a family, know that infertility treatments aren’t usually covered. More on doctor’s appointments to get on your calendar here.
Picking a health insurance plan probably sounds about as fun as going to the doctor. But choosing the one that’s right for you is an important step in taking care of yourself. Ready, set, enroll.