Shopping for health insurance is confusing. There are so many factors to evaluate besides the monthly premium.
In 2017, there were nearly 18 million Americans shopping for health insurance in the individual market. Many Americans are struggling with rising monthly premiums and limited coverage.
Many consumers are tricked into selecting health care plans with a lower monthly premium. For some of these plans, health benefits do not kick in until a high deductible is reached. How do you know that you are getting a good deal?
Read on to learn how to compare healthcare quotes. Explore insurance topics such as copays, coinsurance, and deductibles. After reading this guide, you can confidently select the right health insurance plan for you.
Healthcare Premiums
The first thing that health care shoppers look at is the monthly premium. This is the amount that the consumer pays biweekly or monthly to carry health insurance.
For those with employer-provided health care, monthly premiums are pre-tax deductions from your paycheck. If you are on the individual market, you likely make a monthly payment.
On average, nationwide premiums are expected to rise by up to 94 percent over the next 3 years. When premiums rise, consumers focus their attention more on monthly payments and less on the quality of care.
This is a common mistake that health care shoppers make. Continue to read on to learn what other factors to look for when reviewing healthcare quotes.
HMO or PPO
There are many different types of plans to choose from, but two are the most common. The first is a Health Maintenance Organization (HMO) plan.
HMOs typically have a lower monthly premium than a Preferred Provider Organization (PPO), the second type of plan. An HMO plan may be right for you, but the choice should not be made solely because of cost.
For starters, HMOs rely on a Primary Care Physician (PCP). In order to see a medical specialist, you need to see a PCP first and get a referral.
Also, HMOs do not cover medical providers that are out-of-network. This means the patient is responsible for all costs incurred at a doctor or facility that is out-of-network.
Many healthcare shoppers are spooked by this lack of flexibility. For these shoppers, PPO plans are a better fit.
PPO plans do not have the same limitations as HMOs. Instead, referrals are not required and you receive coverage outside the network. PPOs also do not require you to select a primary doctor.
Research In-Network Doctors and Medical Facilities
Regardless of the plan type, you should verify the doctors that you regularly visit with are in-network. Healthcare quotes often look good until you learn that your lifelong specialist is out-of-network.
This research is required for HMOs due to the emphasis on in-network care. However, it is also important for PPO plans due to cost control.
Out-of-network doctors and facilities are covered under a PPO plan. The catch is that copays and coinsurance are typically higher for services received outside the network.
For an example, you may have a $15 copay for a sick visit with an in-network family doctor. For an out-of-network option, the copay may double to $30.
This same concept is true for coinsurance. In-network medical services may be covered at 85% of expenses, while out-of-network is just 50%.
For these reasons, you should research an insurer’s provider directory before selecting a plan. While reviewing healthcare quotes, you may decide that one plan is cheaper. Unfortunately, total health care costs may end up higher if the doctors you regularly visit are out-of-network.
Beware High Deductible Plans
Having a high deductible is almost like having no health insurance at all. Consider an individual with a $10,000 deductible. This person gets sick and needs to see a specialist and undergo diagnostic testing.
Unfortunately, these medical services not covered until this individual reaches the deductible threshold. This means they must incur $10,000 in out-of-pocket medical expenses before insurance kicks in.
Deductibles are on the rise in the United States. Since 2010, deductibles have spiked approximately 67 percent.
The Affordable Care Act (ACA) did not stem the rise of high deductibles. For bronze plans on the ACA exchange, the average deductible is over $5,700.
There is a significant downside to rising deductibles. Americans are forgoing medical treatment because they have not reached their deductible.
Dive into Copays and Coinsurance
When reviewing healthcare quotes, pay particular attention to copays and coinsurance. Copayments are a fixed amount that an individual pays to a medical provider before service.
Copays, for short, are a cost-sharing mechanism used by insurers. The intent is to keep monthly premiums down.
Consider you are reviewing a quote from O’Neal Insurance Group. The copays for doctor visits and prescription drugs are known prior to purchasing a plan. You should factor these fixed copays into your overall evaluation of health care plans.
Another cost to consider is coinsurance. After you hit the deductible, coinsurance is the percentage of health care costs that you are responsible for.
Coinsurance is another cost driver over the course of a year. Many healthcare shoppers are lured in by low monthly premiums. However, annual costs may be less if you find a plan with a low coinsurance percentage.
Other Considerations when Reviewing Healthcare Quotes
There are other factors to consider besides the primary cost drivers. The plan’s brochure provides details that every shopper should read before a purchase.
For example, consider a family that is preparing to have a child. Some plans offer generous health care benefits for expectant mothers.
There are plans that fully cover maternity and birth expenses. You should investigate any special circumstances that apply to you before purchasing a plan.
Wrapping It Up
Health care is a significant monthly expense for the majority of Americans. Carefully reviewing healthcare quotes can save thousands of dollars in the long run.
The most prudent shoppers look beyond the monthly premium. Understanding how cost drivers like deductibles and coinsurance work are critical.
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