Now that Open Enrollment is winding down, take some time to understand your health insurance plan how to get the most out of your coverage. A little self-reflection and careful reading of your plan documents can help you avoid unnecessary expenses and difficulties later.
Understanding Premiums, Deductibles, and Out-of-Pocket Costs
When most people think of health care insurance costs, premiums come to mind ─ fixed monthly insurance costs. However, there are many other costs associated with health insurance, including:
- Deductibles: The amount individuals must spend on covered health insurance costs before your insurance begins to contribute. You must pay the full cost of your non-preventive medical care until you meet your deductible.
- Copayments: Fixed payments made when patients receive medical services covered by their insurance plan. For example, you might pay a $30 copay each time you visit your family doctor. Copayments are made until you reach your plan’s out-of-pocket maximum.
- Co-Insurance: A percentage of a covered service that consumers must pay. For example, you might have to pay 20% of a laboratory test bill. You pay co-insurance until you reach your out-of-pocket maximum.
- Out-of-Pocket maximums: The maximum amount consumers must spend each year for covered health services. Once you reach your out-of-pocket maximum, your insurance carriers pay for additional covered services.
What Is a High Deductible Health Plan?
A high deductible plan (sometimes called a catastrophic health plan or HDP), offers relatively low monthly premiums but will not pay your medical costs until a relatively high deductible is met. The IRS recently announced the minimum and maximum deductibles for an HDHP in 2018:
- Individual Minimum Annual Deductible: $1,350
- Individual Maximum Annual Out-Of-Pocket Expense Limit: $6,650
- Family Minimum Annual Deductible: $2,700 minimum
- Family Maximum Annual Out-Of-Pocket Expense Limit: $13,300
- An increasing number of employers offer high deductible plans to their employees to reduce insurance costs.
While some younger people prefer high deductible plans because they have low upfront costs, these plans can be risky. Studies report that people with HDPs sometimes delay medical treatment and do not realize that most preventive and wellness care is fully covered ─ even before they meet their deductible. However, with an HDP, consumers are financially responsible for a large amount of medical costs before the plan coverage kicks in.
What Is a Healthcare Savings Account?
If you have an HDP, you should consider opening a Healthcare Savings Account (HSA). An HSA can help offset deductibles and reduce out-of-pocket medical costs. Pre-taxed money is placed in an account and funds can be withdrawn to pay for covered medical treatment. They also offer significant tax benefits and are portable — you keep your HSA funds when you leave a job or employer.
Many employers offer HSA options and consumers can also fund an individual HSA. Some employers also offer seed money or contribute to their employees’ healthcare savings accounts. To learn more about your employer’s HSA policies, contact your human resources representative or health insurance agent.
Assessing the Plan’s Coverage
One of the first steps in assessing a health care plan is reviewing which services it covers. Under current health care laws, health insurers must cover ten essential benefits:
- Ambulatory patient services
- Prescription medications
- Emergency care
- Mental health care
- Rehabilitative and habilitative services
- Preventative care and wellness services
- Lab tests and other services
- Pediatric care
- Maternity and newborn care
The ACA requires health plans to fully cover preventative and wellness services — even before you meet your deductible. Preventive and wellness services include annual physicals, common immunizations, and well-child visits. However, not all tests and doctor’s visits are covered under preventive care. If you seek treatment for a specific health problem — or your doctor orders certain tests — you might have to pay the bill or co-pays.
Understanding the Provider Network
It’s also important to assess the quality of each plan’s provider network. A provider network sets out the variety of physicians, therapists, and other medical providers that accept a particular insurance plan. In some communities, you might have multiple, high quality medical groups and hospitals to choose from. However, in some rural or smaller communities, your options might be significantly reduced. Before you enroll, check the plan’s provider network and ask yourself:
- Are my existing providers within the network?
- Are other doctors or hospitals that meet my needs listed?
- Will I experience significant disruption in my medical care if I switch doctors?
- How far am I willing to travel for primary care or a specialist referral?
Remember, a health plan is only as good as its team of doctors and other providers.
Canopy Health Can Help You Find the Right Health Insurance Plan
At Canopy Health, we offer a wide variety of health plans and an extensive provider network (including nearly 5,000 Bay area physicians). If you have questions about your health plan or are interested in our patient-focused and price-competitive options, please contact us for more information.
Health care savings accounts and other tax-favored health plans (2017, February 10). Internal Revenue Service. Retrieved from https://www.irs.gov/pub/irs-pdf/p969.pdf.
Preventive services covered by private health plans under the Affordable Care Act (2015, August 4). Kaiser Family Foundation. Retrieved from https://www.kff.org/health-reform/fact-sheet/preventive-services-covered-by-private-health-plans/.
Rosato, Donna. How to survive a high deductible health plan (2016, November 17). Consumer Reports. Retrieved from https://www.consumerreports.org/health-insurance/high-deductible-health-plan/.
Your total costs for health care: premium, deductible & out-of-pocket costs. Healthcare.gov. Retrieved from https://www.healthcare.gov/choose-a-plan/your-total-costs/.