Tips on Buying a Health Plan

Health Symphony provides this article to assist you in your search for a health plan.  If you would like to receive a free health insurance quote.

There are four primary areas to review when considering a health plan to purchase, they include Choice, Coverage, Cost, and Compare. 

Choice

There are five types of health plans available in the marketplace.

1. Traditional Indemnity
People who want pure freedom in the selection of their medical providers and who are willing to pay more for insurance may choose these plans.

Advantages:

  • The plan allows an individual to choose any health care provider they wish
  • They have few restrictions 

Disadvantages:

  • There are no financial incentives to reduce patient financial responsibility
  • The absence of cost containment features creates high premiums and employee contribution costs 
  • You may be subject to Usual and Customary reductions if the health plan feels your physician charged too much

2. Health Maintenance Organization (HMO)
These plans have become very popular due to their low cost and comprehensive health insurance coverage.

Advantages:

  • There are no deductibles or coinsurance expenses, only a copayment
  • The cost of premiums and employee contributions are low due to the high presence of cost containment features
  • Paperwork is practically eliminated for the patient as there are no claims to submit and no EOBs to receive

Disadvantages:

  • You can only see a physician within the HMO network
  • You must select a Primary Care Physician who acts as a "gatekeeper" to specialists
  • There is a larger number of cost containment elements in the plan (authorizations, referrals, etc.)

3. Preferred Provider Organization (PPO)
These plans offer financial incentives for staying within the plan's network of physicians.  The cost of this plan is "higher than average."

Advantages:

  • The plan offers financial incentives to see physicians in their preferred provider network
  • Many services require the patient to pay just a copayment, such as for outpatient visits or prescriptions
  • A person may continue to see a physician who is not part of the preferred provider network, but at a reduced payment and higher out of pocket cost.

Disadvantages:

  • Deductibles and coinsurance do apply for many services, such as hospitalizations and out-of-network services
  • Claims are submitted by the medical provider, making it important for the health plan to pay the claim correctly
  • The premiums and employee contribution costs are higher than those of any HMO, but lower than a Traditional Indemnity Plan

4. Point of Service Plan (POS)
These plans are considered a hybrid of an HMO and PPO plan. The cost of this plan is slightly more expensive than an HMO Plan, but less or similarly priced to a PPO plan.

Advantages:

  • Like a PPO Plan, this POS plan lets you go out of the network, 
  • Your cost of going out of network, may be expensive, unless you obtain approval from your primary care physician

Disadvantages:

  • Like an HMO plan, you must select an in-network physician to be your primary care physician
  • If you do go out of network without a primary care physician referral, you may have to pay a higher share of the costs

5. Health Savings Account (HSA)
These plans are the next generation of Medical Savings Accounts (MSAs).  An HSA is a tax-sheltered savings account similar to an IRA, but specifically created for medical expenses and works in conjunction with a high deductible HSA eligible health insurance plan.

Advantages:

  • Having an HSA with a high deductible will typically have a lower premium
  • Pre-tax money is deposited each year into your HSA and can be withdrawn anytime for qualified health expenses 
  • Your employer can contribute to your HSA

Disadvantages:

  • The HSA is tied to the IRS Code
  • If you withdraw for non-qualified medical expenses or non-medical expenses, you would pay taxes on that money

Coverage

An essential element of choosing the correct health plan is determining what benefits are important to you and whether the plan offers them.

Do you require any of the following benefits in your health plan?

  • Maternity coverage
  • Prescription coverage
  • Well child care
  • Immunizations
  • Emergency Visits
  • Annual physicals (preventive care)
  • Dependent coverage
  • Physician office visits
  • Specialists coverage (i.e. home care, surgeries, hospitalizations, vision, dental, speech, mental health, etc.)

The more benefits you select onto your health plan, the greater the premium or employee contribution is going to be.

Other aspects:

  • Is your current physician included in the plan's provider network?
  • Where are the nearest hospitals you can visit with your plan?
  • Is there a wide selection of primary care physician and specialists?
  • What is the financial strength of the insurance company?
  • What about pre-existing coverage or limitations?  (Is there a waiting period?)

Make sure that the benefit coverage you require is available. Aside from costs, this is the other most important factor in selecting a health plan.

Costs

The premium or your employee contribution will vary depending upon:

  • The type of plan you choose (Traditional Indemnity, HMO, POS or PPO)
  • The amount you accept for your deductible, coinsurance and copayment
  • The lifetime maximums you decide on
  • The extent of benefit coverage on the plan

If you want the lowest costs, then an HMO plan with a higher copayment of about $25.00 and a comprehensive, but not overloaded benefits package may be best. If you are more concerned with selection than price, but still want a good price, then a POS or PPO plan with a $250 or $500 deductible may be best. If money is no object, and you want complete freedom on your health plan, then choose a Traditional Indemnity Plan

Compare

After you have performed the above reviews on the proposed health plans, it is necessary to compare. Reviewing at least three or four plans will give you a good sense of price range, benefits coverage and other elements essential to you in a health plan.

To request a health insurance quote, click here

Other Options

If it has been difficult finding a health insurance plan due to a pre-existing condition then you may do the following:

  • You may be eligible for health insurance coverage through a professional organization, school alumni program or union
  • Look for an HMO plan, as they are the least expensive, and request assistance from an HMO representative
  • Review the policy on pre-existing conditions regarding exclusions, limitations or waiting periods before you sign
  • Plans with lifetime maximums of less than $500,000 may not be very useful
  • Plans that only offer hospital and surgical benefits are also not practical
  • Accept the highest deductible, coinsurance and copayment you can afford to reduce the premium payment
  • Ask your State Insurance Department if they participate in "Risk Pools" for the "hard to insure".  (Our links page has a listing of all 50 state's insurance departments for your convenience.)

Final words: The five basic types of health plans listed (HMO, PPO, POS and Indemnity) vary greatly.  It is important to closely review your choices when considering a new health plan.  

Health Symphony provides information as a general resource and does not guarantee any results, expressed or implied, obtained from its use.