It’s that time of year – open enrollment – the time to choose the best health insurance plan that’s right for you.
I’ve learned a lot this year through my family’s experience as well as my clients’ experiences. Here’s a summary of criteria to consider when you need to select the best health insurance plan for your and your family’s needs.
In years past, I used to hear, “Get a plan with a low deductible. Everything is free once you hit it.” That may have been true in the past with 0 to 10% co-insurance on your part once you hit your deductible, but now that’s rare with most plans.
If you choose a plan based only on the deductible amount, you need to realize that not all health costs – even those in network – count toward the deductible. Also, once you hit the deductible, your co-insurance could be as high as 80%, meaning you’re still paying 80% of the costs after you hit your deductible.
For a more detailed explanation about deductibles, read this article: What Does It Mean If Care Is ‘Excluded From the Deductible’?
I’ve learned that since hitting the deductible is not always all it’s cracked up to be, the maximum out of pocket is an important number to factor into your decision. How much are you willing to have saved up to pay for medical expenses? If you’re not in a position to pay thousands of dollars, you can take a closer look at plans with lower max out of pocket figures, which might also mean higher premiums. If you can build up that emergency fund, you might be able to find a plan with a very high max, but lower premiums.
For a more detailed explanation about out of pocket, read this article: How the out-of-pocket maximum helps you save on medical costs
If you want to wager a guess on the types of medical tests, labs and procedures you might need in any given year, you’ll want to take a look at the co-pays. If you’ll need lab work often, what are the co-pays for those? If you’ll have a trip to the emergency room, what will that cost? If you’re a frequent flier at urgent care, what is the co-pay for that? You might find a plan with a very low premium, but if the co-pays for frequent lab work and prescriptions will run you into the thousands, factor this into your comparison of health insurance plans.
Health Savings Accounts (HSA)
I learned the hard way this past year that just because a plan has a high deductible, doesn’t mean it’s HSA eligible. A plan must be officially stamped with “HSA eligible” in order for you to be able to receive tax benefits from contributing to and using a Health Savings Account. Be aware that there is a cap on the maximum out of pocket expenses figure, so plans with very high amounts will make the plan ineligible. In 2020, the cap was $6900. If you foresee a high amount of medical expenses, and using an HSA would be a financial benefit for you (check with your financial and tax advisors), be sure to look for that eligibility label.
For a more detailed explanation about Health Savings Accounts, read these articles:
What types of medical services will you need? Just a primary care physician for routine check-ups? Specialists like cardiologists or neurologists? Physical therapy? Chiropractor? Mental health services? Be sure the plan you choose offers the coverage you need.
If there are specific doctors you want to stick with, be sure they accept the insurance you want to select. Or would you prefer not to worry about networks? Should this be a factor you base your decision upon? Most HMOs require prior authorization, which means you need to step up your administrative duties as your own health advocate by ensuring you dot all the i’s and cross all the t’s to ensure that your medical services are covered by your plan. Many PPOs don’t require prior authorizations for every step of the way, but the premiums might be higher.
Many plans pick up the costs of annual preventive care such as annual physicals, mammograms, prostate exams, and vaccinations. Some preventive care like colonoscopies have minimum age requirements in order to be covered under the no-cost preventive care in the plan. Have a list of what screenings you need yearly so you can compare the coverage and costs.
How do you choose the best health insurance plan?
When we were in our 20’s, choosing the best health insurance plan was a piece of cake: select the one with the lowest premium since we’d only see the doctor once for our annual physicals. Nearly three decades later, it’s more complicated to choose since we need both more preventive care and medical services.
Here are a few spreadsheets you might find helpful:
In short, you need to factor in what applies to your current health and financial situation. I’ll share how I’ll compare plans, but this is what works for my family’s situation. Please take a close look at yours to determine if you can compare the same way or if you should factor in other variables.
*Part of my calculations for this year will be to compare plans by my total out of pocket for the year. I’ll do this by adding up 12 monthly premium payments with the maximum out of pocket figure. Which plans will require the least amount of money leaving my bank account? Last year, this meant choosing a plan with an $8100 out-of-pocket maximum because I’d drain our bank account less this way than choosing a plan with a far lower out-of-pocket maximum and a higher monthly premium.
*Next, I’ll compare preventive services. How many annual screenings that we need will have no cost to us?
*Then, I’ll look at medical care costs. How much will a trip to urgent care cost? How much will labs cost? How much will prescriptions cost?
*Next, I won’t look at the deductible, but I will check to see if a plan is HSA eligible because it would be nice to get some tax benefits when I have to spend money on medical expenses.
*Once I’ve studied these comparisons, I’ll run a comparison of purchasing an individual health insurance plan from the marketplace versus being added to my husband’s insurance plan. To date, it’s never been cost effective to add me, but one day it might.
When I’m about to sit down for this analysis, I let my husband know ahead of time that I’ll need an hour of peace and quiet with zero interruptions so I can concentrate. (He is more than happy to make sure this happens because he doesn’t want to have to be the one to sort through all of this!) Consider having a conversation with your household about everyone’s medical needs and forecast for the next year, then announce when you’ll need some quiet time to figure out what will be best for your family’s health and financial future.
While health insurance normally doesn’t directly fall under the purview of time management, it is definitely connected. If you don’t have a plan with the coverage you need, your health will suffer, which will definitely affect your productivity. If you don’t understand the type of plan you’re signing up for, this could lead to lost time from the hours you’ll need to spend on the phone with your insurance company and the billing departments of medical facilities. Doing your homework can help prevent these things from happening.
I’m a nerd who loves numbers and spreadsheets, but even I don’t look forward to open enrollment specifically because of the amount of information gathering and analyzing that needs to happen. But I need to just roll up my sleeves and get this over with because it’s a necessary part of being a conscientious adult.