With all the Health Insurance options that are available to us it can be overwhelming finding right health insurance plans for ourselves. There are literally dozens of companies with hundreds of plans to choose from. We have to agree that the main reason for having Health Insurance is to protect ourselves from large unexpected medical bills. So when comparing medical plans that is the main thing we should be looking at. Since IRS says that number one cause of Bankruptcy in the United States is medical bills, specifically medical bills that are over $17,000. We will keep that in mind as we will looks all the factors of selecting right health plan.
Before we get into comparing plans there are three main plan options to choose from: PPO (Proffered Provider Organization), HMO (Health Maintenance Organization) and HSA (Health Saving Account). The simple way to understand the differences is keep this in mind; PPO plans will give the greatest flexibility and ability to choose your own doctor usually from a extensive network of doctors. Most PPO plans have reasonable monthly premiums and usually have a hospital deductibles ranging from $500 to $5000. We will get in to deductible and how they work later on. The simplest way to explain how HMO plans work is to think of a gate keeper system. That means that you get assigned to a specific doctor or medical office (Primary Care Physician) that you have to go thorough to get authorization to get medical care. Most HMO plans comprehensive coverage, small co-pays to go see a doctor and low deductibles ranging from $0 to $1500. HMO plans tend to cost more that PPO plans. HSA plan is a relatively new concept and becoming extremely popular. HSA plans work similar to PPO plan in a context that you can choose your own doctor from extensive list of providers. HSA plan have great advantages when it comes to low monthly premiums and ability to save money tax free for the medical expenses, in similar way to 401k or IRA accounts. The reason for low monthly premiums is that HSA plans have large deductibles usually over $2400. For more information on how HSA plans work and if it is a right choice for you visit www.GuideToHealthInsurance.org
Number one thing we should be looking at is what is called Maximum out of Pocket”, also might be called Yearly Maximum out of Packet”. What that means is that amount is the maximum you can be out of pocket in any given year for ALL the medical expenses combined. Most of the time that amount will exclude prescription drug coverage deductibles and co-pays. When you are comparing health insurance plans it is important to find out if everything in the plan is applied towards the Maximum out Of Pocket. Some plans that have attractive monthly premiums might have exclusions to where Maximum out Of Pocket” is applied only for the hospital stays. Most of the PPO plans have Maximum out of Pocket” range from $3000 to $9000. For HMO plans Maximum out of Pocket” ranges from $1500 to $4500. Most HSA plans have where your deductible is your maximum out of pocket.
Second we should be looking for a plan from a known insurance company name. There are a lot of large well established insurance companies that you might never hear of. Reasons for staying with a large well known insurance company are that you know they will pay your bills and not going to disappear. The other reason is that chances are most doctors will accept the insurance plan that they offer. I would definitely stay away from 99.9% of Association plans and small insurance companies with less than 10 billion in Assets. You can find that our by going to Forbes.com. To date largest insurance company that provides Health Insurance is Fortis and their health insurance plans are called Assurant Health”. Largest health insurance provider in the United States is Wellpoint serving approximately 34 million members nationwide. We all know them as Blue Cross and Blue Shield. Keep in mind that in some states Blue Cross and Blue Shield are owned by two completely different insurance companies.
Third we will be looking at the deductibles. There is a huge misconception with how deductibles work. The number one misconception with deductibles is that nothing is covered by the insurance company until this large deductible is met. The reality is that most plans cover most of the things before the deductible is met with small co-pay. In most cases deductible applies only for inpatient and out-patient hospital (surgeries, emergency room). Second misconception is that once deductible is met everything is covered 100% or in case of hospital stay all we will be responsible is the deductible. Although some plans do work that way, most health plans do not. Majority of health plans you are still responsible for, what’s called co-insurance. That meant that you are still paying percentage of the bill usually 30% up to you Maximum out of Pocket” as me mentioned earlier. That is why Maximum out of Pocket” is more important that the deductible. For example if you have a plan with a 2500 deductible and 30% hospital co-insurance, then you are responsible for 2500 plus 30% up to Maximum out of Pocket”. There are some plan today available that have no deductible and they are relatively inexpensive. Chances are those are the plans that have high Maximum out of Pocket” in most cases over 7500 per person. In case of a family of four in worst case scenario you could be responsible for $30,000. If there is no deductible it does not meat that everything is covered at 100%. The way plans with no deductible work is by having you pay a percentage of the bill starting with the first dollar. Percentage could range anywhere from 30% to 50%, again up to your Maximum out of Pocket” amount. The larger deductible you choose the lower monthly premium you will pay. My recommendation will be that you choose deductibles over 2500 unless you are planning on being admitted to the hospital often