Open Enrollment is starting soon, and with all of the shakeups that have come with this year, you may be dealing with a different or new set of decisions to make in regards to your or a family member’s participation in the US healthcare system.
If you aren’t sure what type of plans may be available for you, I recommend checking out my post on health insurance options.
This year, if you are using the Marketplace, open enrollment starts November 1 and ends December 15, 2020. Coverage starts January 1, 2021.
This post is going to focus on comparing two or more plans to determine which plan is the better option for you or your family.
Selecting a plan – there are many forms of ‘cost’
How do you know which plan will help you the most or save you the most money, and how do you prioritize things?
I can share some rules of thumb I have picked up over the years, and I will also let you know that most of the time, you will have either printouts or a website to use to compare the plans that you have to choose among/between.
Many employers provide two or three options(maybe more if they are especially large).
If you are currently unemployed, you may be considering COBRA plans, the Affordable Care Marketplace, or Medicaid.
Medicaid rules differ by state, in some you must be disabled to use the program, in other states they may also accept low-income individuals.
Please check your state’s rules to see if it is an option for you. If it is, generally there is Original Medicaid(which provides the most options) or you need to choose among several Medicaid HMO’s.
Also, healthcare.gov has a glossary, so if you want a further explanation of any of the terms I mention, feel free to look them up!
The first number that you often look at is your premium – or how much you need to pay the insurance company every month just for having them.
Many people instinctively look for the lowest possible premium, but if you need regular medical attention, this is generally a very bad idea as low premiums usually mean that each appointment and/or medication becomes more expensive.
That’s where your deductible comes in. For the most part, the higher your premium is, the lower your deductible and vice versa.
Your deductible is how much money you need to spend(out of pocket) before your insurance takes over payments. So, if your deductible is $1,000, you pay every penny of that $1,000 before your insurance helps, even though you’re paying for the coverage every month.
Your insurance can still be helping you though, as they often negotiate reduced rates for the medical care or medication.
For example, your doctor’s appointment may cost $200 if you went in without insurance, but your insurance company only allows that office to charge $120. You may have to pay that whole $120, but that’s considered paying in full, and that payment would go towards your deductible. You saved yourself $80 compared with going in without insurance.
If you have a low deductible, like $100, your insurance will probably start helping you at or after your first appointment, which can encourage you to keep using your insurance.
Once you have hit your deductible, you usually are only responsible for copays, which are often much more reasonable fees, and possibly a percentage of the bill or an uncovered expense, depending on your insurance’s rules.
Copays for medical appointments vary, and not all insurances charge copays.
If your plan involves copays, they will tell you what your copay is – generally there is one price for your primary care physician(PCP) – the doctor you usually see most often, and usually a higher copay for any visit to a specialist.
Those copays can add up quickly, so if you know you’ll be seeing a lot of doctors, you want either the lowest copay possible, or no copays at all, and that will generally be insurance with a higher premium.
To double-check if or how much cost-savings you would receive – think through how many and what type of appointments you are going to have in a month(or over the course of the year). Use their coverage details in your calculations. Add in your premium to see your estimated total monthly cost. Compare that between plans.
If a high-deductible plan and the low-deductible plan are even close to one another, remember: this is assuming that nothing changes and nothing gets worse.
The low premium plan is likely to increase how much you pay a lot more any time you have an unexpected expense, but often the high premium plan won’t increase much, if at all, for additional expenses.
Opportunity cost: what doctors can you see?
There are four major categorical types of provider networks: Health Maintanence Organization(HMO), Exclusive Provider Organization(EPO), Point of Service(POS), and Prefered Provider Organization (PPO). Some programs(like HMO’s and EPO’s) like to limit your options, sometimes dramatically, so that you can only see doctors that they have a relationship with.
These doctors can vary in quality(just like all doctors), but it does mean that if you might have very limited options, and that if you hear about a particular doctor that is especially knowledgeable about your unusual or not-yet-diagnosed condition, the chances are high that they are not in-network, and so your insurance would not cover you seeing that doctor at all.
In some programs(EPO’s), they also insist that your primary care doctor refer you to every specialist you see. This translates into needing to have your primary care doctor write a note about any specialist you go to- and if you do not have your referral with you when you get to the appointment, your insurance won’t cover the visit.
This tends to lead to seeing your primary even if you don’t really need to(and paying for that) as well as potentially needing to wait to schedule with the specialist until you have that referral. Since many specialists have very long waits to be seen, this can further delay your treatment on top of the inconveniences involved.
Medicare does not require referrals, though you can be tricked into joining an HMO or other referral-requiring programs if you participate in a Medicare Advantage program(aka Medicare part C).
If you have found doctors you like and they all participate in the HMO you are considering, it may be worth doing, but it will leave you with fewer options if you need to change doctors.
I would recommend looking for PPO plans, if possible.
POS plans often require referrals, though they are better than HMOs as they will cover you seeing out-of-network providers(out of network is always more expensive).
With a PPO plan, they do have a preferred network of doctors – often a larger pool of potential doctors than an HMO provides.
More importantly, PPO and POS plans do cover seeing out of network doctors. You do have to pay more for them, but the goal is to try to find in-network doctors(or pick a network that your preferred doctors participate in).
If they aren’t covered by your network, or you hear about an amazing specialist that isn’t in-network – your visit will be covered, but you will pay more for the privilege of going out of network.
To give you an idea, a plan might cover most of the expense of seeing an in-network doctor(you may only be charged a copay), but only 60% of the expense if the doctor’s out of network -that’s still much much better than the 0% that will be covered if you had an HMO!
You often can check with your provider(or potential provider) if the doctors you currently see are ‘in-network’, and what your ‘out of network’ costs would be(you also can ask your doctor if they accept specific plans).
‘In network’ is always the less expensive option, so generally you look for a plan that has the largest percentage of your doctors in network – ideally, that includes the doctors you see most often and the doctors you feel most comfortable with.
The other important part is how often you expect to see the doctor. If you are only seeing a particular specialist once or twice a year, and have another doctor that you see weekly or monthly, the priority is likely the one you see more often.
Medicare program rules
Most insurance sources give you multiple types of plans to choose from, but original Medicare has only one option. It covers 80% of your expenses. Original Medicare is also sometimes referred to as Medicare Part B.
There is an annual premium(that you can have deducted directly from your social security check), and it covers your doctor’s visits and similar medical needs. Medicare part A is your hospital coverage, which usually does not have an additional premium.
Medicare part C(Medicare Advantage) is a replacement program for parts A, B, and D, which does cover a larger percentage of your costs, but generally is an HMO plan.
If you select a Medicare Advantage program, you are only covered by doctors in that specific network, not all doctors who accept Medicare.
Medicare part D is your prescription medication coverage. There is no ‘original Medicare’ of this, and for people with Medicare, choosing part D is generally the main activity during open enrollment.
This year, open enrollment for Medicare is October 15-December 7, 2020. This means that if you are on Medicare, your part D plan must be selected before December 7.
So medication costs are another place where things can get really ugly really fast. Every plan has a formulary – which is a list of medications they cover, and how expensive each medication is.
If your medication is on the formulary, your insurance plan will cover it.
If it isn’t on the formulary, you may be paying full price for that medication(or, more likely, they will recommend you switch medications to something similar that they do cover, refusing to fill your original prescription).
Medication management is already complicated and finding the right medications can be a stressful and challenging process. Generally, these formularies have medication tiers, each of which has an associated co-pay.
Also, medications can have their own separate deductible – which is another thing to double-check when selecting your plan.
Generally the lower-tier the medication is, the lower the co-pay and the less likely it is to have a deductible.
Brand name drugs have their own unique formula, but the primary information that is released is what the active ingredient(s) are.
Generic drugs contain the same active ingredients, but might be created a slightly different way, or have a different mix of inactive ingredients.
For the most part, generic medications are the first two or three tiers(cheaper) with brand-name medications being more expensive.
Generics, of course, can have slightly different degrees of effectiveness, and you cannot control which company your generic comes from(pharmacies generally select their cheapest or most trusted option, and either can change at any time without notice).
This doesn’t usually affect the main thing the medication does, but some generics may have more or less side effects or may work slightly differently with your body chemistry.
If you are often very sensitive to medications, the differences between generics or between a generic and brand name may affect you, but for the most part, switching to generics isn’t terrible, and can make a large difference in costs.
Using your medication needs to help in plan selection
When selecting your plan, you can often list the medications you currently take and look for a plan that will cover them – if there isn’t one that covers all, you get to do a cost comparison and see which plan will save you the most money and effort.
If the medication plan has its own separate deductible, it also usually has its own separate premium – meaning you will also be paying that premium in addition to the one for your insurance. This doesn’t make the plan inherently better or worse, but you do need to make sure that you’re comparing your total insurance costs to one another.
If you don’t know what medications you’re going to be put on, or currently aren’t taking any medications, you still want to get the best coverage you can, as there is always the chance that it could change, and simply getting sick can be more expensive than you’d expect.
One month, I spent over $100 on medications to treat myself for infections – the antibiotics weren’t too bad, but I needed an inhaler(yay bronchitis), which was tier 4 and had a deductible, so that alone cost about $50.
It can add up quickly, so while it’s okay to aim for a low premium, you do want to make sure that you pick something that covers a variety of medications so if you do get sick or need to add in medications you have a better chance of keeping your costs reasonably low.
If an insurance company really doesn’t like a medication, they can cover it so poorly that you end up paying close to retail price for it!
Medication prices can quickly get overwhelming, and if you have just one or two things that don’t mesh well with your insurance, that can become a large part of your budget quickly.
I recently looked into a new migraine medication, which was covered at a rate of $315 for a monthly supply. I’m aware that that is cheaper than some other medication options, but given that I normally spend under $20/month for my medications, it was pretty appalling for me.
So you know, medication can be free when you are eligible for Medicaid(it often is in New Jersey, at least), but they often have the most limited formularies available.
In other words, the medication they will cover is free, but they have a fair number of medications they just won’t cover.
Every plan will have its own range of medication copays and its own formulary, so be aware of what your options are and be sure to include the cost of your medications in your calculations.
Example: Al’s recent insurance decision
Al is now eligible for insurance through his new employer, so he has left Medicaid for new coverage. I went over his options with him in late September, and we are now awaiting the arrival of his new insurance cards.
In his case, he had two options, both run by the same insurance company. The cheaper premium was an EPO, the more expensive was a PPO.
They both had most of the same doctors in-network and partnered with the same hospitals. He can keep the doctors he had through Medicaid and go back to his PCP(who recently stopped working with Medicaid) and to the gastroenterologist who helped diagnose him. This is great news for us, as it means we don’t have any major doctor shopping to do.
All of our local hospitals are in-network, but it does appear that the Hospital for Special Surgery is out of network. We’re definitely hoping he won’t need to go back there anytime soon, butit’s always nice to have as an option if he breaks another bone!
The EPO’s premium is about $50/month less, but charges 30% coinsurance for testing, hospital care, and most other major expenses. The PPO charges only 20% in-network and 40% out-of-network. Both plans have copays of $40 for specialists and less($25 EPO and $20 PPO) for the PCP.
Al is only taking two medications, though I couldn’t find the formulary information on the website.
Since he is taking generics already, I suspect his medication will be low-tier, and since I know that the formulary will be similar(if not identical) between the two plans(since the same company runs them), I only focused on the differences.
There’s a $5 difference between what they charge for tier 1 medications($10 vs $15), and a $15 difference between tier 2 medications($20 vs $35). Tier 3 for both medications is $75. This is more expensive than I’d like, but again, we can only choose between the two plans. The EPO charges more per tier than the PPO, since it has a lower premium. This translates into, at worst, a $30 difference in medication charges per month(if both of his prescriptions are considered tier 2).
The other big thing for us is that Al tends to get a lot of blood work done each year. Most of it should be covered, but he’s responsible for only 20% of the cost with the PPO(in network) and 30% with the EPO.
It looks like the charges for one round of that testing is over $1000(with no insurance), so that alone is at least a $100 difference. He has testing done at least every 6 months, and has two different doctors who may prescribe additional testing, so it can add up easily.
Both of the plans have stupidly high deductibles – the PPO $1500 and the EPO at $1675. Al is unlikely to hit either unless something major happens and he needs to spend the night in the hospital. Given that there’s a pandemic, the odds are higher than usual that it might happen.
The other number I check out is the maximum out of pocket expenses. That’s the point at which the insurance no longer expects coinsurance or other out of pocket expenses to be paid. It’s a number you either want to hit early(so the rest of the year is free) or avoid hitting at all(because that’s a lot of expenses).
Al did hit it when he shattered his acetabulum(hip joint). He had really good insurance at the time, and that number was just $3,000. He likely exceeded it his first few days in the hospital.
These plans have this maximum closer to $15,000, but their maximums that are over $1,000 apart(the PPO providing the lower maximum).
Translation: if the worst should happen, we’d have over $1,000 more in bills to worry about, plus it would have taken longer to hit the deductible.
We discussed it and agreed to go with the PPO. Basically, if all goes well, we spent more than necessary on his insurance.
We’re talking maybe an extra $500, which is pulled out before taxes are calculated. It’s more than we’d like to ‘lose’ but in the grand scheme of things, it’s not a huge amount of money for some peace of mind.
If anything major happens, though, he’ll hit the deductible sooner(reducing our financial responsibility), hit the maximum expense sooner(reducing our bills further), and have more options available if necessary(it’ll cost more to go out of network, but an excellent surgeon or rare disease specialist would be worth it, and 40% is MUCH cheaper than 100%).
We agreed that given his personal health history, it was a worthwhile investment.
Helping yourself feel better about your healthcare expenses
Paying for health insurace can feel draining, especially if you’re used to being in good health or if you aren’t used to having insurance. However, it’s generally a worthwhile investment in yourself and can positively impact your quality of life.
Paying a premium, especially one higher than essential can feel like a waste if you don’t see the doctor often. The fix for that is to get your money’s worth by seeing the doctors you need to and making sure that your family does the same. Getting diagnosed and treated early is a huge money and energy saver and well worth doing – which means investing in well visits and regular checkups.
Psychologically, the advantage of paying a higher premium is that you often can have that money removed from your account before you notice it, so you are less likely to feel the cost than you are when you actually write the check or hand the office its money. Medicare premiums, for example, can be taken out of your SSDI check before it is deposited into your account. Many employers will also pull out your premium before your check, and some may be able to remove it before taxing your income.
Recognize that your choice to invest in health insurance is another form of self-investment, you are putting money into protecting and improving your health. Ideally, you can work on getting yourself healthier, or if you reach the point of needing to apply for disability benefits, you are putting effort into defining and describing your condition so that it will be more likely to be recognized as disabling by the appropriate governing bodies.
You deserve to be well cared for, and part of doing that is selecting the best possible insurance plan for you.
Sometimes, as we found, that is reached by paying more than the minimum option for coverage. It also isn’t necessarily found by just blindly picking the most expensive plan. Take some time and do what you can to understand the logic of the plans and pick the one that best fits your needs.
While the financial cost is the most obvious and often the most considered, there is more to it than your premiums, copays, and deductibles.
Also, having a condition that requires regular treatment adjusts those costs significantly as you need to use your insurance regularly now, instead of ‘in case of emergency’.
Especially when you are dealing with a complicated condition or incomplete diagnosis, it’s very important to have a lot of options for treatment – including both your options for doctors and your options for medications – and going out of network or off of the formulary may make a significant difference in your quality of life.
Making those options more affordable may be essential rather than optional.
Medication also may become an essential expense for you, and different formularies can make a huge difference in the cost of your medication.
If you know what you need to take, the decision is often easier to make, but there are always going to be unexpected expenses or changes involved, so having a good quality plan with options is also important.
While the premium is important to know(and the most obvious expense), you need to dig deeper, and understand which plan is the best option for you.
Remember that investing in your health insurance is an investment in yourself and in your own health and safety. Take your well-visits seriously and make the most of them. Get the testing you need done, so that you can best understand and manage your health condition and learn how to live your best possible life.