What should I consider when picking a health plan?

Q: My company will offer some new choices for health benefit plans during its open-enrollment period. What are the most important things to consider when picking a plan?

A: Health insurance easily grows confusing, especially when a human resources representative throws an alphabet soup of terms like HMOs, PPOs or HSAs at you. You should start sorting through options by thinking about your needs.

For instance, someone with a child away at college must consider the coverage a policy offers outside its normal network of providers.

"A plan that you might not otherwise consider might be worth considering because it has better out-of-area coverage," said Dr. John Santa, director of the Consumer Reports Health Rating Center.

Insurance policies have grown thick over the years with pages of dry legal information inspired by regulators. But most policies contain a summary of key numbers. Consumers should focus on four: the policy's premium, deductible, co-payments and the maximum amount the policyholder can expect to pay out of pocket each year.

People also should look for any numbers that establish coverage limits. Some policies may restrict days spent in a hospital or visits made to a particular provider.

"Numbers are easy for the insurer to say, 'Hey, you've had 10 visits. I can count to 10, you can count to 10. We're done with you.,'" Santa said. "You can't argue."

People should be wary of any policies that limit the number of hospital days. Hospital stays can cost far more than $1,000 a day, depending on things like whether you have surgery or stay in an intensive care unit.

"Nobody anticipates being in for a long time, but it could happen," said Annette Ramirez, a health researcher with Public Citizen, a nonprofit consumer organization.

Consumers also should learn what the insurer considers to be a pre-existing condition. If a person conquered polio or epilepsy in childhood, he or she should know how these conditions would be treated if related problems surface.

Be wary of low lifetime maximums, too. The cost of an organ transplant, cancer care or treatment for some conditions like hemophilia can quickly devour lifetime coverage maximums of $2 million or less.

Preferred provider organization plans, or PPOs, were the most common forms of employer-based health care last year, according to The Henry J. Kaiser Family Foundation. About 57 percent of workers covered by employer-based insurance enrolled in those.

These plans usually offer a wide range of provider choices, and patients generally don't need a referral from a primary care doctor to see a specialist.

HMOs, or health maintenance organizations, are the second most-common insurance type. These plans usually offer lower premiums and higher benefits, but customers are confined to a smaller network of providers.

"If you're willing to give up some choice in return for dollars, then usually you should be looking at the HMOs," Santa said. "If you want maximum choice, and you're willing to pay for it, then you should be looking at the PPOs or the indemnity plans."

If you already have a doctor, make sure the provider is in the network for the plan you choose, Ramirez noted.

Health savings accounts, or HSAs, let people save money tax-free for medical expenses. These accounts often are combined with a high-deductible plan that features a low monthly premium. They give the customer coverage for expensive claims, but he or she must pay more out of pocket for the smaller stuff.

People shopping for health care always need to weigh a plan's flexibility against the coverage it provides and the cost.

"Those are basically the three things that you're constantly juggling, but just make sure that you're not trading off something that's very important to you," Ramirez said.

Back To Top