There are so many things to consider when choosing a health insurance plan that it’s no wonder clients often feel overwhelmed. You may not know where to begin if you don’t discuss insurance use.
In reality, there are five critical elements to any health insurance plan. A basic understanding of each helps you determine which plan is the best for you.
Provider Network
The provider network includes all the healthcare facilities that a health plan contracts to provide customer services. These include doctors, hospitals, labs, and clinics. You may hear these referred to as “managed care” programs, meaning that these contracts help the insurer manage both the cost and quality of member services.
The three main types of managed care plans are HMOs (health maintenance organizations), PPOs (preferred provider organizations), and POS (point-of-service) plans. Each has significant similarities and differences that pertain to health coverage.
HMO
These healthcare provider contracts service a particular area. They require members to receive all care from a provider under contract with the HMO. HMOs, do not cover care from providers outside the network. They do, however, in cases of emergency (such as while traveling) or with prior approval.
HMOs require members to choose a primary care physician, commonly called a PCP. This provider works within the network and coordinates your care with other providers when needed, such as providing referrals for specialists. Visiting a specialist without a referral usually results in you being held responsible for the cost, even if they are within your network.
This plan is a good choice for patients willing to accept limited provider choices for the benefit of lower out-of-pocket costs. Typically, HMOs have lower premiums and co-pays and cover a more comprehensive range of services. Suppose you do not have a preexisting condition, such as a chronic illness, or a long history with a particular physician. In that case, the narrow list of approved providers presents little problem. However, if you need the freedom to choose any doctor you want, whether that doctor is in your network or not, HMOs may not be your best bet. This package is best for companies that seek to provide a robust healthcare program for their employees without tons of paperwork and customization.
PPO
A PPO also includes a network of preferred providers. The main difference is that beneficiaries may visit an out-of-network doctor or facility for a slightly higher out-of-pocket cost. However, that is not the only difference between an HMO and a PPO.
PPO members do not have to select a PCP (primary care physician) or require a referral to visit a specialist. The price of higher freedom is higher out-of-pocket costs, including higher premiums, deductibles, and co-pays. Patients with substantial history with a particular provider typically feel that the higher price is worth the ability to choose any doctor or hospital to receive treatment. This would be a preferred option for companies willing to offer a more generous package.
POS Plans
A POS plan combines the best parts of the HMO and the PPO. For example, customers may select a PCP but are not required to do so. They receive lower out-of-pocket costs when they remain in the network, but visiting an out-of-network provider is covered by the plan at a steeper expense to the patient.
Typically, a POS’s premiums, co-pays, and deductibles are higher than those of an HMO but lower than a PPO. POS plans are popular choices for those looking for a bit more freedom than an HMO provides but lower costs than a PPO.
Choosing the appropriate plan depends on your current medical condition, ongoing dental and vision issues, preventive care, and the other preferences elaborated above. Ask your employer to consider this convenient option if you want flexibility and broad coverage.
Drug Formulary
A drug formulary is simply the list of prescription drugs covered by your plan. We choose them for safety, effectiveness, and value. A committee of pharmacists, physicians, and nurse practitioners determines which drugs to include and update the formulary as necessary.
Most drug formularies include tiers, each with a different co-pay option. Tier 1 prescriptions usually include mostly generic versions and have the lowest co-pay amount. Formularies may have up to five tiers. Co-pays increase as you step up each tier of the drug formulary, as does the cost to the insurer.
Prescription drug plans may require plan beneficiaries to meet a yearly deductible before the plan begins covering any of the prescription costs. Other restrictions include prior authorization (permission from the insurer before prescribing a drug) and step therapy (which requires you first to try lower-priced versions of the same medication). These restrictions and tiers intend to manage costs for the insurer and the plan beneficiary regarding prescription drugs.
Premium
The premium is the amount you pay to the insurer, which may be due monthly, quarterly, bi-annually, or annually. It is the same as your premiums on any other insurance policy, such as auto, homeowner, and renter’s insurance.
As long as you pay your premiums, you remain covered under your health insurance plan (unless your insurer accuses you of wrongdoing, such as fraud).
The length of your policy period, usually 12 months, dictates the amounts of your premium and other out-of-pocket costs. The cost of your premium usually plays a role in determining your additional out-of-pocket expenses, with a higher premium leading to lower co-pays and deductibles. Plans with higher premiums usually also offer better plan benefits.
Employees and company officials must review these options together and collaborate with an agent to determine the optimal premium for the best coverage.
Deductibles
Some plans (but not all) include yearly deductibles that plan beneficiaries must reach before their insurance begins covering medical costs. For example, if you have an annual deductible of $2,000, you must pay that amount before the insurance starts paying.
Most plans do not include preventive care as part of the deductible requirement, such as yearly health and wellness visits and immunizations. The idea behind deductibles is that they cut unnecessary doctor visits while encouraging preventive care that reduces long-term healthcare costs.
Please note that deductibles and co-pays are not the same things. Co-pays are the flat fees you pay for doctor’s visits and prescriptions. The co-pay is your “share” of the bill. So, if you have a $25 doctor co-pay, and the bill is $100, the insurer pays the remaining $75.
Consider out-of-pocket costs when choosing your plan, not just the premium. High deductible plans work well for people who enjoy good health, as premiums are typically lower. Low deductible plans have higher premiums but may provide better health insurance for individuals with chronic conditions.
Plan Benefits
According to the Affordable Care Act (also known as ACA or Obamacare), every healthcare plan must cover the following:
- Behavioral healthcare, including substance abuse, counseling, and psychotherapy
- Emergency services
- Hospitalization
- Laboratory services
- Outpatient care (doesn’t require hospital admittance)
- Pediatric services that include oral and vision care
- Prenatal and postnatal care (pregnancy, maternity, and newborn care)
- Prescription drugs
- Preventive services, such as wellness visits and chronic disease management
- Rehabilitative and habilitative services and devices that help patients recover physical and mental skills
Plans may include broader coverage, but ACA requires every plan to have these ten items at a minimum. Dental and vision care for adults are optional.
Hopefully, this list helps you better understand your health insurance options. The costs of managing a chronic condition or covering an unexpected issue can quickly increase. Therefore it is vital to learn more about insurance and health care as they pertain to your coverage.
If you have questions that you would like to discuss with your employer, or would like to receive a quote, don’t hesitate to get in touch with us today. San Tan Insurance is more than happy to spend time answering your questions and concerns and advise you on the best health coverage.
Frequently asked questions
When is the best time to get a health insurance plan?
The years during your mid-twenties are the best time to consider health insurance plans. If you think long term, this is the period when health issues start to develop, so it is best to get health coverage early on. Furthermore, the financial burden during your mid-to-late twenties is usually lower, and you also make headway in your career.
Group packages ensure that every employee working in a company receives adequate coverage, and they minimize the burden on your business as insurers get specialized help in time.
What is open enrollment?
While some health coverage programs offer enrollment year-round, most have a dedicated period where it is possible to elect or change the health insurance plan option. Therefore, open enrollment is an annual window where employees should discuss with their managers before selecting the right plan.
The annual enrollment for Medicare runs between October 15 and December 7. However, the Affordable Care Act insurance marketplace/exchange has open enrollment from November 1 to January 15.
What is special enrollment?
Contrary to open enrollment, a special enrollment period provides plan beneficiaries with an option to sign up for health insurance outside of the specific annual window. However, to qualify for special enrollment, employees must meet certain conditions. These include life events such as moving, getting married, losing health coverage, having a baby, adopting a child, or having a household income below a certain threshold.
Additionally, employees may have 60 days before or 60 days following the event to enroll for health care coverage. On the other hand, job-based plans must provide a special enrollment period with a window of at least 30 days. Such leeway allows employees enough time to access their options, find a doctor, and review available insurance policies. Discussing these preferences with a company official is essential so your agent can make the necessary arrangements.
Similarly, employees can enroll in Medicaid or CHIP (Children’s Health Insurance Program) at any time.
How to choose the best health insurance plan?
The best path forward is to be mindful of your open enrollment and know when you are eligible. Moving forward, you’d want to take enough time to access your lifestyle, family history, and any health needs that are important at the moment. Despite common misconceptions, group plans can be additionally customized, and there is plenty of leeways to receive broad coverage at an affordable cost.
Employees may be asked whether they have a primary physician or use any medical specialists. You’d also want to list medications and prescription drugs and consider any chronic illnesses. Finally, you’d like to consider the need for preventative screenings, vaccinations, diagnostics tests, blood work, laboratory services, and anticipated surgeries or procedures. Comprehensive coverage is a great way to protect your employees’ health and your business’s productive capacity.
Sometimes, however, these considerations may prove insufficient because life events and environmental factors may considerably alter several circumstances. The Covid-19 pandemic, for example, faced people with unexpected medical costs, the need for ongoing treatment, and even lasting disabilities.
Therefore, the best way to learn about each policy and familiarize yourself with local medical service providers is to attend an insurance company seminar or book a free consultation with a licensed agent. Each area has a slightly different healthcare landscape. Therefore, it is vital to understand the complete details of coverage, the supplemental health insurance plans, and the services in your state.
What is the difference between Medicare and Medicaid?
Medicare is a medical insurance program that covers people over 65, younger disabled persons, and those in need of dialysis. Conversely, Medicaid is an assistance program dealing with low-income patients’ medical expenses. Furthermore, there is Medicare Advantage, a Medicare-approved plan from a private company that is an alternative to the original health and drug coverage plan.
How can people get health insurance if their employer doesn’t offer group health coverage?
Though most Americans under 65 get their health insurance from an employer or through self-employment, nearly half of all businesses between 3 to 49 workers do not offer health benefits. Small business health insurance often depends on the company’s size or employment contract. Still, there are ways to find a plan with individual and family coverage even when companies don’t offer any.
Thanks to the Affordable Care Act, and the American Rescue Plan, employees can use subsidies to get affordable care and lower their monthly premiums. Furthermore, silver plans offer cost-sharing reductions and free coverage depending on their income level. These apply when an employee’s income is at or below 250% of the poverty level. Similarly, they can use a health savings account or buy additional coverage through supplemental benefits.
How can businesses qualify for group health insurance?
Irrespective of the size of your company, and its structure, it must fulfill two requirements to become eligible for group insurance.
Firstly, the business must have at least one qualified full-time employee (or a full-time equivalent employee) other than the business owner or a spouse.
Secondly, the company must be recognized as a legal business entity according to its state’s regulations.
Definitions of a legal entity can vary by state. Still, a qualified full-time or full-time equivalent eligible employee is determined by the IRS as someone who works at least 30 hours per week. Contact an insurance agent and schedule a free consultation to understand the costs and complete details for covering your business. San Tan offers a variety of group insurance plans that cater to many needs and circumstances.
