Preparing for Health Benefits Open Enrollment (Types of Health Plans) Part 3

Sometime in the next few months you will have the opportunity to select a health plan for 2015. Your tendency may be to leave things as they are now and ignore the enrollment material you receive from your employer, Medicare or your current carrier. That may be a mistake!

The best advice I can give is to read every piece of information you receive. The offerings you have for 2015 and the cost to you probably changed, keeping what you have now may not even be an option. If you do nothing you could be placed in a default plan possibly resulting in a nasty surprise with your first expense in 2015.

You will probably face a choice among types of health plans during open enrollment (about 1/3 of large employers no longer offer a choice, but only a high deductible health plan). That choice can be daunting because employers tend to get cute when naming their plans and attempt to put a smiley face on a reduction in benefits. In any case, the following explanations of different types of health plans are from healthcare.gov

Use this information as a guideline only; check the details about the plans available to you BEFORE you enroll. The acronyms PPO and POS are sometimes used interchangeably.

Regardless of what a plan is called, here are the things you want to be sure you understand:

🔹Are you required to select a primary care physician (provider) (PCP)?

🔹Do you need a referral from your primary care doctor before seeing a specialist? What are the consequences for not doing so? Significantly higher cost to you is most likely.

🔹Do you have coverage if you use an out-of-network provider? What is your co-insurance if you do so?

🔹Are your family’s current doctors and hospitals participating in the plan?

🔹Is there a Health Savings Account (HSA) accompanying the High Deductible Health Plan (HDHP)? If so, is there an employer contribution and how much and what do you have to do to receive an employer contribution? (it may be linked to wellness activities).

🔹What are your potential out-of-pocket costs in the plan you select?

REMEMBER, read the description of benefits from your employer or insurance company for each of the plans offered. It’s what they say that matters. Read a copy of the latest “Summary of Benefits and Coverage.” This is required under the Affordable Care Act. If you enroll through the Marketplace, read the details of the plan, don’t just rely on the color code or premium in picking the best plan for you and your family.

Health Maintenance Organizations (HMOs) and Exclusive Provider Organizations (EPOs)

HMOs and EPOs may limit coverage to providers inside their networks. A network is a list of doctors, hospitals, and other health care providers that provide medical care to members of a specific health plan. If you use a doctor or facility that isn’t in the HMO’s network, you may have to pay the full cost of the services provided.

HMO members usually have a primary care doctor and must get referrals to see specialists. This is generally not true for EPOs.

Preferred Provider Organizations (PPOs) and Point-of-Service plans (POS)

These insurance plans give you a choice of getting care within or outside of a provider network. With PPO or POS plans, you may use out-of-network providers and facilities, but you’ll have to pay more than if you use in-network ones. If you have a PPO plan, you can visit any doctor without a referral.

If you have a POS plan, you can visit any in-network provider without a referral, but you’ll need one to visit a provider out-of-network.

High Deductible Health Plan (HDHP)

High Deductible Health Plans typically feature lower premiums and higher deductibles than traditional insurance plans. As of 2015, HDHPs are plans with a minimum deductible of $1300 per year for individual coverage and $2600 for family coverage. The out-of-pocket limit is $6,450 for individuals and $12,900 for families.

If you have a qualified HDHP, you can use a health savings account (HSA) to pay for qualified out-of-pocket medical costs. This can lower the amount of federal tax you owe. There will be more on the HSA in Part 4

Catastrophic Health Insurance Plan

A catastrophic health insurance plan covers essential health benefits but has a very high deductible. This means it provides a kind of “safety net” coverage in case you have an accident or serious illness. Catastrophic plans usually do not provide coverage for services like prescription drugs or shots. Premiums for catastrophic plans may be lower than traditional health insurance plans, but deductibles are usually much higher. This means you must pay thousands of dollars out-of-pocket before full coverage kicks in.

In the Marketplace, catastrophic plans are available only to people under 30 and to some low-income people who are exempt from paying the fee because other insurance is considered unaffordable or because they have received “hardship exemptions”. Marketplace catastrophic plans cover 3 annual primary care visits and preventive services at no cost. After the deductible is met, they cover the same set of essential health benefits that other Marketplace plans offer. People with catastrophic plans are not eligible for lower costs on their monthly premiums or out-of-pocket costs.

Watch for this upcoming post:

Preparing for Health Benefits Open Enrollment (Using the FSA and HSA) Part 4 September 30

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