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10 Tips For Choosing A Health Plan

By Richard Trubo
WebMD Feature

In earlier times, selecting a health plan was a relatively simple process. Your employer offered to enroll you in the company plan, and once you signed on the dotted line, most of your healthcare expenses were covered.

But times have changed. For many people, choosing health insurance feels like a high-wire act, where even a single misstep might send them into a free fall if illness strikes.

Managed care is still the name of the game for many consumers, forcing them to make sense of the alphabet soup of healthcare delivery systems, most commonly HMOs (health maintenance organizations) and PPOs (preferred provider organizations). While HMOs limit you to a network of approved physicians and hospitals, PPOs give you the opportunity to use healthcare providers outside the network, typically at a higher cost.

To complicate matters, the cost of coverage is climbing rapidly enough to leave many wallets screaming for mercy. Estimates predict increases in health-plan premiums of 12% to 15% in both 2002 and 2003, according to the Health Insurance Association of America (HIAA). In many plans, patients are also facing higher out-of-pocket expenses for their medical care, such as increased co-payments and hospital deductibles, due to soaring prescription drug costs and rising hospital and doctor fees.

"Clearly, managed care succeeded for a number of years in holding down costs," says HIAA's Randy Clerihue. "But there was a consumer backlash because folks didn't like to be told that they had to get multiple referrals to see a specialist. So there has been a noticeable relaxation of rules within managed care, and some resurgence of PPOs."

Choosing Wisely
Even if you're among the majority of Americans who obtain your health insurance through your employer, you'll need to choose from among the plans being offered, and make sense of the scope of the coverage and how much you'll be paying out-of-pocket. "Misunderstanding and misinformation are a big part of the problem with health plans today," says Rhonda Orin, a partner with the law firm Anderson Kill & Olick in Washington, which specializes in policyholder cases against insurers.

Unfortunately, you can't always count on your employer's benefits department to incorporate only the best possible plans into your employee benefits package. "A lot depends on how skilled these people are, and how concerned they are about their employees," says Paul Lerner, a consumer advocate and author of Lerner's Consumer Guide to Health Care. "Some look primarily for the plans that are the cheapest."

As a result, you need to practice your own "planned patienthood," as some doctors describe it, comparison-shop to make sure you're selecting the right coverage for you and your family. "The average person spends only about 16 minutes looking at health-plan materials before he or she makes a decision," says Lerner. "It would be worth spending more time than that."

Guidelines for Optimal Coverage
To help you navigate successfully through the health-plan obstacle course, here are some key issues to examine:

• Is your own doctor part of the plan, and does she expect to stay on the plan? Before selecting your coverage, choose your physician, and find out what plans she participates in. If you already have a doctor who you want to keep seeing, Orin suggests asking her (or her office staff), "I'm thinking of committing myself for the next year to a plan that you're on; is it safe to assume that you're going to continue participating in it for the entire year?"
• Do you need to see specialists? If you have a chronic health problem -- like diabetes or allergies -- or if you develop a serious condition that should be treated by a cardiologist or gastroenterologist, for example, make sure that you can receive care from such a specialist. "If quick access to doctors is important to you, then HMOs might not be the best choice, since they may keep down costs by controlling access, particularly to specialists," says Lerner.
• Is medical care available close to home? Check the locations of physicians' offices and hospitals that are part of the plan, and make sure they're as convenient as possible.
• Is prescription drug coverage adequate? There can be big differences among plans in their medication benefits, says Orin, author of Making Them Pay: How to Get the Most from Health Insurance and Managed Care. Check on co-payments, the pharmacies you can use, and the maximum amounts that the plan pays per year. On many plans, you will have much smaller co-payments when you choose lower-cost generic drugs.
• Will any of your (or your family members') "pre-existing conditions" be excluded from coverage? If you're changing plans, an existing medical problem may be excluded from coverage until a waiting period has passed.
• Does the plan offer preventive and other specialized services? Look for plans that cover vaccinations, preventive screenings (such as mammograms), and "well visits" to the doctor. Also check for coverage for dental and eye care.
• How extensive is mental-health coverage? Services by a psychologist or psychiatrist may be limited in the number of office visits and/or the amount of reimbursement per session. There may also be caps on the number of inpatient hospital days for covered psychiatric disorders and substance abuse.
• Are "complementary" or "alternative" services part of the plan? Check whether the plan pays for treatment by chiropractors or acupuncturists, for example.
• Does the plan have a "lifetime maximum"? There may be a limit to the total healthcare benefits available to you over a lifetime -- typically, $1 million. This may seem like a lot of money, but if you develop a catastrophic illness or have a major operation (an organ transplant, for example), you could be well on your way to reaching the maximum level. For that reason, the higher the cap, the better.
• What do your co-workers think of their plan? If you get your health coverage at work, ask your fellow employees whether they're satisfied with the plans offered by your employer.

Published Oct. 21, 2002.

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