By David Pittman, Contributing Writer
Health Behavior News Service
Through both her personal and professional life, DeAnn Friedholm knows all too well how difficult it can be navigating the waters of the health insurance market.
As Director of Health Reform for Consumers Union, the folks behind the popular Consumer Reports publications, DeAnn is familiar with the ins and outs of health insurance and health care delivery in the U.S.
Several years ago, she had to shop for her own health insurance. The prospective insurance company discovered she had had a couple of benign tumors more than a decade before and so denied her coverage because of her preexisting condition.
Just like that, Friedholm had no good option for insurance in case she needed to see a doctor.
Illustration by Steve Goodwin/7rains
Friedholm went without health insurance for a year before landing a job at a large company that provided it. In the meantime, she paid the full doctor’s bill herself and prayed nothing catastrophic would happen.
“We have all kinds of examples of that, where people were denied coverage and couldn’t find anybody to cover them because of something in the past that no longer is a current issue for them,” Friedholm said.
Whether you have a preexisting condition or not, are new to shopping for insurance or trying to figure out what coverage you do have, there are resources to help with this often complicated but important purchase.
First Things First
If you are seeking health insurance, the first thing you should do is figure out what coverage you are eligible for, recommends Cheryl Fish-Parcham, deputy director of health policy at Families USA.
Find out if you can gain coverage through your employer or if you can be placed on your spouse’s or parent’s plan. About 55 percent of Americans have an employer-sponsored plan while another 10 percent buy it on their own, according to the U.S. Department of Health and Human Services (HHS).
Don’t know an HMO from a PPO?
Here are some of the most common terms you will encounter when selecting and using health insurance:
Premium — the amount you and/or your employer pays for health insurance. It can be paid monthly, quarterly or yearly.
Deductible — the amount of money that must be paid out-of-pocket for a health care service before an insurer will start to pay
Co-payment — a fixed amount you pay when receiving a health service, such as a doctor visit or to receive prescription drugs
Co-insurance — the percentage an insured person pays for a service after a deductible is met. Your insurance pays the rest.
Network — the hospitals, physicians and other health care providers your insurance has contracted with to provide health care services.
HMO (health maintenance organizations) — managed care plans that have a closed network of providers you can visit. Most HMOs require you to have a primary care physician who will refer you to a specialist if needed.
PPO (preferred provider organization) – managed care plans that allow you to visit any doctor from a preferred network of hospitals and physicians. Under PPOs, you can visit a doctor out-of-network, but you will be charged more.
Out-of-network — health care providers not contracted to provide services to customers on a particular health plan
Out-patient — a person who visits a hospital or clinic for medical services but does not require an overnight stay
Inpatient — a person who is admitted to a hospital for at least one night for ongoing care
Mental Health Care — the diagnosis and treatment of mental illnesses, such as depression
Figure out if your income, age or other factor, such as a disability, makes you eligible for a state or federal health plan. For example, the federal Medicaid program is designated for those with low incomes and children while Medicare covers people over 65 and certain people under 65 with a disability.
Next, consumers should look at how much they will be paying; both for premiums-money paid on a regular basis for health insurance-and through deductibles and co-insurance, which are the amounts insurance companies require you to pay before they cover a portion or the rest. Because everyone has different health needs based on age and health condition, it’s difficult to say overall how much a good plan should cost. “You want to get an idea of what’s available to you in the market,” Fish-Parcham said.
Cost of insurance typically varies from state to state and from region to region as the population by age, race, and sex, the numbers of uninsured and providers, local health care costs, insurance companies and taxes vary.
Additional questions you should ask yourself include: Are prescription drugs covered? Are mental health services included or limited? What is the difference between coverage for out-patient care, like from a doctor’s office, and hospital care or visits to an emergency room?
A common pitfall is choosing the plan that has the lowest deductible without looking at what’s covered under the plan. “That’s a big mistake,” Fish-Parcham said.
Mari Edlin of California is a freelance writer who has shopped for and purchased health insurance on her own for 24 years. She advises that people evaluate their lifestyles and medical histories to figure out what they need in terms of routine doctor’s visits and possible specialty care.
As a 59-year-old who expects to have health problems, she admits to paying high monthly premiums in exchange for lower-cost office visits. For example, recent back surgery, which included a hospital stay, only cost her $100.
“I guess I feel a little content paying a slightly high premium knowing everything else I pay is very small,” Edlin said.
If navigating the health insurance sea is still a little rocky, there may be some help coming later this year. Starting in September 2012, insurance companies will be required to issue a summary of your insurance benefits in plain, easy-to-understand language. Using uniform standards developed by HHS, the goal is to help customers understand their health insurance coverage and how to use it.
The new benefits summaries will not only tell you what you are paying for and what’s covered but also provide a dictionary for common terms such as “deductible” and “co-payment.”
If monthly premiums seem to take a big chunk of your paycheck, Tommy Taylor, managing consultant with the health insurance broker Willis, in Texas, suggests considering a high-deductible plan. Deductibles are the money insurance plans require you to pay first before their coverage kicks in. When employer-sponsored health insurance started to become popular in the 50’s and 60’s, deductibles of $50 or $100 were common. Now, high-deductible plans often have $1,000 to $5,000 deductibles.
Insurance companies offer lower monthly premiums with these higher deductible plans because the policy holder is willing to pay more of their health costs up front. In some cases, such plans might cover routine office visits and prescription drugs with lower co-pays. Knowing your health condition and how frequently and likely it is that you will need to see a doctor or receive health care services, will influence the package of health coverage, premium and co-payments that work best for your or your family’s situation.
Taylor drafted an example of a plan for someone living in Austin, Texas. Coverage with a $500 deductible would cost a sample individual $603 a month and a family $2,015. That same person could drop their premiums to $330 per person per month with a $3,500 deductible.
“That’s what a majority of our employers provide,” Taylor said. And added that he believes, “What you should be able to do is buy the plan you are comfortable with.”
Resources, Asking for Help
Fortunately, there are several avenues to guide you along the way if you are lost or need help. And it’s never wrong to ask someone if you are confused or need guidance, DeAnn Friedholm said.
Healthcare.gov is the federal government’s website that provides information on finding and using every kind of insurance, including a guide to selecting insurance. Cheryl Fish-Parcham also noted it has a useful tool to compare small group and individual policies by state.
The Consumers Union, like many other patient advocate groups, has created guides to health insurance designed to help people understand and use their health insurance coverage.
Independent agents can also help. “Be sure that they are licensed in your state before you use them,” Fish-Parcham said. State insurance departments are a good place to check for complaints or compliance charges against plans and agents.
Need help finding and understanding health insurance?
Here are some helpful websites:
Resources from the U.S. Department of Health & Human Services
Resources from Consumers Union
Health Behavior News Service is part of the Center for Advancing Health
The Health Behavior News Service disseminates news stories on the latest findings from peer-reviewed research journals. HBNS covers both new studies and systematic reviews of studies on (1) the effects of behavior on health, (2) health disparities data and (3) patient engagement research. The goal of HBNS stories is to present the facts for readers to understand and use for themselves to make informed choices about health and health care.