I always feel bad for people who find health insurance confusing–the things that really make it hard to understand, most people don’t even encounter. Most initial questions revolve around ‘what’s a deductible?’ Right after ‘what’s the difference between an HMO and a PPO (see my other post about that).
When evaluating a health insurance plan, either individual health insurance or a group health insurance plans, the one thing most people look at is ‘what’s my co-pay?’ It’s a good thing to know that, but more importantly (to me) are the following three items:
- The Deductible
- Out of Pocket maximum
The deductible generally is what you pay before your coverage kicks in. Some benefits will be available prior to meeting the deductible, like the office visit co-pay. Deductibles are generally involved with PPO plans but in order to drive costs down HMO plans, particularly individual HMO health plans, are starting to have deductibles. I try to get my clients to look at the higher deductible health plans in order to save money on their monthly premium, but it all boils down to what people are comfortable with.
Co-insurance refers to what the insurance company pays versus what you pay once the deductible is met. you hear about 80/20, 70/30, 60/40 even 50/50 plans. The insurance companies pay the larger number.
The out of pocket maximum is really important because if something big happens to you, this is the number that keeps you from going broke. When a major health issue hits once you’ve met your deductible, and the 70/30 co-insurance kicks in, once your ’30% s’ hit the out of pocket maximum that is generally it for the rest of the calendar year. You may still have office visit co-pays and prescription co-pays, but other costs are pretty much taken care of until January 1 the next year. On a lot of PPO plans these can be $7500 or more, which isn’t chump change, but when you put that up against a surgery costing $100,000 or more, then it becomes a bargain.
Of course there are many other things to look at. Many individual health insurance plans in California, in an effort to come up with affordable plans, don’t cover maternity. Some plans offer generic drug coverage only, there’s all sorts of combinations coming up so you really need to look at what you are considering purchasing. That’s where an independent agent can come in handy.
Independent agents can help you sort through all of what’s available and help you decide which options will fit your situation best. AND, best of all, it doesn’t cost you anything to use an agent. The rates are the rates, and independent agents are paid by the carrier you place your business with. And a good agent will be there after the sale to hep you with any issues that come up. Be well!