(WKBN) – Now is open enrollment time for most insurance plans. It’s your one chance to choose coverage for 2024, with some exceptions, and making sure you make the right decision can be stressful.
Going into open enrollment, make sure you understand the terminology. For instance, a premium is what you pay every month just to have insurance. It comes in a payroll deduction (weekly, bi-weekly or monthly) or it’s the amount you pay every month to be insured.
Next, you have words like co-pay, co-insurance and deductible. A copay is a fixed amount you pay for a health care service. For instance, you might have to pay a $10 copay for a doctor’s visit or prescription.
Typically, plans with higher premiums have lower copays and those with lower premiums have higher copays. This is where you can think about how much time you spend going to the doctor and choose a plan that coincides with how often you seek medical care.
A deductible is the amount you have to spend out of pocket before your insurance kicks in. This amount could be a few hundred dollars or thousands, depending on your plan. For instance, if you have a medical procedure that will cost $1,500 and your deductible is $500, you will have to pay $500 before the insurance kicks in to cover the $1,500 procedure (assuming you haven’t had any other medical costs that have been applied to your deductible –if so, it could be less.) So, the insurance company will help with the remaining $1,000 balance This is where coinsurance comes into play.
So, now you have a $1,000 balance that insurance will help pay. This is where you can look at what your co-insurance is. Many plans have an 80/20 formula, which means the insurance company will pay 80% after your deductible is met and you pay 20%. So on that $1,000 balance, your insurance company will pay $800 and you will have to pay $200.
There are other variables in plans. For instance in-network and out-of-network costs. Your insurance plan will typically have an agreement with healthcare providers on pricing. Those partnerships are in-network, so when you visit those partners, costs are lower. Other providers may not agree to those price structures and would be considered out-of-network, so coverage could be a lot less or not at all, and co-insurance could be higher, sometimes substantially higher.
Plans are laid out differently and personal preference and cost come into play when choosing. Mostly, plans are categorized as Preferred Provider Organization (PPO), Health Maintenance Organization (HMO) or a high deductible health plan (HDHP). There are other plans, but those are the most common.
According to HealthCare.gov, a PPO is a type of health plan that contracts with medical providers, such as hospitals and doctors, to create a network of participating providers. You pay less if you use providers that belong to the plan’s network. You can use doctors, hospitals, and providers outside of the network for an additional cost.
An HMO usually limits coverage to care from doctors who work for or contract with the HMO. It generally won’t cover out-of-network care except in an emergency. An HMO may require you to live or work in its service area to be eligible for coverage. HMOs often provide integrated care and focus on prevention and wellness.
With the HDHP, deductibles are higher than other plans, but the monthly premium is usually a lot lower because you pay many health care costs yourself before the insurance kicks in. With this plan, you can save on medical costs tax-free with a health savings account or HSA.
United Healthcare is one the biggest insurers in the country. It says the three biggest mistakes people make when choosing a healthcare plan are not doing enough research, misunderstanding the total cost of care (not understanding terms like deductible, copay, and coinsurance), and forgetting to confirm if a provider is in-network or out-of-network before services are provided.
The biggest thing about choosing a healthcare plan is your health, lifestyle, how often you use healthcare providers and planning for the unexpected.