How to Choose a Medical Plan
Many employees today face a choice each open enrollment of two or more health plans. But how do you know which plan will work best for you? Following are a few pointers that may help.
HMO, PPO, HSA, what is the difference?
One key difference between different types of plans is the deductible and specifically what types of services the deductible applies to. For example, in most HMO plans, the deductible only comes into play if you are receiving care in a hospital, are having outpatient surgery, or need complex imaging such as an MRI or CT Scan. Most other services limit your out-of-pocket costs to co pays. Another feature of an HMO is the fact that you will need to always see your primary care physician first and receive referrals for almost everything else.
Most PPO plan deductibles work like the HMO deductible, but they also apply to diagnostic services such as x-rays and lab work. You also can see other doctors or specialists in the network without a referral.
The Health Savings Account (HSA) plan deductible is the broadest deductible. It will generally apply to all services with the exception of preventive care.
What are your best and worst case scenarios?
It also helps to consider your best and worst case scenarios under each plan. First, what does it cost to simply have coverage? Even if you didn’t file a claim all year, what will you spend in premium just to carry the card in your pocket?
Then look at your worst case. What is the out-of-pocket limit on each plan if you have a lot of expenses in a year? Imagine you have a hospital stay. How much will you have to pay out-of-pocket on top of what you already paid in premium?
How much health care do you actually use?
Now that you have an idea of what type of services will be subject to co-pays compared to deductible, and you have an idea of your best and worst case scenarios under each plan, what do you expect to use for health care if this is a typical year? You may find it helpful to look at your records from the past year to get an idea what you spent. If you can access your explanation of benefits (EOB) and pharmacy records from the prior year, you should be able to see what charges would have been toward a deductible even if they were subject to co pays when you had the service.
Other than specific preferences you may have for a certain plan type, the best way to prepare yourself to choose between plans is to simply do the math. If you don’t otherwise have a preference, you can always pick the plan likely to be most affordable.