How to Choose a Health Insurance Plan
In this post you’ll learn about:
- Deciding what’s important to you in selecting an insurance plan
- Using a health insurance checklist to sift through the options
The vast number of choices and decisions involved in selecting a health insurance plan makes the task complicated and confusing. This post replaces confusion with understanding and clarity by examing some of the major factors that you will eventually rely on to make your choice. The Checklist in Table 10-1 at the end of this post gives you a way to track your priorities and needs as you learn about health insurance plans.
Refer to the Checklist often and change your rankings as needed.
Drawing Up Your Selection Criteria
The first step in selecting a health insurance plan is determining your priorities and needs. The next step is comparing those priorities and needs with the coverage that a given health insurance plan offers. To make the selection process manageable, the next sections explain some of the major features that make up a health insurance plan.
Covering yourself, your spouse, and your dependents
If you’re employed and married or have a domestic partner, you may have some flexibility in choosing secondary coverage under a spouse’s or partner’s plan. For example, two adults who each have individual coverage may pay less in premiums than if both are covered under one policy with a family plan.
If you and your spouse are each covered by a group plan, you may be able to get secondary (additional) coverage under the other’s plan, or you may decide to forego secondary coverage and stick with one plan per person. Or one spouse may drop his or her employer’s insurance altogether and obtain coverage under the other’s policy. (Be sure that neither plan has provisions that prohibit this choice.) Weigh the cost of each option against the coverage you get before making a decision.
Some families include unmarried domestic partners. Check out your plan’s policies regarding coverage for domestic partners, but don’t be surprised if coverage isn’t available.
The issue of health insurance for domestic partners has no national legislation, nor does any state have regulations covering its employees’ domestic partners.
To cover a person under your health insurance plan, that person must be considered a dependent. The definition of dependent is based on your plan’s legal requirements concerning financial support. (In an employer-sponsored plan, the employer may also have input into the definition of dependent.) Some plans consider a child a dependent only if the child meets all of the following very specific criteria:
- The child is your responsibility by birth or legal adoption, or the child is a stepchild or a foster child.
- The policyholder provides more than 50 percent of financial support and maintenance for this child.
- The policyholder can claim the child as an exemption on his or her federal income tax return.
A child is considered a dependent if a legal court order mandates that the policyholder must provide coverage for the child. Other individuals may be considered dependents if they satisfy IRS requirements.
Health insurance plans’ regulations regarding coverage for children and/or other dependents may vary greatly, so check out the plans carefully. To make administration simple and consistent, some companies use some variation of the birthday rule, in which the primary coverage for eligible children is through the plan of the parent whose birthday falls in the earlier month of the year. For example, a parent born in May 1954 would assume coverage for the children, even though the spouse born in September 1950 is older.
Selecting doctors and hospitals
Many health insurance plans have an arrangement between the insurer and a selected group (or network) of doctors and hospitals and other health care providers. Such plans offer significant financial incentives to policyholders to use the providers in that network, including reducing your benefits when you use doctors and hospitals outside the network.
Before you decide to buy a particular health insurance plan, find out which doctors and hospitals are included in the plan’s network. Use this section to evaluate those doctors and hospitals. If they don’t satisfy your needs, evaluate other doctors and hospitals with this section and then look for a plan that uses the doctors and hospitals of your choice.
- Location of doctors and hospitals: If you prefer to deal with a nearby doctor or hospital, check to see whether these providers are part of the network of the plan you’re considering. If you travel much, find out what the plan’s benefits are if you need to consult doctors or visit hospitals outside the plan’s provider network.
Doctors are usually associated with a particular hospital. When selecting a doctor, keep in mind that you usually end up using the services of the hospital with which that doctor is affiliated.
- Primary care physician (PCP): A primary care physician is a doctor who provides or authorizes all care for a patient. Most HMOs and PPOs (see this post about How to Evaluate Your Health Insurance Plan Options for more information) require their members to choose a primary care physician.
If freedom of choice in selecting your primary care physician isn’t that important to you, an HMO or PPO may be a good choice for you.
If you’re already happy with a doctor who isn’t part of a plan network, a fee-for-service plan (also known as an indemnity plan) may be a good choice for you. This type of plan allows you the greatest choice of doctors and hospitals. You can also ask your out-of-network provider to consider joining a network — check with your benefits administrator for the forms.
Some doctors require payment at the time of service. Others offer a grace period for payment. Still other doctors file your insurance claim for you or file directly with the insurer. If you prefer not to pay the doctor and wait for your insurance company to reimburse you, find out what the doctor’s policies are and whether you can make special arrangements for payment.
- Specialists: Some plans require that you get a referral from your primary care physician prior to each time you see a specialist. Getting a referral usually involves a visit to the primary care physician for diagnosis and perhaps treatment to see whether the more expensive visit to the specialist is necessary. Check to see whether your preferred specialist is in the plan’s network or whether the network has a specialist who deals with your particular condition. Using an out-of-network specialist may cost you more.
- Hospitals’ quality of care: Most hospitals participate in an accreditation program that the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) administers. This organization surveys hospitals every three years to assure that they meet specific quality standards for staff and equipment, as well as for their success in treating and curing patients. Make sure that the hospitals within your plan’s network are accredited.
Call your state department of health, health care council, or hospital association to find out what kind of consumer information is available. You may also call or visit the hospital’s quality assurance staff. They should be able to tell you how they oversee and work to improve the hospital’s quality of care. In addition, ask them about recent patient satisfaction surveys.
- Nursing staff: Ask the hospital’s nursing staff how the staff is structured. In functional nursing, each nurse is responsible for particular tasks. In primary nursing, each nurse is responsible for a certain number of patients, generally resulting in better care. The patient-to-nurse ratio should not exceed six to one. Check that the hospital in your plan’s network has a structure and a patient-to-nurse ratio that provides optimal care.
- General or specialty hospital: If you or your dependents have a condition that requires medical staff with specific experience, you may prefer to be affiliated with a specialty hospital, such as a children’s hospital. In that case, check whether the specialty hospital you may need is within a plan’s network.
- Other services: Research some of the services that may be important to you — does the hospital offer community education programs, pre-admission testing services to reduce inpatient time, or a referral network with information about a more specialized facility? Are hospital-affiliated acute care centers (extensions of emergency rooms) located near your home? Is the food edible? Does the hospital accommodate special diets? Learn about the visiting hours and whether lodging is available for parents to stay overnight with their children. Tour the hospital to find out whether the rooms and halls are clean and comfortable and the staff is friendly and helpful.
Waiting for coverage to start
Be sure that you know exactly when your coverage begins. Insurance companies may sometimes impose a waiting period between the time you apply for or enroll in a plan and the date your coverage takes effect. The waiting period — sometimes due to a pre-existing condition — may apply to some or all of a plan’s benefits.
If you enroll in a group plan when you begin a new job or when your employer offers an open enrollment period, you usually don’t have a waiting period. Individual plans are usually stricter and most likely will impose a waiting period. Generally, you don’t begin paying premiums until your waiting period is over.
Keep in mind the kinds of medical care you may need when you’re switching insurance companies or plans and be sure that you remain covered, perhaps by extending your current plan and overlapping it with a new one.
Understanding accreditation of health insurance plans
You can check on the quality of the health insurance plan you’re considering through your state’s department of health or insurance commission or through consumer publications.
Investigate the insurance company itself by checking your library for insurance company ratings by organizations such as The A.M. Best Company, Standard & Poor’s, and Moody’s. These organizations base their evaluations on the insurance companies’ financial records, which may give you an idea of a company’s stability. A highly-rated insurance company generally won’t go out of business overnight and disappear without paying your claims.
Also check for accreditation, which indicates that a plan meets certain national standards set by independent organizations such as the Joint Commission on Accreditation of Healthcare Organizations (JCAHO). An insurance company’s decision not to participate in an accreditation program does not reflect one way or another on its quality. To find out whether the plan you’re interested in is accredited, ask your employer’s benefits manager or call the insurance company itself.
One company that offers accreditation of health insurance plans is the National Committee for Quality Assurance (NCQA). This company evaluates a health plan’s organization, structure, and quality improvement process. NCQA also uses the Health Plan Employer Data and Information Set (HEDIS), a group of about 50 factors, to measure plans’ quality of care.
Using Your Health Insurance Checklist
Use the Checklist in Table 10-1 to track what’s important to you in a health insurance plan. As you work through the Checklist, keep in mind current medical conditions, as well as the possibility of accidents, serious illnesses, and other surprises that life may throw your way. For now, leave blank the areas that you’re unsure about. By the end of the list, you should have a clear and fairly comprehensive picture of what your needs are and what type of health insurance plan will satisfy those needs.
Check one of the boxes to indicate how important each service is to you. The Checklist indicates importance on a scale of 0 to 5 — 0 is for the services that you don’t need at all; 5 indicates those that you think you’ll need the most.
Use a pencil to fill out the Checklist; as you learn more, your priorities may change. Use the blank lines at the end of the Checklist to add items of special concern to you.
Table 10-1: Checklist for Determining Your Health Insurance Needs
0 1 2 3 4 5
Choice of doctors q q q q q q
Nearby doctors and hospitals q q q q q q
Out-of-town doctors and hospitals q q q q q q
Costs q q q q q q
Ease of getting an appointment q q q q q q
Minimal paperwork q q q q q q
Waiting period before coverage q q q q q q
Covered medical services q q q q q q
Adult day care q q q q q q
Alternative treatments such as q q q q q q
acupuncture, spiritual care, and so on
Ambulance q q q q q q
Cancer screening (colorectal cancer tests, mammograms, Pap smears, and so on) q q q q q q
Chiropractic q q q q q q
Cholesterol screening q q q q q q
Dental care, braces, and teeth cleaning q q q q q q
Diabetes supplies q q q q q q
Drug and alcohol abuse treatment q q q q q q
Family planning q q q q q q
Hearing examinations, hearing aids q q q q q q
Home health care q q q q q q
Hospice care q q q q q q
Hospital care q q q q q q
Immunizations q q q q q q
Infertility treatment q q q q q q
Inpatient hospital q q q q q q
Maternity care q q q q q q
Medical equipment for home use q q q q q q
Medical tests and X rays q q q q q q
Mental health care q q q q q q
Nursing home care q q q q q q
Office visits to your doctor q q q q q q
Other covered services q q q q q q
Outpatient surgery q q q q q q
Pediatric care q q q q q q
Physical therapy q q q q q q
Physician visits (in the hospital) q q q q q q
Pre-existing condition care q q q q q q
Prenatal care q q q q q q
Prescription drugs q q q q q q
Preventive care and checkups q q q q q q
Rehabilitation facility care q q q q q q
Skilled nursing care q q q q q q
Smoking cessation counseling q q q q q q
Speech therapy q q q q q q
Surgery (inpatient and outpatient) q q q q q q
Vision care (eyeglasses, contact lenses, examinations, and so on) q q q q q q
Well-baby care q q q q q q