Key questions: Choosing your family’s health insurance

The package of information came in the mail. It covered just one part of the Medicare plan choices: the Part D prescription drug coverage. It weighed two pounds. Health insurance decisions are weighty questions! Every year, you need to make those decisions. If you do nothing at all, you are choosing to continue with last year’s insurance, even if the premium or coverage has changed. What do you need to know to make a good decision?

Two pounds is a lot of paper, but you don’t need to read that much. The key is figuring out the important questions. Just four questions will give most people all the information they need to make a decision:

1. What are my routine health care needs?
2. Are my health care providers in-network?
3. What does this plan cost?
4. How much will my prescriptions cost?

This is the one of a series of articles on understanding health insurance. Click here for all of the articles. This series covers basics — exceptions and complications go beyond the basics.

What are my routine health care needs?

Everybody’s health is different. Start by looking at the past year for yourself and your family.

• How often did you (or your son, daughter, spouse) see a health care provider?
• Did anyone go to an emergency room or urgent care?
• Does anyone have a chronic condition, such as high blood pressure?
• Does anyone have allergies that need regular treatment?
• Does anyone in your family have ongoing treatment appointments: physical therapy, mental health, diabetes management, etc?
• Has anyone in the family had surgery, or been hospitalized, in the past three years?
• Do you anticipate any surgery or hospitalization during the year ahead?

Answering these questions will give you a good idea of the kind of health coverage you will use in the year ahead.

Are my health care providers in-network?

Many people have doctors or clinics that provide their regular health care. Make a list of the doctors, clinics, therapists, etc. that family members see for care.

In a Health Maintenance Organization (HMO), you choose one HMO doctor as your primary care physician. That doctor would make referrals for any other service that you need. Referrals are limited to other HMO health care providers.

Other insurance plans use a preferred provider organization model. That means you can go to any health care provider, with or without a referral. The insurance terms encourage you to choose only in-network providers. You will pay a much higher price for providers who are out-of-network.

Each health insurance plan has its own network. Providers may be in many networks. You can check online or by phone to see whether your providers are in the network for a specific plan.

What does this plan cost?

Health insurance doesn’t cover all health costs. To figure out what the plan costs, look at the premium and the out-of-pocket costs. Out-of-pocket costs include the deductible, co-payments and co-insurance. (For a detailed discussion, see Putting together the puzzle: Deductibles, co-payments, co-insurance, out-of-pocket limit.)

The premium is the amount that you (or your employer) pay each month for health insurance.

The deductible is the amount you pay for health care each year BEFORE your insurance company starts paying. After you pay the deductible amount, you pay a part of each bill as either a co-payment or co-insurance amount.

Co-payment is a specific dollar amount that you pay for specific services. For example, your policy might say that you have a co-payment of $22 for each doctor’s office visit.

Co-insurance is a percentage amount that you pay for health care services. For example, your policy might say that you pay 20 percent of the bill for each meeting with a psychologist.

The out-of-pocket limit is the maximum amount that you have to pay for health care each year. The legal maximum for out-of-pocket limits is $6,450 for an individual and $12,900 for a family in 2015. Most insurance plans have lower limits.

In general, a plan with lower premiums will have higher out-of-pocket costs. If you use a lot of health care services, higher co-payments and co-insurance can add up fast. If someone in the family visits the emergency room or is hospitalized, a high deductible can mean that you will pay a lot.

If you earn less than 400 percent of the poverty level, you can get some help in paying premiums. For more details, see If you can’t afford health insurance: Three ways to get help.

How much will my prescriptions cost?

Prescription costs can add up quickly. Insurance covers some of the cost, but the amount varies from one medication to another. Some medications are not covered at all.

Start by making a list of all the prescriptions for all family members. Then check this list against the insurance policy’s drug formulary. The formulary is a complete list of what drugs are covered, and how much of the cost the insurance company will pay. Here’s an example:

• Tier One: Generic medicine – $10 co-pay for a 30-day supply
• Tier Two: Preferred brand names – $30 co-pay for a 30-day supply
• Tier Three: Non-preferred brand names – $50 co-pay for a 30-day supply
• Tier Four: Specialty drugs – $50 co-pay for a 30-day supply

Each insurance company has its own tiers. Some may have two tiers of generic drugs. Insurance companies make changes in their formularies, so it’s important to check this every year. See Trouble ahead? Three health insurance alerts for more information.

Complications

When it comes to insurance, nothing is simple. This series covers basics — exceptions and complications go beyond the basics. MNSure has “navigators” throughout the state to help with questions. You can find a navigator near you on the MNSure website.

Articles in this series:

• Trouble ahead? Three health insurance alerts
• Open enrollment time: Should you renew or change your health insurance?
• Beyond the premium: What will you really pay for health care?
• Putting together the puzzle: Deductibles, copayments, co-insurance, out-of-pocket limit
• What you need to know about health insurance bills, networks and tiers
• What does health insurance cover?
• If you can’t afford coverage … three ways to get help
• Key questions: Choosing your family’s health insurance