Cutting the Clutter from Open Enrollment
October is a big month in health care: it’s both health literacy month and the period when open enrollment begins. Considering that just 4% of Americans are able to correctly define all four terms that determine how much they would personally have to pay for medical services and drugs they receive under their health insurance plans (deductible, co-pay, co-insurance and out-of-pocket maximum), we put together a quick list of considerations and definitions to help you navigate the murky terms and language as you prepare to select your plans during open enrollment.
Important Considerations During Open Enrollment
Open enrollment is the annual period during which individuals and employees can add or drop their health insurance and make changes to their coverage. When it comes to choosing a health plan, there are a lot of factors that you should weigh, including:
- Look beyond the sticker price. When looking at which plan will fit your needs, it’s important to keep in mind that the plan with the lowest monthly premium may not be the plan with the right coverage for you. If you are in need of a lot of health care, a plan with a higher premium but lower deductible may actually save you money. Note that even before you’ve met your deductible, many plans include fully covered preventative care (including screenings, immunizations, counseling, regular check-ups, flu shots and cholesterol tests) that is free to you, which should also be part of your equation to determine the right coverage.
- Ensure that a good experience is important to your health plan. Health care should be easy. It’s not, but many plans are taking big steps to help their members navigate the system more easily. Check out their website and make sure it’s intuitive and easy for you to use. Check things like the hours customer service is available and if they offer services in your preferred language. Is the site accessible? Is it mobile friendly for when you need it on the go?
- Double check to make sure your preferred providers are still in network. Even if you are thinking of staying with your same health insurance plan to keep your favorite family doctors, you need to check to ensure they are still covered by your current plan in the new year. Insurance plans change providers regularly, so double check.
- Check for alternative care options. Do you prefer quick and easy access to health care from home? See if they provide telehealth coverage. Or want to make sure that your naturopath, physical therapist, acupuncturist or massage therapist are in network and covered, if those are services are part of your regular health care routine.
- Get the tools the help make you a smarter health care consumer. What do the health plans offer to empower you to take more control over all the aspects of your health care? Can you search online for physician options by preferences like gender and location? Can you schedule appointments and compare costs from directly within the tool? Make sure to check if the plan you are thinking about offers cost transparency and robust provider search tools, but see what they do to go beyond those features as well.
- Weigh the perks. Many health plans offer wellness programs and incentives or rewards for various behaviors. Can you get rewarded for engaging in healthy behaviors?
- When in doubt, go to HR. If you are selecting your health care plan through your employer, then it really does make sense to go to human resources! They know or can point you to experts who can help answer your questions and select the right plan for you and your family.
Understanding Types of Health Plans
- High-deductible health plan (HDHP). A HDHP has higher annual deductibles than traditional health plans, such as a PPO or HMO (see below for more on those terms). With the exception of preventive care, covered employees must meet the annual deductible before the plan pays benefits. HDHPs may have significantly lower premiums than other traditional plans.
- Health savings account (HSA). HSAs may be opened by employees who enroll in an HDHP. Employees can put money in an HSA up to an annual limit set by the government, using pre-tax dollars. Employers may also contribute funds to these accounts within the prescribed limit – yours will let you know if this is a benefit they offer. HSA funds may be used to pay for medical expenses whether or not the deductible has been met, and no tax is owed on funds withdrawn from an HSA to pay for medical expenses. HSAs are individually owned and the account remains with an employee after employment ends.
- Health reimbursement arrangements (HRAs). Unlike HSAs, only an employer may fund an HRA and the funds revert back to the employer when the employee leaves the organization. HRAs are not subject to the same contribution limits as HSAs, and they may be paired with either high-deductible plans or traditional health plans.
- Preferred Provider Organization (PPO). A PPO is a health plan that contracts with medical providers 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.
- Health Maintenance Organization (HMO). An HMO is a type of health insurance plan that 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.
- Medicare. Medicare is a federal health insurance program for people 65 and older. This program also extends to some individuals under age 65 who have disabilities.
- Medicaid. Medicaid is an insurance program that provides free or low-cost health coverage to some low-income people, families and children, pregnant women, the elderly and people with disabilities. Many states have expanded their Medicaid programs to cover all people below certain income levels.
Other Key Terms Defined
- Premiums. A premium is the amount you pay for your health insurance each month.
- Deductibles. A deductible is the amount you pay for health care services before your insurance starts paying for health services.
- Copayment. Copayments are the fixed amount ($20, for example) you pay for a health care service that is covered (paid for by your insurance company) after you’ve paid your deductible.
- Coinsurance. Coinsurance is the percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.
- In-network. Doctors, clinics, hospitals and other providers with whom the health plan has an agreement to care for its members. Health plans cover a greater share of the cost for in-network health providers than for providers who are out-of-network.
- Out-of-network. A health plan will cover treatment for doctors, clinics, hospitals and other providers who are out-of-network, but you will pay more out-of-pocket to use out-of-network providers than for in-network providers.
- Out-of-pocket limit. The most you could pay during a coverage period (usually one year) for your share of the costs of covered services, including co-payments and co-insurance.
For more key health care terms and information, you can use the HealthCare.Gov Glossary