- I just started a new job at business insider and had to choose a health insurance plan for the first time.
- Deciding which plan to choose was really complicated, and I’ve been writing about health care for years.
- Here’s what I learned about choosing a health insurance plan and why I didn’t go with the cheapest option.
I recently got a new job here at business insider.
And for the first time, I had to choose a health insurance plan from the four options offered by our parent company, Insider Inc.
should be pretty well positioned to do that. I’ve been writing about health care for years, and I’m married to a doctor.
However, I found the options confusing and had a hard time deciding which plan would be best for me. so I asked a couple of experts (and the internet) to help me choose the right plan.
This is what I learned.
The standard advice for choosing a health insurance plan goes something like this: Pick one with a monthly cost (known as a premium) you can afford and one that covers the drugs and doctors you need.
If you’re relatively healthy and don’t expect to see a doctor a lot, choose a plan with higher out-of-pocket costs and lower monthly premiums. If you need to see a doctor more often or take prescription medications regularly, you may want a more expensive insurance plan that costs more each month.
comparing insurance plans: it’s complicated
However, it turns out that choosing the right plan is much more complicated.
I asked david anderson, a duke researcher who used to work at a health insurance company, to review my options. (He also wrote a blog post about how he chooses his own family’s insurance; I found it very helpful and inspired the image at the top of this article.)
luckily, I’m pretty healthy, so I don’t really go to the doctor or take a lot of prescriptions.
anderson presented me with a couple of simple scenarios: one where I have to go to the ER for something relatively simple, at a cost of $1,000. and another where something terrible happens (say, I get hit by a bus) and I end up needing $50,000 in medical care.
anderson found something surprising. in any case, the plan in which my total costs would be lowest was my company’s “high deductible” plan. that might not always be the case, depending on the specific medical care you needed. but it’s worth digging deeper to understand why, and why I still haven’t picked up my company’s cheapest plan.
here is part of anderson’s analysis. I have rounded some of the figures because an informant asked me not to reveal too many details of our plans. All of these costs are for one person who gets all of their care from doctors and hospitals that accept in-house health insurance (known as “in-network”).
You’ll often hear people talk about insurance “deductibles.” A deductible is the amount of money you have to spend out of pocket on health care, before your health insurance kicks in. but you’ll notice that in the chart above, I don’t mention deductibles at all.
Instead, I am focusing on another feature that is just as important. That’s the out-of-pocket maximum, which is a term for the total amount your insurance plan will require you to spend on health care in a single year. once you spend more than that amount, health insurance will cover the rest of your care.
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(When your spending is more than your deductible, but less than your maximum out-of-pocket limit, you will still have to pay some of the costs of seeing a doctor or picking up a prescription. This can be a flat fee of $25 or $50 to go to a clinic, known as a copay, or it can be calculated as a percentage of the cost of a visit, in which case it is called coinsurance).
A note: If you don’t have access to a health policy researcher to perform this analysis, a quick trick is to add up your total annual premium and maximum out-of-pocket limit from your insurance options. that will give you a quick idea of how much you could end up paying, in total, if something really bad happens.
what does a deductible do, anyway?
Your health insurance company should also do a similar analysis for you, although it’s usually buried in the middle of a document you receive from hr or the insurance company, called a summary of benefits and coverage.
Above, you can see that the high-deductible plan (called an HSA plan, which refers to a type of savings account that goes with it) has a big financial advantage over the other options, because Insider offers it to employees for free — there is no annual premium. and the company will also give you a few hundred dollars to spend on your health care. the next cheapest plan costs almost a thousand dollars a year.
I should note that our high deductible plan is quite generous. limits the total amount you could end up spending on health care in a given year to around $3,000.
On top of that, all of your care is free. The main caveat is that the limit only applies to care you receive from doctors who are in your insurance network.
Overall, it’s a very good option for a lot of people. Margaret Bowani, who oversees health insurance here, told me that she chose it for her own family and that she is also popular with many of the company’s younger employees.
ashish jha, a physician and health policy researcher at harvard, has written about his own experience using a high-deductible plan for his family. he would definitely recommend reading his article before opting for a high deductible plan.
avoid financial catastrophe
I ended up choosing the high deductible plan. A great reason to have insurance is to reduce the chance of financial catastrophe. and in that sense, i was worried that the hsa plan would fall short.
There are three other plans listed.
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almost ignored the epo plan; could be a good option for someone who needs to see a doctor regularly and is willing to stay within a more limited network of doctors. The plan does not offer any coverage if you go to a doctor or hospital that is not included in its network. It’s much more expensive than the HSA plan and it wouldn’t make sense to me because I don’t need a lot of care.
Both ppo plans offer a broader selection of doctors than their less expensive counterparts. The “High PPO” plan has a lower deductible and out-of-pocket limit, but its initial cost is much higher. Since I hope I don’t end up needing a lot of medical attention, it’s also not a good option for me.
That leaves the “low ppo” plan, which is the one I ended up choosing.
ppo plans, in addition to their larger networks, will also pay for out-of-network care, although it would be very expensive. hsa and epo plans do not cover any care given by doctors or hospitals not in their network, except in an emergency.
why I chose a more expensive plan
It’s hard to know which doctors fall outside the smaller network: you can search for individual doctors or facilities, but it’s impossible to get a more holistic view of who’s in and who’s not.
I’ve heard enough horror stories about people getting five- and six-figure bills for care their insurance doesn’t cover, and the data backed up my concern that it’s a really big problem. While nothing short of a change in federal law can prevent that from happening altogether, I thought choosing a plan with some out-of-network coverage might help (New York has some state laws that protect me, too).
dahlia remler, a health economist at baruch college of the city university of new york, has also written about why out-of-network coverage can be important if you’re sick, based on her own experience trying to find a neurosurgeon to treat a rare type of tumor.
For what it’s worth, both Anderson and Tom Loach, the director of carrier relations at the ehealth insurance shopping site, told me I’d probably be fine with the more limited coverage.
“You can’t really make a bad decision because you’re not going to use it anyway,” loach said.
Still, I thought I’d opt for better protection. so I’m spending about $1000 a year on the “low ppo” plan.
Hopefully, when next year rolls around, I still won’t be seeing a doctor much and that thousand dollars will have been wasted money.
But I know there’s a slim chance it was worth it. who knew health care could be so complicated?
Do you want to tell us about your experience with health insurance? email the author at [email protected]