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How to Get the Best Value for Your Health Insurance Plans

Do homework during open enrollment to save money

Welcome to November, with its shorter days, cooler weather and, for many, decisions about choosing a health plan for the coming year.

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Whether you're covered by an employer's insurance plan, you're covered by Medicare or you are self-employed or unemployed, doing homework during "open enrollment" can help you get the best value for your money. You may find that you have more options for 2012.

Overall, employers that offer health care coverage are providing more choices, according to recent data from my agency, the Agency for Healthcare Research and Quality (AHRQ).

Large firms that offer health insurance are more likely to offer workers two or more plans now than they were 10 years ago. Unfortunately, our report also found that the percentage of employees who are offered health coverage is less today than it was a decade ago.

When you know your options and how they work, you can better decide which option fits your personal situation. Your choice may be different depending on whether you have a spouse or dependent children or if you need certain medicines.

Getting Started

To help people covered by Medicare review their options, the federal government expanded its open enrollment period for 2012. Open enrollment continues through Dec. 7, 2011, which is the deadline to pick a new Medicare plan. (You don't have to do anything if you want to keep the one you have.)

Compare your choices using Medicare's Prescription Plan Finder. This tool will help you find and compare the different kinds of Medicare Advantage health care plans (or Part C) and Medicare prescription drug plans (Part D). An online demonstration of this tool is available on YouTube.

If you're self-employed or unemployed, finding a health care plan takes more work. Healthy individuals who can afford out-of-pocket expenses might consider a high-deductible plan. Under these plans, you will have to pay much more yourself before the plan covers any expenses. The advantage is that premiums are lower than other types of coverage. The National Association of Insurance Commissioners offers tips to help you understand and apply for individual coverage.

If you've lost health care coverage because of a job loss, you may be able to continue it for 18 months. You will pay higher premiums, however. A Federal law known as COBRA lets workers who have lost group coverage continue those benefits. More information on how the COBRA law works is available here.

If you are uninsured because of a preexisting condition, you may be able to receive insurance through a temporary high-risk pool created under the Affordable Care Act. The program is funded by the federal government, but states can choose how or whether they want to participate. The program began on July 1, 2010, and ends on Jan. 1, 2014.

Understanding how different health care plans work can make it easier to choose wisely. You may prefer to pay more to get a wider choice of doctors, for example, or to use generic medicines instead of brand-name ones to save money.

Keep in mind that not all health care plans pay for the same services or pay the same amounts for services. (One exception is Medicare, which is required by the Affordable Care Act to pay for certain preventive benefits.)

Plans also vary in how much you'll pay before your insurance covers you. These are called out-of-pocket costs, and they usually are in the form of deductibles or coinsurance. The deductible generally is an annual amount that is not covered by your health care plan. It must be paid before your plan starts to pay for your care.

Coinsurance is the percentage of your health insurance bill that you must pay when you file a claim. You must usually pay this percentage in addition to the deductible.

The alphabet soup of health care plans

Health care plans differ in what they offer and what providers you can choose. You are likely to pay more for a plan that gives you many options for choosing doctors and hospitals. Health care plans typically fall into one of these groups:

  • Conventional indemnity: The least restrictive type of coverage, indemnity plans allow you to see any health care provider without affecting what you pay. These plans are not common in populated areas, but still exist in rural areas.
  • Preferred provider organizations (PPOs): A form of indemnity insurance where coverage is provided through a network of selected providers. You can go to providers outside of the network, but you will pay a larger portion of the costs.
  • Exclusive provider organizations (EPOs): This is a more restrictive type of PPO. It covers services only if you go to doctors, specialists or hospitals in the plan's network, unless it's an emergency.
  • Health maintenance organizations (HMOs): The most restrictive type of health care plan, HMOs provide medical services to members in exchange for a fixed fee. They stress preventive care as a way to keep patients healthy and save money.
  • Medicare Advantage plans (Part C): Private insurance companies contract with Medicare to provide you with Part A (hospital) and Part B (doctor, outpatient care, home health) benefits. Many, but not all, of these plans include the Medicare prescription drug benefit (Part D).

Readers of this column know I am passionate about making health care better. That's why I urge you to pay attention to the information about the quality of health care plans, including Medicare Advantage plans. This can help you understand what a plan does well, what it needs to do better and whether it's a good fit for you.

Of course, choosing a good health care plan is no guarantee against getting sick. But a wise choice will make it easier for you to continue to take an active role your health.

I'm Dr. Carolyn Clancy, and that's my advice on how to navigate the health care system.

Also of interest: Medicare scammers target open enrollment.

Carolyn M. Clancy, a general internist and researcher, is an expert in engaging consumers in their health care. She is the director of the U.S. Agency for Healthcare Research and Quality.