Here are some questions you should ask to evaluate an individual health insurance plan:
- Copay: I go to a general doctor, and the bill for the doctor visit (excluding lab work) is $300. This is my first visit for the year. How much do I have to pay?
- Lab work . Is lab work and doctor cost included in the same deductible or are they separated?
- Contracted rate vs. actual rate. I go to a general doctor, and he recommends lab work to be done. How can I tell the contracted rate (i.e. the actual amount of this procedure) which the doctor is allowed to bill)? b)If the contracted rate is $500, how does the insurance company figure out what portion of that amount it will cover and the amount I will need to pay?
- Prescription Copay: My doctor writes me two prescriptions: a)a generic drug worth $50, and b)a brand name drug costing $200. How much will I need to pay if this is the first prescription in the calendar year?
- Prescription Deductible: Is there a separate deductible for prescriptions or are they mixed together?
- Coinsurance: I have reached my annual deductible of 5000. I incurred $6000 of expenses (i.e., office lab work, but not prescriptions). How much will my health insurance pay of that extra $1000?
- Maximum Out-of-Pocket: What is the maximum amount total that I will be expected to pay for one calendar year?
- Routine Exams: I want to get a routine physical at my primary physician and it is the only doctor’s visit I have made in the year, what will I need to pay? If a doctor recommends $500 of tests in addition to the cost of the routine office visit (and $500 is the contracted rate for these tests), how much of that amount will be included in the insurer’s coverage of the physical? How much of it will go towards my deductible? Is lab work recommended during the physical reimbursed any differently from lab work recommended during an office visit?
- HSA Eligible: Can I use money from my health savings account for this plan? (Read about HSA guidelines here).
- Initial exclusions. Suppose a day after the policy begins, I get in a serious illness or become afflicted with a serious illness. Are there any initial restrictions on your company’s obligation to cover me? How long do these restrictions last?
- Caps on Chronic Conditions. Suppose I have a chronic condition. Are there separate lifetime limits for claims related to any kinds of chronic conditions?
More about HSA Eligibility: Ehealthinsurance says a health insurance plan must meet the following criteria to be considered HSA eligible:
- The health insurance plan must have an annual deductible of at least $1,100 for individuals and at least $2,200 for families.
- The sum of the annual deductible and the other annual out-of-pocket expenses required to be paid under the plan (other than premiums) does not exceed $5,500 for individuals and $11,000 for families.
The most confusing thing to me is coinsurance. “Coinsurance is the term used by health insurance companies to refer to the amount that you are required to pay for a medical claim, apart from any co-payments or deductible. For example, if your health insurance plan has a 20% coinsurance requirement (and does not have any additional co-payment or deductible requirements), then a $100 medical bill would cost you $20, and the insurance company would pay the remaining $80.” (RJ: That would seem to suggest that coinsurance is bad and the closer to 0%, the better. However, I see that high deductible plans have 0% coinsurance, while small deductible plans have coinsurance minimums (usually 20-30%). What a strange nonintuitive detail!
Another important thing to keep in mind is which expenses count towards your deductible? In many cases, all lab work and medical tests are to be paid by you until the deductible is finally met. When the doctor participates in a particular network, they sign an agreement to limit the costs of medical tests to the patients (that is called the “contracted rate”). In fact, this agreement is a hidden advantage of health insurance because it helps you avoid paying a higher rate for tests and lab work. The key thing is understanding that most lab work will not be covered by coinsurance, so you will be responsible for all of it until the deductible is met. Also, to be truly cost-conscious, you should go to the insurance provider’s website to find out what “contracted rate” which the doctor has agreed to when they signed up for their provider network.
Finally, two things are worth mentioning. In 2012, Obamacare expanded its requirements to preventative care which need to be 100% covered by doctors. That doesn’t mean you will still have to pay for lab work, but it is nothing to sneeze at. Second, on Jan 1, 2014, individual health plans will be forbidden to do underwriting to weed people out and to add special rider to at-risk people. At that date, you are guaranteed to get coverage from wherever you apply for coverage without having to answer a questionnaire (and submit to the prying questions via telephone by a nurse practitioner)
Before I cover the details of each plan, let’s stop and look at the big picture for a moment.
- 2009 (43 years old): $132 per month + 16 dental for $5000 deductible, 10,000 out of pocket
- 2010 (44 years old) $197 per month for $5000 deductible, 10,000 out of pocket
- 2011 (45 years old): Not 100% sure, but I think Aetna raised my rates to $210 (company-sponsored).
- 2012 (46 years old), $212 +35 dental, 3500 deductible, 6500 out of pocket. (blue cross)
- 2012 (46 years old) $205 + 18 dental, 2000 deductible & max out of pocket, (Company-sponsored-United)
- 2012 (47 years old) $ $243 + 36 dental, 5000 deductible & max out of pocket (Cigna)
December 2012 to present. Shucks! My assignment ended early, so I ended up having to look for individual plans again. And the Blue Cross plan I had only two months ago was now $30 higher. Ultimately, as a 47 year old I went with CIGNA’s $5000 deductible/$5000 max out of pocket plan because copays for PCP/specialists were $30 and there was no copay for urgent care/hospital care. I ended up going with the TX Open Access Plus 5000/100%. My total monthly premium was $279, but that includes $35 per month for dental.
An odd thing. People who know me know that I am practically a teetotaler, and yet in underwriting, Cigna asked me several questions about drinking, and indeed that was the primary question they honed in upon on the telephone with the doctor. Really strange.
October 2012. A short term assignment with ADP offered me full benefits. I didn’t expect to stay long at this company, and as it happens I stayed only 2 months. Interestingly, their health insurance coverage wasn’t that great and it was only slightly cheaper than my individual plan. But the maximum out of pocket was significantly less. I paid a monthly rate of $205 and dental $18.41 for United Health Care. Details for me as a 46 year old: $2000 deductible, (which is the same as maximum out of pocket), $25 copay for doctor’s visit (no specialist required), but $200 copay for emergency room visit. Yikes!
Here is my individual health care choice for July 2012 as a healthy (albeit overweight) 46 year old.
Notes: I did this screengrab from the very helpful plan comparison engine on the federal government’s site. It basically has the same information, with the addition of how many people receive surcharges on their plan and how many applications are denied. Here is my rationale for choosing the plan. I’m still in good health though over time I expect to incur more medical costs. The big thing I worry about is the cost of lab work and surgery — though I’m guessing that Blue Cross Texas can negotiate good rates. I’d like a lower maximum out-of-pocket (6500 instead of 10,000), and to be frank — even $6500 is a lot of money to drop down all at once. The quoted rate was $212 + $35 dental, though I’m assuming that Blue Cross will be adding a surcharge like United did (probably $30-35 like United did). (Update: No surcharge — hooray!)
Important April 22, 2010 Update: I have decided not to sign up for the United Health policy. They classified my body weight as “Standard” rather than “Normal” and used that as an excuse to raise my rate by $30 per month. (MY BMI is 28, and the age of 44, it is hardly excessive). It is United’s right to do this, but I don’t like the way they handled it. That’s something they should have notified me in writing about immediately. They did not do this; instead they allowed me to discover it on my own several weeks after I did my application. This is totally not cool. United might still be a good deal for people with a BMI under 28, and so I am leaving the details of their policy here until I choose a new one.
For 2010 I have chosen United Health One Copay Select 70-5000. Its monthly premium was 167$ as of April 2010. Here are the reasons:
- I totally resent Aetna for raising my monthly rates from $132 to $188 in 15 months. Anything but Aetna!
- United health is a Network plan (not a PPO), but choice of doctor didn’t really matter to me anymore. Not one bit.
- United health has lower costs of generics but slightly more complicated prescription drug coverage.
- I almost went for the 7500 or 10,000 plan with United Health, but the agent told me that maximum out-of-pocket is the deductible + $5000. I felt very uncomfortable with the possibility of having a potential $15,000 liability.
- United apparently has two different categories of lab work: preventative and diagnostic. Preventative is more generously reimbursed because it falls under the $200 ceiling for physicals.. Actually, my notes are very sketchy here. A greater percentage of lab work for diagnostic (ie. normal office visits) must be paid by you towards your deductible. I think I wrote that it’s a 30% copay? I will doublecheck.
So United plan is 15% cheaper while cutting a few corners (but not much). I’m inconvenienced by the fact that I must now buy a separate dental insurance policy (United doesn’t offer one), but I can worry about that later. Again, this decision was motivated less out of cost concern than the simple desire to be rid of Aetna. Again, I’m healthy enough to survive transitioning to another insurance company, but once my medical history becomes more complicated, I’m sure changing insurers will be a lot more costly.
References for Texas consumers
State of Texas requirements for health insurance plans. This spells out exactly what minimum coverages all insurance policies must have!
Here’s a list of links and government resources specific to Texas. Another Texas site is not about health insurance per se, but it provides quotes and ratings of different companies (mainly for homeowners and auto).
State of Texas guide to buying individual health insurance. What’s particularly good about this article is that it talks about resources available for people with special/unusual circumstances. This includes applying for coverage through the Texas health Insurance Risk Pool and finding low-cost health services in your area. It also contains information about how to file a complaint with Texas Department of Insurance. Also useful: tips for Seniors, Students, Unemployed People, Small Employer and Person with an Uninsurable condition.
Great piece by Leah Ariniello in the Washington Post about what to do when your health insurance runs out.
9 secrets that health insurance companies don’t want you to know. This has good information, but I hate the way the website divides the article into 3 paragraph chunks, with each page having oodles of ads. This is not a good way to run a website.
J.D. at Get Rich Slowly on how to buy individual health insurance. See also how to save thousands on your medical bills (which was based on a piece by Elizabeth Ody about the same subject). Ehow has a piece with general advice.
Ehealthinsurance provides quotes from all the major providers, but no way about how to evaluate these quotes. Also, be sure to check the AM Best Ratings description. Unfortunately there are not many independent sources that evaluate the plans themselves or offer any gauge of customer satisfaction with the plan. Here’s a basic FAQ on the website to answer common question.
Johanna Schlegel of salary.com has some general advice about buying individual benefits as a contract employee.
Disability Insurance Links
Smart Money article by Stacey Bradford about buying disability insurance (sept, 2008). (Here’s a 2000 article defining extras for disability insurance). Suzanna S. on Get Rich Slowly has a more exhaustive treatment about disability insurance.
(Here is my 2009 policy and my rationale for choosing it).
Aetna Managed Choice Open Access 5000………….$132 per month!
As a 43 year old I am purchasing a PPO with 5000$ deductible and $500 prescription deductible. I am paying $132 for health insurance (and $16 for dental care)The main thing of concern to me is this weird concept called coinsurance which in my Aetna plan requires you to pay 20% of all costs of expenses over $5000 (with a maximum of $10,000). On the other hand, you should balance that against the fact that I am paying a $40 copay for primary doctor visits, $15 copay on generic drugs and $35 copay after $500 deductible on brand name drugs.
My other option was to go with a very cheap Blue Cross plan with a $5000 deductible (see the comparison below). The big gotcha is that the drug deductible is the same as your main deductible, meaning you have to use $5000 worth of drugs to get any value from drug coverage.
Also, I noticed that my plan is not HSA Eligible, and that probably is not great, but it has little practical consequences to me right now (since I don’t have an HSA anyway).
Note: All these screenshots come from ehealthinsurance, not from the insurance provider itself.
Well, Blue Cross looks attractive; but hey, let’s look at the prescription drugs, and then you will fall out of love with Blue Cross (the first column). Aetna has a 500$ deductible on nongeneric drugs, whereas Blue Cross simply applies the standard $5000 deductible (Ouch!). Essentially that means that with Aetna you get cheap generic drugs, a $500 prescription deductible (with a $35 copay on brand drugs after the $500 deductible). The same is true for Humana but the Cigna plan uses the same $500 drug deductible.