Health care questions
Important considerations when choosing an insurance plan
As a follow-up to my recent column about choosing a health insurance plan, I decided to run a few common questions by a nationally recognized expert on insurance. Dania Palanker is an attorney and a policy expert with a degree from the Kennedy School of Government at Harvard. She works at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute, where she is focused on all things Obamacare.
A: When people shop for health insurance, there are a lot of factors to consider. The balance varies for each person, but it is always important to look beyond the premium. Sometimes paying a higher monthly premium results in lower annual costs because the cost sharing is lower, you see a provider in the network of a higher cost plan, or you take prescription medication that is less expensive on the higher cost plan.
A: Nobody can know all the health care services they need in the coming year, but there are tools to help. Healthcare.gov and many state-based marketplaces have cost-comparison tools that can help shoppers estimate their overall costs. These tools take into account the premiums and cost sharing under the plans to provide estimates to shoppers of costs under each available plan. Some employers make similar tools available during open enrollment. It is always import to check whether your prescription drugs are covered by the formulary and at what cost-sharing level.
A: Deciding between a higher premium vs. a higher deductible is a decision you have to make based on your knowledge of how much care you need and your comfort with risk. The decision also depends on whether you could afford to pay the deductible if you were to have high costs in the first few months of coverage.
If you will have to go into debt to pay for services, it may be less expensive to spread a higher premium over the entire 12 months than to pay interest on your medical debt.
For families, it is vital to know if the plan has an embedded deductible or an aggregate deductible. With an embedded deductible, once one family member reaches the individual deductible the plan begins to cover costs for that individual's covered health services. However, an aggregated deductible does not begin to cover costs for any family member until the entire family deductible is met. If one family member has high health costs, an aggregate deductible can result in significantly higher out-of-pocket costs.
A: Health savings accounts are only available to individuals who enroll in a high-deductible health plan. Not all plans that have high deductibles are considered HDHPs. If an individual does enroll in a HDHP, then a HSA can help reduce the costs of services because the funds used toward the deductible and other health services are not taxed. HDHPs are generally designed with the expectation that an individual is enrolling in an HSA, and the costs associated with an HDHP may actually be higher if an individual does not use the HSA or if the employer does not make any contributions to the HSA.