The plan-picking path of health insurance

Oct. 02--Maybe the premiums for the plan you're in this year are increasing. Perhaps the company you work for is switching up its offerings for 2018. It could be that you're not happy with the services you've received under your current coverage. For many reasons, millions across the nation and thousands across San Diego County will find themselves shopping around this open enrollment season, looking for the right mix of benefits and affordable costs that often seem as elusive as a Comic-Con ticket in July.

As with any complicated and potentially tedious task, it helps to have a road map to guide you on your way, and we have asked experts for their advice on taking you through the open-enrollment process step-by-step. We've worked with two consumer focused experts with decades of health insurance experience to make sure our advice is accurate and comprehensive.

They are: Robert Krughoff, president of Consumer's Checkbook, a nonprofit that has published health insurance purchasing information in a range of forms since 1979. And Betsy Imholz, special projects director, Consumer's Union. This organization is the advocacy arm of product-testing publication, Consumer Reports, and has recently been very active in a range of health-care-related legislative efforts in California.

Step One

Refresh your memory on these five key health insurance terms:

* Premium -- monthly health insurance payment.

* Deductible -- amount you must pay before your health insurance company starts writing checks.

* Co-pay -- small payment you make before each office visit or prescription fill.

* Co-insurance -- percentage of your medical bills you pay after your deductible has been satisfied.

* Out-of-pocket maximum -- maximum amount you can pay in any policy year.

Krughoff: "Please tell them not to just look at the premium. You would be surprised how many people only look at that one number. All of these numbers affect what you're going to pay when you actually try to use your health insurance."

Step Two

Let's see if you truly understand how these concepts work.

Let's say you racked up $5,000 in medical bills after fainting in line at Comic-Con and needing 10 office visits to recover. How much would you pay if your policy had a $1,000 deductible, 10 percent co-insurance, $10 co-pays and a $3,000 out-of-pocket maximum amount? Answer: $1,490.

Now let's unpack that: You would first pay $100 in co-pays (10 visits at $10 each) plus the first $1,000 of your medical expenses to satisfy your deductible (co-pays usually don't count toward deductibles). That leaves another $3,900 in bills ($5,000 in total bills minus the $1,100 you already paid). At 10 percent co-insurance, you would pay $390 ($3,900 x 0.1) of that amount for a total of $1,490.

Bonus question: How big of a bill would you need to get to hit your $3,000 out-of-pocket maximum? Answer: $30,000. If you think about it, $3,000 is 10 percent of $30,000. All you need to do is multiply the co-insurance amount and the out-of-pocket maximum amount (0.1 x $3,000 = $30,000)

Krughoff: "You have to know that out-of-pocket maximum. That's your worst-case scenario."

Step Three

You also need to know the basics of the different types of health insurance:

Health Management Organizations (HMOs) assign you to a primary care doctor who must refer you to specialists. They usually don't pay for services outside their contracted health care providers.

Preferred Provider Organizations (PPOs) have a network of contracted doctors, hospitals, labs and other services. Your costs will be lower if you stay in-network, though these plans still pay some costs for out-of-network services.

Exclusive Provider Organizations (EPOs) are like PPOs but offer no coverage for out-of-network providers. High-deductible plans, also sometimes called "catastrophic coverage" are often promoted in conjunction with these plans.

Imholz: "It is extremely important to know what kind of coverage you're buying. There are some short-term bare-bones plans out there, and you need to be really careful if you see a super-low premium."

Step Four

Now that you've done your homework, you can start looking at specific offerings from different health insurance companies whether you're in the individual market and buying coverage on your own, choosing among several different options offered by your employer, or trying to decide whether you want to switch Medicare plans in 2018.

While you might be tempted to start with premiums and other pricing details, our experts think you'd do better to start with doctors. If you have a family doctor who you'd like to stay with, it's a good idea to find out which insurance plans he or she will accept in 2018. And in California, it's the law that each plan must list its full doctor directory on its website. Find that plan and get a feel for how many doctors, hospitals and other resources the plan covers. After looking at a few different doctor directories, it should be clear which plans have the most robust networks of resources.

Krughoff: "It's important to remember that you're not just looking to see if your doctor is listed. You're also making sure that the plan has a sizable number of providers across all of the different specialties that you might end up needing."

Step Five

Armed with knowledge about the networks that back up the plans available to you, it's time to put it all together, looking at all the cost variables. Lucky for you, it's easier than ever before to make apples-to-apples comparisons. The Affordable Care Act forces insurers to offer plans on the individual market within four specific metal tiers: bronze, silver, gold and platinum. Each tier pays a larger percentage of a policyholder's costs. Requiring everyone to work within these categories ensures that when you're looking a silver plan from company A and another from company B, the plans have comparable attributes. The ACA also requires employer-sponsored plans to provide standardized information on each plan they offer their employees.

Imholz: "That's called a summary of benefits and coverage. Though many employers aren't giving it out, they're required to provide it if you ask for it. These summaries make comparing plans much, much easier than it was in the past."

Get help

Does health insurance have you stumped? You're not alone. Millions turn to professional help every year when they find they don't understand the often-confusing nuances and options involved in choosing the right plan. Lucky for you, there are several places to turn for free help:

* Brokers: Though many don't realize it, health insurance companies actually pay health insurance brokers to compare the pros and cons of different plans for free. You can find brokers in your area by typing your ZIP code into an online database maintained by the National Association of Health Underwriters at nahu.org.

* Enrollment workers: Covered California, the state's health insurance exchange, has a large team of certified enrollers in pretty much every city across the state. They also operate enrollment centers throughout the region and have a large bank of counselors operating a phone bank available to answer questions on demand. Find a searchable database at coveredca.com or call (800) 300-1506.

* Medicare: The Health Insurance Counseling & Advocacy Program provides free and independent consulting for Medicare beneficiaries. This resource can be reached at (858) 565-8772.

Common health insurance mistakes

* Looking only at the premium. Ignoring factors such as deductibles and out-of-pocket costs can be disastrous if you actually need to use your insurance.

* Ignoring provider availability. It's important to make sure the plan you buy offers a wide range of doctors, hospitals and other services you may need in the coming year.

* Focusing too much on the deductible. Plans also have out-of-pocket limits which allow them to keep charging you even after you've met your deductible.

* Health expense tunnel vision. Just because you've never needed certain services in the past doesn't mean you won't next year. Check to make sure your plan covers not just what you've needed in previous years, but also a broad range of resources from doctors and hospitals to labs and medical imaging.

* Underestimating risk. Choosing a plan with a higher deductible and higher out-of-pocket costs comes with a very real financial worst-case scenario. Don't make a decision until you know what that number is and how you will pay it.

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Twitter: @paulsisson

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