Health plans are not a one-size-fits-all proposition. And, with so many options available — from high-deductible health plans (HDHPs) and preferred provider organization plans (PPOs) to health maintenance organization plans (HMOs) — choosing one can be a little daunting. To make sure you choose the plan that’s best for your health and your wallet, it’s important to weigh the features and costs of each option. Here are some things to keep in mind when choosing a health plan during the Open Enrollment period this spring.
High-Deductible Health Plans
With an HDHP plan, you’ll have low monthly premium costs but high point-of-service costs until you meet your deductible. Often your deductible and out-of-pocket maximum will be the same amount. That means that, once you meet your deductible, your health care plan will kick in to cover 100 percent of all further health care costs. Your annual physical, however, is always covered at 100 percent, regardless of whether you’ve met your deductible.
According to Healthcare.gov, in addition to lower monthly costs, HDHPs offer one additional financial advantage: health savings accounts (HSAs). With an HSA, you’ll be able to set aside pretax money from each paycheck that you can use to cover copays, coinsurance fees and prescription medication costs. Upon initial enrollment, you’ll be tasked with setting up your HSA. Otherwise, the paperwork is fairly minimal.
If you’re someone who is generally healthy, with predictable and minimal medical needs, this type of plan, with its lower monthly premiums, may be a good choice for you — just know that in the event of an unexpected medical need, you’ll need to pay up until you meet your deductible.
Preferred Provider Organization Plans
PPOs tend to offer more flexibility, according to Health Insure. First, you’ll have access to a wide network of providers, but you can still choose to see out-of-network providers, albeit at a slightly higher out-of-pocket cost. Second, you have the advantage of being able to see your providers of choice without a referral. And finally, depending on your medical needs, you may benefit financially by paying the PPO’s higher monthly premiums versus a lower deductible and out-of-pocket maximum.
Besides having access to a wider network of doctors, another advantage of a PPO plan is that you’ll always know how much you’re going to pay for copay and coinsurances. Unlike an HDHP, where you’ll pay all charges until you meet your deductible, PPOs have set copay and coinsurance amounts. And you’ll only need to deal with paperwork if you use out-of-network providers.
Health Maintenance Organization Plans
When you choose an HMO plan, you will need to designate your primary care physician during enrollment. That professional will then coordinate all aspects of your health care. You’ll need a referral from that doctor before you see any other kind of provider (e.g., a dermatologist, cardiologist or endocrinologist). HMO plans generally have a restricted network of providers, so your primary care physician may have a limited number of specialists to refer you to.
The trade-off for what Healthcare.gov labels a more limited network is extremely low costs. Not only will your monthly premium be low, but so will your copays, coinsurance costs, deductible and out-of-pocket maximum. One exception to the referral rule is that you can seek treatment at an in-network emergency room without first seeing your primary care physician. From an administrative standpoint, you’ll likely also generate and have to deal with less paperwork than with other types of plans.
Weighing the Costs
Consider all of these plans against your unique health needs and financial objectives. Be certain in your choice as you make it — unless you have a qualifying life event (like birth, marriage or divorce), you won’t be able to change your coverage until the next open enrollment period.
