4 Things to Think About When Choosing Your Health Plan During Open Enrollment

Each year, you have the ability to review your health plan option during a time called open enrollment. Whether you are picking a plan through your employer or not (for example, through a health insurance marketplace), and whether you are getting coverage for the first time or changing to a new plan, understanding your coverage options can help with your decision process. Even if you like your plan, it is always smart to spend a little time and a little research to make sure your plan is the right one for you, especially as plans change year to year. Here are four helpful things to consider when choosing your health plan:

1. Where can you go for treatment?

Each insurance plan has a specific networkA network includes the facilities, providers and suppliers that a health insurer or plan has contracted with to provide health care services to patients enrolled in their plans. of health care providerA person or entity that provides health care services. This could be a doctor, nurse, physician’s assistant or other health care service provider. Also see Network.s, hospitals and pharmacies—these in-network services are covered under your plan. If you visit a health care provider, hospital or pharmacy that is out of network, additional out-of-pocket costs could apply. Some plans, such as health maintenance organizations (HMOs)A type of health insurance plan that typically only provides coverage for in-network providers, and generally does not cover out-of-network care except in an emergency. Patients typically need to go through a primary care physician to get a referral for specialist visits., typically only provide coverage for in-network providers, leaving patients paying the full cost of any out-of-network care. preferred provider organizations (PPOs)A type of health insurance plan that offers lower cost sharing for in-network providers and higher out-of-pocket costs for doctors and hospitals outside of the network. In addition to cost sharing, when patients receive care from an out-of-network provider they may be subject to additional medical bills by those providers. provide some coverage for out-of-network care, but patients may still face high costs for out-of-network care.

2. Review the plan deductible and premium.

Most health plans have a premiumThe amount paid for health insurance coverage, usually paid monthly, quarterly or yearly. Premium payments vary based on the type of coverage and cost sharing a plan requires. Premiums do not count toward a deductible or toward the maximum out-of-pocket limit., which is the amount you pay usually monthly for health insurance coverage. In addition to premiums, health plans may also have a deductibleThe amount patients must pay annually with their own money (out of pocket) before a health plan will pay for most non-preventive health care expenses. This amount does not include premiums. For example, if a deductible is $1,000, the health plan won’t pay for most items or services until a patient pays $1,000 out of pocket. Sometimes plans exempt certain costs, such as some or all prescription drugs, from the deductible. In most cases, preventive services are covered with no cost sharing, even if you have not reached your deductible. The deductible typically resets annually., which is the amount you pay out of pocket before your insurance will pay for most expenses. For example, if your health plan has a $500 deductible, your plan won’t pay for many services until you have paid for the first $500 of care. It is becoming more common for plans to include prescription medicines in the deductible, even those you may require for a chronic condition. Make sure to check the plan’s deductible to find out whether certain prescriptions or other services are covered before the deductible so you have a good understanding of how and when your plan will cover health care costs.

3. Learn about your potential out-of-pocket costs.

In addition to premiums and deductibles, patients will often have additional out-of-pocket costs for individual treatments and services, called co-pays or coinsuranceCoinsurance is a percentage of costs a patient is responsible for paying with his or her own money (out of pocket). Health insurance plans specify what this percentage will be for a variety of health-related services, such as a specialist visit, emergency room visit or prescription medications. Because coinsurance is a percentage of total costs, it can be difficult to estimate and plan for in advance.. A co-pay is a fixed amount—or flat fee—that patients are responsible for paying out of pocket for certain services or medicines. Coinsurance, on the other hand, is the percentage of costs a patient is responsible for paying. If your medicine is subject to coinsurance, you may want to try to find out from your insurer what the actual out-of-pocket cost will be, as percentages are harder to predict.

4. Find out if and how your medicines are covered.

There are several factors to consider about medicines when choosing a health plan.

• Formulary − Each health plan has a formularyThe list of prescription medicines covered by a health insurance plan. A non-covered medicine is not included in the list of prescription drugs covered by an insurer. For non-covered medicines, patients must pay for the cost of the medicine or go through an exceptions process to get it covered. Also see Drug List or Tiers., which is a list of medicines that the plan will cover. Make a list of your current medicines and compare it to the plan’s formulary to ensure that your medicines are covered. The formulary may specify that your medicine is on a tier (e.g., tier 1 or preferred brand tier), and that tier corresponds to the level of cost sharingThe amount insurance plans require patients to pay out of their own pockets. For example, cost sharing includes co-pays, coinsurance and deductibles. Cost sharing does not include premiums. (e.g., co-pay, coinsurance) you will pay out of pocket. The plan’s summary should list the cost sharing for each formulary tier.

• Step therapy − The formulary may specify that a particular drug is covered with step therapyHealth insurers may require patients to try certain medicines before allowing a patient to get the medicine his or her doctor originally prescribed. This is sometimes called fail first. Also see Preauthorization, Prior Authorization and Fail First., or "fail first." This may require you to demonstrate that other medicines on their preferred list don’t work before your plan covers the cost of the original medicine your doctor prescribed.

• Prior authorization − The formulary may specify that a particular drug is covered with prior authorization, which requires your doctor to obtain prior approval from your insurance company to cover a medicine not on your plan’s preferred list.

An informed consumer is an engaged and empowered patient. With the right information, you are well equipped to be an active participant in making decisions about your health care.