You might be thinking, I’m young and healthy, so why should I waste money on expensive health insurance? But what happens if you get into a car accident, or get COVID, or be diagnosed with a serious health condition like cancer? Will your plan cover the unexpected?
Brendan McIntyre is the Director of Health Plan Partnerships and Value Based Care at Roswell Park Comprehensive Cancer Center. He answered some of the most frequently asked questions about health insurance and how it pertains to young adults to help you make an educated decision about what coverage might be best for you.
What is open enrollment?
Open enrollment is the window of time where individuals can enroll in health plans for the following year.
Can I make changes outside of open enrollment?
Very often, people are surprised to learn that they are unable to switch health plans except during open enrollment. This is why it’s so important to do your research before selecting a plan and consider what health events may arise, what they would cost under each plan, and which providers you’d want to ensure you’d have access to for your care.
There are some circumstances that arise during the year that can allow for changes outside of the open enrollment window, which are often referred to as qualifying events. Plans differ, but often these events are changes in employment, getting married/divorced, having a baby, or losing health coverage.
Why is researching health plans important for young adults?
Researching health plans is very important because of the great deal of variation between health plans (e.g. BCBS, IHA, Univera, etc.) and their products (HMO, PPO, etc.). While it’s generally a good thing that health plans can offer a variety of options for consumers to obtain health insurance coverage, the differences between plans and products can many times lead to surprising results for insured individuals when the time comes to use their insurance. Just because you may not have needed much healthcare recently doesn’t mean you won’t anytime soon, so it’s best to plan with your future health needs in mind.
I’m young and healthy, why shouldn’t I just get the cheapest plan?
There is an increasing number of low-cost health plans available to consumers, which certainly has an appeal, especially for those early in their careers during a challenging COVID economy. However, while the plans may seem inexpensive when you don’t have immediate care needs, lower-cost health plans usually carry significant plan limitations when the need for care arises. For example, many of these low-cost plans tend to have high costs of care passed on to the patient directly. Additionally, many plans have “narrow” or limited networks of providers that sometimes force members to travel out of town for care or might not cover care at all, leaving patients to foot the entire bill of care, despite expecting they would have reasonable health care coverage.
What are some things you should consider when looking at health insurance plans?
It’s best to research health plans, their passed-on costs and their provider networks prior to making a health plan selection. This will help ensure you are prepared for the costs you’d incur when you receive your care and that you will be able to obtain care from the best providers possible.
What do I need to know about different types of health plans?
Understanding where the various insurance plans are managed is helpful to beginning to understand what your options might be. Insurance is primarily secured through your employer or a government agency.
- Employer based plans (around 50% of insured individuals):
- HMO (Health Maintenance Organization): Local network of providers, usually lower premiums.
- PPO (Preferred Provider Organization): Larger network and flexibility, out of network coverage, although typically larger out-of-pocket expense.
- POS (Point of Service): Larger network and flexibility, out of network coverage, although requires PCP referrals for specialists.
- EPO (Exclusive Provider Organization): Larger network, but lower cost without out of network coverage.
- High deductible: Low monthly premium with larger out of pocket expense. Usually has an HSA or FSA accompany it.
- Government organized plans:
- Medicare: Federally based health insurance for those 65 or older and certain individuals with disabilities.
- Medicaid: State-based health insurance usually based on income or disability.
- Exchange: A health insurance exchange/marketplace where consumers can purchase health insurance plans with a range of costs/benefits, provided by commercial payers (not the government itself) and priced out at the monthly premium. NYS’s exchange is called NY State of Health and has plans that include HBX (Health Benefit Exchange – Metal Level Plans), EPP (Essential Plan Program), and CHP (Child Health Plus).
- Plans’ Networks of Providers:
- In Network vs. Out of Network: Plans limit which providers they allow their members to see based on which providers they contract with. Contracted providers are referred to as ”in-network” providers or participating providers. Providers who aren’t contracted as called “out-of-network” providers, or non-participating. The decision about whether a provider is in-network isn’t just a health plan’s decision to make. Sometimes it’s the provider who doesn’t want to participate with a plan, such as when a provider doesn’t want to accept a plan’s insurance, which can be for a variety of reasons.
- Limited Networks; Tiered Networks: Health plans sometimes are purposeful in limiting their networks, to help guarantee providers of a certain level of quality in their plans or to help control costs. They can achieve this by maintaining in certain products a limited network or tiering their networks into different levels. It’s important to be aware of this practice because it can reduce your monthly premiums and guarantee the quality of certain providers, but it can also restrict your access to providers you may prefer to see but are unable to under such a plan.
- Out of Pocket Costs:
- Deductible: A deductible is the amount of healthcare cost you must annually pay before your health insurance begins paying for their portion. This varies in amount, usually in large part, based on the monthly premium you pay for your coverage, usually at amount such as $500, $1,000, 2,500, or $5,000.
- Coinsurance: Some insurances require you to continue to pay a portion of the care even after your deductible is met. This portion is called the coinsurance and is usually around 10%, 25%, or even as much as 40%.
- Copay: This is how much you must pay at the time of care, regardless of your deductible, based on the provider you’re seeing. E.g. $25 copay to see your primary care provider or $250 copay at the E.R.
That’s a lot of definitions, what does it really mean?
Let’s say on January 1 you break your arm and you have a health plan with a high deductible (which has a low monthly premium payment). Let’s say that going to the ER has an automatic copay of $250. Because $0 of your deductible has been paid so far (it’s January 1), you pay the entire cost of the visit until you reach the deductible. If the deductible is above the cost of the ER visit, coinsurance doesn’t come into play.
If instead, you broke your arm on December 31. you’d still have the copay of $250 for going to the ER, but perhaps your deductible has been met at that time. You would not have to pay any cost toward your deductible, but if your plan had a coinsurance, you may owe a portion of that visit cost based on the coinsurance rate.
If you don’t have a plan with a deductible and only have copays, you would just pay the $250, regardless of when you break your arm.
It boils down to, if you pay a higher monthly premium up front, you pay less when you need to go to the doctors. If you pay a lower monthly premium, it’ll cost you more when you do need to see a doctor.
What are HSAs and FSA and why should you get one?
Health Savings Accounts (or HSAs) and Flexible Spending Accounts (or FSAs) are dedicated accounts you use to save for your healthcare expenses, with the added benefit of using pretax dollars. This means that instead of spending money on healthcare costs from your paycheck (after you’ve paid tax on the money), you get to make the deposit into the account before the money is taxed, saving you from having to pay tax on those healthcare expenses. Different plans usually allow you to have one or another, but not both. HSAs can be more attractive than FSAs because the funds you deposit into an HSA are yours indefinitely. FSA funds must be used by the end of the year or the funds are lost. Additionally, there are some interesting potential retirement strategies for funds you save in HSAs and don’t use for healthcare.