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Advice / Succeeding at Work / Changing Jobs

Healthy Choice: How to Pick the Best Benefits Package

Unlike many adult responsibilities, like  insuring our cars or making rent, we’re rarely offered the chance to ease our way into dealing with health insurance.

Health insurance is one of the most complicated and most important aspects of being a professional (and adult), and it requires a great deal of understanding in a very short amount of time.

So let us shed some light. Here’s a look at what you’re likely to see in your job-based health insurance plan, and a guide to help you understand your options when faced with new (or changing) healthcare policies.

The Basics

When you get that obligatory paperwork accompanying your new health insurance policy, it’ll be covered with insurance jargon. Bear in mind that the numbers, breakdowns, and providers for your coverage will be policy-specific, but here’s a glossary of the basic vocab you should know:

Premium: The yearly fee you pay for health insurance coverage. This is a monthly or quarterly deduction from your paycheck. You typically only pay a percentage of the full premium to the health insurance company, and your employer covers the rest—often three or four times what you’re putting in.

Deductible: The total amount you, as a patient, will have to pay to cover your healthcare costs before the insurance company starts paying. Your deductible will likely be expressed as an annual amount. High deductibles typically come with lower premiums, and the inverse is true as well.

HMO: Stands for Health Maintenance Organization, one of the two major options for managed-care health insurance through your employer. Members of HMOs receive comprehensive health care, often under one roof, for a fixed cost. If you participate in an HMO, a Primary Care Physician serves as your first point of contact for health concerns, and you need a referral from him or her in order to see specialists within the HMO or to have any diagnostic services covered by the insurance company. If you were to pursue specialist treatment, tests, or x-rays outside of the HMO, you would be responsible for the full cost of these services.

PPO:Stands for Preferred Provider Organization, the other main option for managed-care. PPOs work by contracting a variety of health care providers to constitute their “preferred” network. These plans offer a higher degree of flexibility than HMOs, as no referral is needed to see specialists, and there is often a range of choices among doctors in most areas of medicine as well as among hospitals and pharmacy locations. Also, while visiting an out-of-network provider may still cost you more, most PPO policies will provide some coverage to non-network services.

In-Network / Out-of-Network: These terms describe both healthcare service providers (doctors and specialists) and establishments (hospitals and pharmacies). The costs of healthcare services differ depending on whether you receive them from in- or out-of-network providers, so it’s important to know who and what is included in your health insurance network. Your insurance company’s website should provide a search tool or a list to find contracted in-network providers near you. Also, some doctors won’t accept some insurance companies—so when you schedule an appointment with someone new, it’s always a good idea to ask the receptionist if the office accepts your insurance.

Co-payments:A set fee you pay to an in-network health provider at the time of service. The remaining cost of the service or prescription is paid by the insurance company. Services like doctor visits, filled prescriptions, diagnostic tests, x-rays, and hospital visits each have their own co-pay amount, but the amount you pay for each type of service is consistent across covered providers. (You’ll pay the same amount to any OB/GYN for your annual exam, but that amount is different than what you’d pay to see a chiropractor about your back). Co-payments may not count towards your deductible, which is good to know ahead of time.

Co-insurance: The percentage of your healthcare payments you will pay after your deductible has been met, or the percentage you’ll pay if you get out-of-network healthcare. Your company will pick up the rest—typically, at a 20/80 split (you pay 20%, they pay 80%). But while they may still be paying most of the bill, your 20% of a few big items can add up fast, so you’re usually better off staying in-network for expensive services like hospital visits. However, co-insurance, unlike co-payments, usually do count toward your deductible. <

(Maximum) Out-of-Pocket:The total annual amount you can be responsible for paying to cover your healthcare expenses. This figure includes your deductible and a stated combination of co-pays and co-insurance, but generally does not include the cost of your premium. After you hit your maximum out-of-pocket for the year, your insurance will pay for everything (up to your limit—though that’s likely in the half-million-plus range).

Preventative Care: Screenings and immunizations that insurance companies are currently required to cover under the Affordable Care Act. If you belong to a group policy that’s several years old, it may not be grandfathered in yet, but these measures to keep you well should be offered at a low co-pay or co-insured cost.

Exclusions: Anything your policy does not cover, from specific conditions or medical emergencies to accidental injuries. Review this section very carefully, call the insurance company with any questions, and read up on policy definitions and implied exclusions.

Dental and Vision: These areas of healthcare each typically come with their own, separate policies with unique terms and conditions, so don’t necessarily expect to have free range when selecting an optometrist or dentist—your employer may not even provide these kinds of insurance. However, opthomologists (eye health specialists) frequently are covered by general health insurance plans and can write annual glasses or contact lens prescriptions, so be sure to explore different options.

HMOs vs. PPOs

The managed-care policies offered by many companies will let you chose between an HMO and a PPO option. This is great—as long as you know what your needs are. Take your personal situation into account, and use the following list of questions to help you make a smart decision:

Convenience: Where is your nearest HMO facility? Would you prefer to have one doctor to go to for everything and trust her with making referrals (HMO), or have the option of finding in-network specialists yourself (PPO)?

Existing Healthcare Providers: Do you have a long-standing relationship with a physician or a pre-existing condition that requires attention from a specific specialist? If so, check if he or she is in your network. If not, and if you’re not excited about switching doctors, a PPO will offer you some coverage for out-of-network providers. However, if you’re new to a city and mostly require just preventative medical care, this concern may not apply to you—a HMO may suit your needs just fine.

Upfront vs. At-the-Office Costs: Are you the type of person who’s “better safe than sorry?” HMOs generally cost more upfront through a higher premium, but each trip to the doctor will cost you less than if you held a PPO insurance policy. If you’re more likely to self-treat and avoid the doctor except when absolutely necessary, PPOs will cost you less per year in premiums, but they’ll charge you more at the doctor’s office.

Specialty Coverage and Personal Concerns: Be sure to pay attention to the exclusions of different HMO and PPO providers, as not all policies are created equal. If you expect you’ll need hospitalization for a condition, it’s important to find out what network doctors are available at what hospitals, and to what degree such services are covered.