Poring over the fine print of
health insurance plans
to choose a policy is nobody's idea of fun, but you're better off
spending some painstaking time researching before you buy than
nursing a nasty financial headache after it's too late.
The "quality" of a health plan often depends on your needs and
how much financial risk you can bear.
"One size doesn't fit all," says Martin Rosen, cofounder and
executive vice president of Health Advocate in Plymouth Meeting,
Pa., which helps employers and individual clients navigate the
health care system. "You really need to assess what you need."
Whether you're choosing among group health plans offered by your
employer or shopping for individual
health insurance coverage
, here are seven scenarios to avoid:
1. Your doctor isn't in the network.
You pay more for using health care providers who aren't in the
health plan's network, so make sure the doctors and other
professionals you want are included.
A plan that tightly restricts you to a local network might be
sufficient if you need care only in your area, but it won't benefit
a kid away at college or meet all your needs if you spend a lot of
time on the road, says Pete Villemain, president of Employee
Benefit Services, which manages employer benefits plans in San
Make sure any specialists you need are also covered by the plan,
Rosen says. Don't assume a specialist is in the network just
because your primary care doctor gave you the name.
2. You pay huge insurance premiums to save a few bucks on
"The mistake I see individuals make so many times is they focus
so much on getting a low copay and they fail to look at how much
extra premium they pay for it," says Villemain.
He suggests you evaluate how you'll use your plan and compare
the costs accordingly. If you go to the doctor only a couple of
times a year, is it worth spending hundreds of dollars extra on the
premium just to get a low copay?
3. The drugs you take aren't covered.
Some states require individual plans to offer prescription drug
coverage, but in other states, many individual
plans don't cover drugs, says benefits consultant Michael Goodheim
of Farsighted Strategies in Seattle, Wash.
If the plan does provide drug coverage, check to see if your
medication is included on its formulary, which lists the preferred
drugs for coverage, Goodheim says. Expect to pay more if you take a
drug that is not listed.
Rosen suggests checking whether the plan provides discounts if
you order prescription drugs in bulk by mail order. For instance,
you might be able to pay less per month for a 90-day supply through
mail order than a 30-day supply at the pharmacy counter.
4. You're overinsured.
In addition to comprehensive health plans, many employers offer
supplemental insurance policies, such as cancer or critical illness
insurance, which pays a lump sum of cash after diagnosis. Such
policies can provide valuable protection, but they might be
unnecessary if you already have broad coverage under your
and short-term and long-term disability insurance, Goodheim
If you're footing at least a portion of the premium bill, why
pay for coverage you don't need?
5. You can't afford your share of the medical
Low premiums are an attractive feature of high-deductible health
plans, but make sure you're prepared to pay all the out-of-pocket
medical expenses, Goodheim says.
Besides the deductible, check the maximum amount of
out-of-pocket expenses you pay. After you pay the deductible, many
plans pay only a portion, such as 70 percent of covered medical
expenses. Your 30 percent share of the expenses is called
coinsurance, which you must fork over until you reach the cap on
"Those dollars can really add up," Goodheim says.
6. You're expecting, but your health insurance plan
doesn't cover maternity care.
Most employer-sponsored plans cover maternity and prenatal care
thanks to the federal Pregnancy Discrimination Act of 1978 and the
Health Insurance Portability and Accountability Act of 1996, as
well as many state health insurance mandates for group coverage.
Some states also require individual health insurance plans to
include maternity coverage, but in states where there is no such
mandate, many individual health plans pay only a small portion of
the costs or don't cover maternity at all. Even if the plan boasts
maternity coverage, read the fine print to know exactly what is
covered and whether there's a monetary cap.
Starting in 2014, individual and small-group plans sold through
state health insurance exchanges must include pregnancy and newborn
care, along with other essential benefits.
7. Your health plan changed.
Scrutinize group health plan offerings from employers each year
during open enrollment, Rosen says. Don't assume the plan stays the
same. Coverage levels, costs and networks could change from one
year to the next, even if the plan is offered by the same
"If you're not sure about something and it raises a flag in your
mind, then check it out," Rosen says.