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3 Things to Pay Attention to When Comparing Health Insurance Plans

Posted by Andrew Day on Thu, Sep 15, 2011 @ 01:54 PM

3 Things to Pay Attention to When Comparing Health Insurance Plans

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The terminology between different insurance providers makes it very difficult to make a side by side comparison. While it is easy to compare Rate and Deductible, there are many other items that can have an even larger impact on your personal costs. If you understand the differences and know how to look for them, you will be able to make a much more informed decision about what plan is right for you.

A few things to watch out for when comparing health insurance plans include (but are not limited to):

  • Do the percentages mean what the company will cover, or what I will be liable for?
  • Does the Out of Pocket Maximum include my deductible?
  • What are Prescription Tiers

1. Many plans will give a percentage for something like Maternity. For instance, let’s assume that a plan grants 20% Maternity Coverage. Does that mean the company will pay 20% of costs or that you will pay 20% of costs? It is usually not too difficult to determine, but if it is not understood the consequence could be devastating.

2. Whether or not your “Out of Pocket Maximum” (OOPM) includes your deductible can also make a huge difference. Let’s say your OOPM is $10,000 and your deductible is $2,500. If your deductible is included in your OOPM, then the maximum you will pay is still $10,000. If it is NOT included, the maximum you would end up paying would be $12,500, a 25% increase in your costs for the same service(s).

3. Prescription coverage may vary from plan to plan, and company to company. Most operate on a “Tiered” system that seems to be consistent across the industry.

Normally a Tiered System is defined by 4 levels:

  • Tier 1 – Generic Brand drugs
  • Tier 2 – Brand Name drugs
  • Tier 3 – Non-Formulary (drugs NOT listed by the insurer as a “preferred” drug)
  • Tier 4 – Specialty

The costs of drugs for each tier are treated differently, but if you know which tier your drugs fall under and have a good idea of what drugs you are likely to be taking in the future, you can make a better decision as to which plan would result in the lowest cost to you.

It is very important to know what plan fits your needs and your lifestyle best. Health insurance plans are as unique as the individuals buying them. The terms pointed out here are 3 things to pay careful attention to when looking for insurance. It takes time to learn the terminology, but can save you a great deal of money if you get the right plan for you.

Tags: Health Insurance