Let’s assume that you have narrowed your selection to a particular Health Care Plan or plans that are viable for your situation. In other words, each plan you are considering is one that you can actually qualify for and fits your life situation.

Selecting a plan simply because it is the least expensive can have devastating consequences as can selecting a plan without adequately investigating it in detail including what is hidden in the fine print. If you are not clear on this point, you may want to take a look at the article on “Premium Cost vs. OOP Expenses” (Out-of-Pocket) (click here).

This step is critical because of the many hidden complexities contained in the actual health care plan or certificate of Insurance. The marketing materials used as sales materials often do not reveal the full impact of your financial exposure. It is unrealistic to expect that you can fully anticipate how a health care plan will cover medical expenses for every scenario you might conceivably face. But that is what you must try to evaluate before you buy. At a minimum, you want to be certain that you do not incur medical expenses in excess of your ability to pay the out-of-pocket portions you are responsible for according to the coverage. Unfortunately, many of us tend to value a health care plan from too limited a perspective for our own good. When unforeseen events occur, we may not actually have adequate coverage. It is at this point in your decision process that the value of Licensed Certified Field Broker/Agent ( Click Here) is most important. A well qualified field agent will be able to guide you and provide the detailed information on the health care plan(s) you may be considering.

For example, if we place too much emphasis on selecting a plan based upon the least costly medical care like doctor’s office visits, annual examinations, immunizations, and prescription drugs, we may overlook more important coverage components such as hospitalization related provisions – now costing upwards of $20,000 per day, or a visit to the Emergency Room for some $5000 out of pocket. On the other hand, those people who may only be concerned with coverage for catastrophic situations realize too late that a relatively modest outpatient or emergency room bill can easily be in excess of $10,000 out-of-pocket. Few consumers recognize the importance of the composition and size of the provider Network utilized by the insurance carrier. Many mistakenly believe they will have more control with regard to the providers they utilize and how they will be treated than is actually the case. Once again, these are important issues to discuss with the assistance of a Licensed Certified Field Broker/Agent ( Click Here) who will be able to answer your questions on a particular plan.

Before we get into the process of evaluating a plan, it is worth reviewing the graphic presented below. It depicts the three expense categories that most medical scenarios fall into.

****Medical expense categories

While it would be nice not have to pay anything out-of-pocket for any medical expense, the fact remains that if you insure to a zero out-of-pocket level for the smaller expense category (yellow) you are, in effect, requesting insurance for expenses that are almost certain to occur. What do you suppose happens if you were to ask someone to insure something that almost certain going to cause a payout? To remain profitable, you would have to be sure the premium was at least equal to the payout and you added a profit margin for your trouble. Health care plans are no different and therefore it will probably cost you more in insurance premiums to cover all you our-of-pocket expenses than to cover some or all of these expenses out of you own pocket. Health Care Coverage providers and Insurance companies are in the risk assessment business to make a profit. The insurance company’s rationale behind this is due to something they call negative or Adverse Selection. The logic goes something like as follows: 

Many people who consider themselves healthy and as a result incorrectly use their good health to justify that they do not need to spend money on a health care plan. Therefore, if you are looking for coverage to pay 100% of the minor medical expenses (yellow category), then it must be because you really feel you need or are likely to need the care. Therefore, you are more likely to use the coverage than the average person, which means that they must charge extra to make sure they do not lose money.

Next consider the medical expenses associated with the modest expense category (orange). These are expenses that can range from $1,000 to $7,500 per incident (perhaps more in some areas). If you can afford to financially absorb most of the financial impact for one or more of these medical scenarios per year (depending upon Family size maybe more), then you can possibly benefit from a plan that offers less coverage for outpatient, diagnostic/lab, and emergency room coverage as the premium should be lower. This approach can save you a lot in premium costs over time, but you must be prepared to absorb the financial impact for any uncovered expenses.  

Finally, we need to be concerned with the large expense category (red) and make sure we know the absolute maximum we will have to pay per year in various situations; no matter how large the medical expense may be up to the policy’s stated maximum annual or lifetime limits. This is where the size and composition of provider network associated with a particular health care plan becomes very important. Many policies written today actually do not have a Maximum Out-of-Pocket provision when it comes to a non-network provider. It is a bit deceptive because the big print in the sales literature often seems to indicate that they will pay 100% once the plan holder has paid a certain amount of pocket. But, in most cases the 100% only refers only to the amount that the company would have paid had the provider been in their network and not what your provider charged. It is important to realize that in hospitalization situations we are not in a position to make sure the surgeon, assistant surgeon, anesthesiologist, and other specialists you may require are in the network. In fact, you can really only research providers in situations where the need for hospitalization is known well in advance. Ever consider if you simply want to use a highly recommended specialist that is not in the network? Will you be able to financially absorb the additional out-of-pocket expense created with such a plan? The small print may state something to the effect that “the plan holder is responsible for 100% of the difference between what the plan pays the provider and the provider actually charges you”. Many health care plans significantly reduce the amount they pay to a provider for a given procedure and the provider agrees to accept it as part of the conditions of being in the plan network. You may have heard of such terms as Allowable Charge, Negotiated Fee, Fee Schedule, etc.(You may want to refer to How Does Plan Type Affect Quality of Care (click here)).

Keep in mind the three expense categories shown in the above graphic as you assess the coverage benefits and Limitations a given health care plan provides as it relates to each of the following:

• First dollar coverage
• Annual Maximum out-of-pocket
  • Deductibles
  • Co-payments 
  • Co-insurance
  • Per diem charges
  • Emergency room limitations
  • Other outpatient care costs
• Exclusions /Limitations
• Network vs. Non-network liabilities
• Maximum lifetime dollar amount of coverage.

Here we must deal with the details of anticipated 'Cost' as part of the three Cs, Cost, Coverage and Control (click here) in ways that go beyond simply looking at the monthly premium or the annual Deductible. It ultimately depends on what you want to be covered and what the health care coverage or insurance carrier is likely to charge for that benefit and how likely you are to use it. Unless you have had a recent major medical incident or had known specific on-going health care needs you are not likely to be as aware as you should be in terms of what to realistically consider. This is where most people can benefit from the assistance of a Licensed Certified Field Broker/Agent ( Click Here).

By thinking about it and deciding how much coverage versus out of pocket expense you wish to accept in each of the three components of medical expense shown in the graph, you have taken a big step forward in choosing the coverage that best fits your wants and needs.

To do so you must consider how each of the following factors impact the likelihood that you will incur a medical expense in each of the three general catefories of medical intervention depicted above,due to your:

• Age
• Sex
• State of your health.
• Marital status, Family size and medical history.
• Life style (work related risk, sports activities, niles driven per year, Travel, etc).
• Tendencies to seek care.
• Financial resources.
• Emotional makeup.
• Access to care.

It comes down to desired coverage versus additional cost. It is a bit like filling up a knapsack to go on a long hike. The knapsack (your wallet) is limited in size. Therefore anything you put in (like doctor visit coverage or dental) takes up a part of the knapsack, leaving less room for the next item. Thus you must first put in all the things you must have, those that you cannot afford not to have covered. Then based on value per premium dollar you may add additional items until the knapsack is full. The answer as to how to fill your health care coverage knapsack is not universal and should be addressed on an Individual basis with each person’s life situation factored into the decision process.

Perhaps the most important thing for you to take away from this article is not so much the “how to” aspect as much as whether the agent you may be dealing with is asking you these questions and getting you to consider the consequences or are they allowing you to pick a plan base upon your price point or inexperienced understanding. By the same token a professional agent will respect that the decision is clearly yours, but only after asking you about your needs and making you aware of the key coverage features and limitations embedded in the health care plan you are about to select. The idea is to empower you as an informed consumer.