Beware of out-of-pocket costs

When you sign up for next year’s health plan during the open enrollment period, beware of out-of-pocket costs.  The key to making an informed decision is to understand the (1) real costs you will be expected to pay and (2) the specific coverage your health plan offers.  Unfortunately, many of the costs are not obvious and you really need to read the fine print to understand exactly what is covered and you will need to ask a lot of questions to know the specific costs you will be expected to pay.

With health care costs rising every year, you will be paying more for your health plan benefits in the form of increased monthly premiums, co-payments, co-insurance and deductibles.  Many employers are encouraging workers to select consumer driven high-deductible plans (CDHPs). These plans require employees to pay more out-of-pocket charges for visits and services, but have a much lower monthly premium.  CDHPs can save you hundreds of dollars on premiums per month and very often high-deductible plans are paired with health-savings accounts (tax free dollars)   When you select a high-deductible plan, you will be financially motivated to make the most of your health care dollars and you will be more than willing to shop around for the best value before visiting a provider.  Most people don’t realize this but it is possible, with a high-deductible plan, to actually spend less out-of-pocket dollars during the year.  Here’s how.

Here’s what you need to know before choosing a new health plan. 

Identify what your co-payment amount is for health care service like doctor visits, hospital stays, outpatient procedures and diagnostic tests.   Be aware of co-insurance charges, which typically require you to pay a percentage of the total cost of service. 

Understand what services are NOT covered.   Read the fine print and don’t assume anything. 

Before you sign up for a health plan, you should try to understand how your insurance plan’s contracted rates (with health care providers) compares to other insurance plans contracted rates.  In other words, what amount are you expected to pay when you visit your doctor? Is the fee $100, $70 or $50? If you need to have an MRI will your plan require you to pay $600 or $2000? I should warn you that this is very difficult information for consumers to obtain, but it can save you hundreds of dollars on out-pocket expenses when you understand these negotiated prices.  A provider typically has many different prices for the exact same service because insurance plans negotiate different prices for the service.  Your health care dollars will go a lot further if your insurance plan has negotiated low rates with health care providers.