I am trying to select an individual policy but the descriptions all seem to be written in some language other than English! Seriously, how on earth can I compare plans and avoid pitfalls? I don’t understand all these “initials”: HMO, PPO, EOB, EOC, etc
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UPDATED: Jul 16, 2021
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You are right, you need to take a foreign language course to learn the vocabulary (HMO is Health Maintenance Organization; EOB is Explanation of Benefits for claims; EOC is Evidence of Coverage, etc.). You are also right that the policy provisions are very confusing. If you want to go it alone, use the tips in the next paragraph. However, without any extra cost to you, you can work with a health insurance specialist in your neighborhood (find a nearby professional member of the National Association of Health Underwriters by going onto their website and putting in your zip code). Remember the old days when travel agents were paid by the airlines? Well, for the most part, health insurance agents are still paid by the carriers. It costs you no more to use an agent to guide you than it would cost if you went online and tried to use any of the comparison consumer purchase websites. Most members of the professional association represent multiple carriers, so you can get specific help from someone you can actually meet!
However, if you want to analyze everything yourself, here are the four important questions to answer:
- What is the annual out-of-pocket maximum cost to me if I stay within the network? (This assumes you already are looking at the networks and finding the carriers with your own doctors, or you are calling your doctor’s offices to ask!)That’s it! That’s the golden question. Think about it: does it really matter if your office visits are a wonderfully low $25, if your annual maximum payment for claims is $10,000? No! Buy a plan with a low annual maximum out-of-pocket as your highest criteria: far, far more important to you than how or when the copayments/coinsurance applies.
- What limitations are there on “non-formulary, Brand-name” prescriptions? If you know you will soon get different coverage (maybe you are between jobs), this question is less important. But if you are selecting a plan for several years, you should know that chemotherapy drugs, autoimmune drugs, and certain other chronic condition drugs can easily cost more than $2,000 monthly. Don’t make the mistake of purchasing a long-term plan that covers generic drugs only, or puts a dollar limit on the amount of payment for Brand name. (A “deductible” is fine for that type of drug; if the carrier is shelling out $24,000 a year, you won’t mind having even a $2,000 deductible each year before they start paying!)
- Is a normal pregnancy covered or excluded (if applicable). Be careful: most individual plans now refuse to cover vaginal delivery. Even ones caused by late night, bedroom “accidents”.
- What is my monthly cost?