Employees at companies all over the country open up countless emails, fill out tons of paperwork, and sit through hours of HR presentations regarding group health insurance options. Whether becoming eligible for coverage for the first time, or given the option to make changes during open enrollment periods, the information never really gets more exciting or any less painful. However, devoting time to choosing the best group health insurance plan is a necessary evil – or a blessing, depending on how you choose to look at it.
Unfortunately, many people opt for the same plans they’ve had for years. If it’s open enrollment, few people make changes. If eligible for the first time as a new hire, some just choose plans most similar to ones they previously had with their last employer.
There’s usually not a lot of time dedicated to reviewing group health insurance, but everyone should make time for reviewing their policies. After enrollment periods end, it’s usually very hard to make changes to group plans. It can become even more difficult if something happens and lower deductibles or higher coverage amounts are suddenly needed – in such scenarios, policyholders may have to petition insurance companies.
It can be hard to understand the ins and outs of health insurance. What do you look for? When do you make changes? Should you? What factors are most important? Which factors carry more weight? Whether a first time buyer or ‘repeat customer,’ stick to an evaluation plan as regimented as an annual employee review process and use a few steps to guide you to the parts of group health insurance plans you should focus on.
#1: Don’t Let Price Guide Your Choice
When picking group insurance plans, it’s natural to choose plans with the cheapest price tags. That’s one of the cardinal sins of insurance though, and usually means you don’t have very much — or even good, comprehensive — coverage. Look at how much a plan costs last, and look at coverage options first.
Why is this listed as #1 then? Because it’s likely to be the first thing you look at in plans and it needs to come in closer to the last. That allows you to determine and evaluate what’s most important to you and will basically show you exactly what’s most important to you aside from price. In doing so, you’ll know you’ve made your choice upon what truly matters to you rather than buying the first cheap policy you see. If the price isn’t right once revealed, you’ll at least know what factors you truly desire.
#2: Seek Sufficient Coverage Limits
Healthcare costs are continuing to skyrocket, and unfortunately it doesn’t seem that will change anytime soon. According to a recent study released in March 2013 by America’s Health Insurance Plans (AHIP), hospital care prices alone rose 8.2% per year from 2008 to 2010. Even though general practitioner bills are considerably cheaper than other healthcare, they’re still a part of rising healthcare costs too. According to the American Medical Association (AMA), physician care costs have risen 1.3% within the last year. Such broad increased healthcare costs makes having appropriate coverage limits essential, and you want policy limits high enough so you’re not likely to be left picking up the rest of the tab, even for catastrophic events. When evaluating group insurance options, review two options that each come with two types of coverage limits: Dollar maximum per claim and dollar maximum per lifetime.
#3: Find Out the Dollar Maximum per Claim
Each option comes with a limit already attached to the policy, and you’ll need to decide if it’s right for you. A per claim maximum is the most your insurer will pay on a claim for one single incident. For example, if you’re in a catastrophic car accident one year and your per claim coverage limits is $1 million, you may not have enough protection. After all your surgeries, medications, follow up care and appointments, and physical therapy, you’re back to normal, but the total of your claims come to $1.3 million. That remaining $300K will be coming out of your pocket. A good guideline to use is obtaining a policy with at least a $1 million per claim limit.
#4: Find Out the Dollar Maximum per Lifetime
You may see this on several policy options, and instead of setting limits on individual claims, each claim reduces the amount of coverage you have the rest of your life. For example, let’s use the aforementioned car accident example: You have a $3 million per lifetime coverage limit, and your medical bills equal $1.3 million. Everything will be covered, but afterwards, you’d only have $1.7 million left in lifetime coverage. Some policies don’t offer lifetime limits at all, but decide what’s best for your personal situation. This is one of several considerations to make that can entail reviewing family history, your past medical history, and similar factors. In general though, a good rule of thumb is to have a policy with at least a $3 million per lifetime limit.
#5: Look For Limitations
In addition to claim and lifetime limits, some policies impose limits on certain procedures, known as internal policy limits. Try to avoid this at all costs. Things like room and board at hospitals may be limited to certain dollar amounts per diem, and some impose strict limits on specific surgeries. This can put patients in difficult situations. For example, say an appendectomy is under your policy’s internal limits for procedures/surgeries with a $4K limit. You have an appendectomy, but although your per claim limit is $1million, the internal policy limit on your appendectomy of $4K would override your per claim limit. This means the $6K hospital bill you thought was covered within your claim limit would actually cost you $2K because internal policy limits for appendectomies is only $4K.
#6: Look For Provider Freedom
This may be difficult because most group insurance plans are HMO and PPO plans. These types of policies work within a network of selected providers. For full or partial coverage, you’re required to visit only doctors and specialists within that preferred network. If you venture outside of it, you’ll have to pay in full for medical bills — even with health insurance.
Some plans, like HMO’s, require you to only see one physician, and if you need a referral to a specialist, it must be approved by that physician first. If provider freedom is of the absolute, utmost importance to you, group insurance may not be your best option.
However, you may pay dearly to be free of the “chains” of group health insurance. Employer share group health insurance costs, but it’s all on you for private coverage. The most recent data from from Kaiser Family Foundation revealed employees paid $58 on average monthly for group health insurance, whereas private insurance policyholders paid an average of $218 monthly. If you can afford individual major medical policies, you’ll have more freedom — just ask yourself what that freedom is worth to you.
Either way, always review provider networks before committing to a plan. If you’re comfortable with the options, having complete provider freedom may not be an issue.
#7: Consider Your Need for Worldwide Coverage
If you rarely travel, this aspect of health insurance may not be important to you, but many jobs increasingly require international travel of employees. If you fall into this category (or have this luxury), ensure your group health insurance provides worldwide coverage. Some only provide coverage for emergency situations, but when you’re stuck in a foreign country with the flu (or one of those scary illnesses brought on by scary, giant, foreign mosquitoes), you’ll wish you had non-emergency coverage as well.
If you travel internationally, but rarely –once a year, for example – purchasing travel health insurance specifically for the time you’re traveling could be the best option, which is pretty affordable. However, if you travel internationally frequently — for business or pleasure — purchasing travel health insurance each time could easily cost more than having a group or individual plan with worldwide coverage.
If you’re still having trouble choosing an option, ask specific questions. If your HR manager can’t answer your questions, most insurers provide consultants during enrollment periods. Take advantage of their knowledge, but do your own research too. You could even consult with independent agents. Maybe you’re not leaning towards private health insurance plans, but independent agents can provide free health insurance quotes, allowing you to compare private plans versus group plans and ask general health insurance questions.
Use enrollment periods for research, evaluating what’s important to you both health insurance wise and lifestyle wise, and you’ll end up with the right group plan. Necessary evil or blessing, healthcare reform is going to have many more evaluating group health insurance plans, and it’s in your best interest to know exactly how to do that.
Follow Desiree on Twitter @DesireeBaughman.