Choosing a Health Plan

Choosing between health plans is not as easy as it once was. Although there is no one "best" plan, there are some plans that will be better than others for your family's health needs. Plans differ, both in how much you have to pay and how easy it is to get the services you need.

Health insurance plans are usually described as either indemnity (fee-for-service) or managed care. These types of plans differ in important ways. With any health plan, however, there is a basic premium, which is how much you or your employer pay, usually monthly, to buy health insurance coverage. In addition, there are often other payments you must make, which will vary by plan. In considering any plan, you should try to figure out its total cost to you and your family, especially if someone in the family has a chronic or serious health condition.

Indemnity and managed care plans differ in their basic approach. Put broadly, the major differences concern choice of providers, out-of-pocket costs for covered services and how bills are paid. Usually, indemnity plans offer a greater choice of doctors (including specialists, such as cardiologists and surgeons), hospitals and other health care providers than managed care plans. Indemnity plans pay their share of the costs of a service only after they receive a bill.

Managed care plans have agreements with certain doctors, hospitals and health care providers to give a range of services to plan members at reduced cost. In general, you will have less paperwork and lower out-of-pocket costs if you select a managed care type of plan and a broader choice of health care providers if you select an indemnity-type plan.

Besides indemnity plans, there are basically three types of managed care plans: PPOs, HMOs and POS plans.

In choosing a plan, you have to decide what is most important to you. All plans have tradeoffs.

Ask yourself these questions:

How comprehensive do I want coverage of health care services to be?
How do I feel about limits on my choice of doctors or hospitals?
How do I feel about a primary care doctor referring me to specialists for additional care?
How convenient does my care need to be?
How important is the cost of services?
How much am I willing to spend on premiums and other health care costs?
How do I feel about keeping receipts and filing claims?

You might also want to think about whether the services a plan offers meet your needs. Call the plan for details about coverage if you have questions.

Consider:

Life changes you may be thinking about, such as starting a family or retiring
Chronic health conditions or disabilities that you or family members have
If you or anyone in your family will need care for the elderly
Care for family members who travel a lot, attend college or spend time at two homes

Adapted from "Questions and Answers About Health Insurance," published by the Agency for Healthcare Research and Quality.