Millions of Americans who are self-employed, working for small businesses or -- increasingly in this economy -- jobless, are facing the difficult and expensive task of buying health insurance on the open market.
The options are dizzying, with premiums, deductibles and co-payments that vary widely among plans and costs that are not always obvious. People who are older may pay more, as may those who have children and women who are of child-bearing age. Anyone who has needed major medical care in the past might be denied a policy altogether or charged significantly more.
Choose the wrong policy and you could wind up without enough coverage to pay for a lengthy hospital stay or an expensive medicine.
We offer tips on navigating this tangled system and, in related stories, alternatives for those who don't qualify for private insurance or can't afford it.
There are seven key elements that consumers must weigh when choosing a health policy. And it's important to understand the interplay between them, said Shannon Fallick, director of consumer affairs at eHealthInsurance in Mountain View, Calif.
You can get a cheap premium, for instance, but probably only if you choose a high deductible or limited coverage.
"You need to be careful," Fallick said. "Mistakes can be really costly."
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What consumers must consider
Here are the key elements and what to expect with each.
Premiums, the amount you pay each month for the coverage, can range from $50 to more than $1,000. This vast difference reflects both a policyholder's age and health -- you're probably eligible for a really cheap policy only when you're fresh out of college and in scant need of care -- and the bells and whistles that you choose.
Those who choose high-coverage, low-deductible plans will pay more in premiums. Those who are willing to pay for their day-to-day care out of pocket can spend less on premiums, but they face large costs in years when they use a lot of medical services.
Deductibles are the amount you pay before insurance kicks in. If you're buying family coverage, you should know that some policies impose both family and individual deductibles. For example, an Aetna Managed Choice plan quoted at eHealthInsurance.com imposed a $2,500 individual deductible but a $5,000 deductible for the family. This plan also has a separate $500 deductible for some prescriptions.
However, services may be exempted from the deductible. Some managed-care plans, for example, do not apply the deductible to regular checkups and vaccination expenses. The theory is that if you skip those checkups you're more likely to become sick and require costly care. Other plans apply the deductible to everything -- and may have multiple deductibles that you need to add up to figure out your real risk.
Co-payments are the charges you'll pay when getting certain types of care, as designated by the insurer.
Many plans have set co-payments -- anywhere from $20 to $50 -- each time you see a doctor or specialist. Some also have set co-payments for prescriptions.
Co-insurance is a separate issue. Unlike co-payments, which are always a set amount, co-insurance is a percentage of the doctor's or hospital's bill that the patient must shoulder.
In other words, a plan that advertises 30% co-insurance expects you to pay 30% of all your medical costs, up to certain limits. That's often above and beyond the co-payment. Co-insurance could significantly increase your costs if you have a serious health issue. For example, with 30% co-insurance you would have to pay $3,000 of a $10,000 bill, unless your policy has a cap on such expenditures.
Out-of-pocket limits restrict the maximum amount you could pay in co-insurance and deductibles. If you have co-insurance -- and happened to have a major medical issue -- these limits could be pivotal. One Aetna plan, for example, said a family would never have to pay more than $14,000 in covered medical expenses in any given year. Another plan, which had a similar premium, limited annual out-of-pocket expenses to the family deductible amount of $5,250.
Lifetime coverage maximums put a cap on the amount the insurer could be on the hook for if you got cancer or some other chronic and costly ailment that stretched over several years. Most good policies cover at least $1 million and often considerably more. Given that one trip to the hospital could cost $100,000 or more, these limits are too important to dismiss, said Jeff Miles, an employee benefits expert from Marina del Rey.
Limitations and restrictions are the services that your policy doesn't cover.
Rachael Wheat, a 27-year-old Torrance accountant, became an independent contractor last year and bought a policy for herself and her family.
It had a low premium of just $174 a month, but that was partly because it had a high deductible and partly because certain expensive treatments were specifically excluded. For example, the plan does not pay for maternity care, which Wheat says she doesn't need.
