Health Insurance, Making Sense Out of Nonsense

Updated: Mar 6, 2021

We thought a helpful blog for our patients and followers would be a quick guide on navigating the world of Health Insurance, especially since open enrollment is coming up quickly and 2020 has been a year to really think about our health.

Health insurance isn't like any other type of insurance because it pays for the preventative care and on-going needs when managing conditions. Your traditional home owners, renters, or car insurance doesn't do that, they are only there if catastrophe strikes.

Now add that the United States currently ranks highest in healthcare spending among the developed nations of the world (1). You would think that means the US has the healthiest people, right? Actually, we rank about the lowest.

Although the U.S. has the most expensive health care system in the world, the nation ranks lowest in terms of “efficiency, equity and outcomes,” (2)

Part of the problem is with the current medical model of disease "management" and frequent need for expensive (too expensive) pharmaceuticals in our country and you unfortunately need a very pricey policy for most Americans.

Policy Types

HMO: Health Maintenance Organization

These plans typically deliver their services through a network of facilities and providers. They give you less choice of providers and you'll often have a primary care physician (PCP) who will dictate your referrals and manage your overall care. These plans often do not pay for physician visits outside their network. (i.e. Kaiser).

PPO: Preferred Provider Organization

These plans offer more flexibility on which providers you can see, as long as they are contracted with the insurance company (in-network) you will get the most benefit, and you won't need referrals to see many of these providers. You can also see physicians who aren't contracted with the insurance carrier (out-of-network), but you will pay more (because there is no contracted reduced rate with the insurance company).

EPO: Exclusive Provider Organization

Much like a PPO, but you will not have any coverage for out-of-network providers. You need to see an in-network provider in order to have coverage (some Kaiser plans are like this).

POS: Point of Service Plan

A mixture of HMO and PPO. You may have a PCP who coordinates your referrals for you. You can typically see out-of-network providers, but will pay more.

Catastrophic (High Deductible) Plan;

These plans have the lowest premiums and are typically reserved for those < 30 years of age. You will have a few preventative care visits with your PCP (meaning you aren't seeing them for a problem) that are paid by insurance, but all other care applies to your deductible, meaning you pay the full (contracted) cost. Once you've paid the whole deductible, then your care is covered 100%. Deductibles for these plans are generally several thousand dollars.

We don't usually recommend these unless you are super healthy, have a stellar diet and are well versed in taking care of yourself mentally, emotionally and physically in addition to having a nice chunk in your savings account. What we see happen is patients put off a problem until it's too late, as they limit your access to more affordable care when an early issue arises.

Plan Coverage

Once you decide on a type of policy, you then have to choose your coverage level. Many plans are ranked in terms of Bronze (lowest coverage, most out-of-pocket) up to Platinum (highest coverage, least out-of-pocket). These have several types of out-of-pocket costs that can vary depending on the plan. The premium is higher for plans with lower out-of-pocket costs. The out-of-pocket costs can also be thought of as your cost-share with the health insurance. You pay a portion of the costs, and insurance pays the rest.

Contracted Rate: This is the cost of the visit dictated by the insurance company for providers who are in network (contracted) with the insurance provider. This varies depending on the insurance company, plan and provider. It is a discounted rate from the provider's usual and customary rate that insurance has negotiated with the provider in order for them to be considered in-network. Simply having an insurance plan helps you get access to these lower rates.

Deductible: The amount of the contracted rate (see above) you need to pay in full until certain benefits become covered by insurance. Not all costs are subject to the deductible, and it's important for you to know what is subject to the deductible and what isn't. This can vary greatly, depending on the plan.

Labs and diagnostics are typically subject to the deductible.

Preventative exams and screening labs (i.e. annual cholesterol) are typically not subject to the deductible.

Copay: A flat amount you will pay for each visit to your doctor. Different doctors can have different copay amounts (i.e. a specialist copay will be higher than your PCP copay). Copays are typically not subject to the deductible.

Coinsurance: A percentage of the visit cost you are required to pay for each visit or service. Coinsurance is often subject to the deductible before it applies.