As a consumer, it can be frustrating to watch health insurance rates continue to rise. The good news? By making smart decisions before next year’s open enrollment period even begins, it’s possible to ease the impact on your wallet.
The numbers for 2016 are eye-popping: In some states, insurers are seeking 20 to 40 percent increases in premium rates on public exchanges. Meanwhile, people with insurance from their employers are paying a greater share of their own costs. A typical family of four will spend more than $24,600 on health care this year, including premiums and copays, according to the 2015 Milliman Medical Index.
But even with rates rising, there are ways to manage the pain. Here’s what you need to know to minimize your costs.
Start by Learning the Basics
One of the smartest steps you can take is to learn the ins and outs of your health insurance plan.
“Now more than ever, you really have to understand your plan’s out-of-pocket costs — the deductible, copayments and formulary constraints,” says Gerry McCarthy, president of TransUnion Healthcare.
More than 60 percent of consumers in a recent TransUnion survey said they are at least sometimes confused by their out-of-pocket costs. If you fall into that category, understanding these six common health insurance terms can help:
? Your premium is the monthly price you pay to have health insurance.
? A deductible is the amount you pay out of pocket toward your medical bills before your insurer starts paying a larger portion of costs this year.
? An out-of-pocket maximum is the most you can pay in a year before insurance picks up the tab on all remaining medical bills and covered expenses.
? A copay is the set amount you pay for a service as outlined in your policy, such as $25 for a doctor’s visit or $10 for a prescription drug.
? Coinsurance is similar to a copay in that it is your portion of service charges, but it differs in that it’s set as a percentage — often 20 to 30 percent.
? The formulary is the list of prescription drugs your plan is guaranteed to cover, at least partially.
Prepare to Compare
Generally speaking, monthly insurance costs are higher when out-of-pocket costs are lower. Finding the right health care plan for you and your family requires balancing those costs, whether your plan originates with your employer or with an online exchange.
“Achieving a balance between affordability and risk can be tricky, but you can evaluate your need for medical care to determine your risk,” says Martine Brousse, a medical billing advocate and founder of AdviMed Inc.
If you’re using an online exchange to buy health insurance, the first thing you’ll want to do is find out whether you qualify for subsidies, or tax discounts. On government exchanges, either healthcare.gov or a state exchange, you’ll be able to compare prices with the discounts included, along with deductible, copays and coinsurance.
“Add up the cost of 12 monthly premiums, then add the amount of the yearly deductible and out-of-pocket maximum for each policy,” Brousse says.
Once you can see the costs side-by-side, you might notice that the higher the monthly cost, the lower your portion of charges at the time of service. Ask yourself whether you’d rather pay a little more each month, or more when the time comes to see your provider, Brousse advises.
If you’re getting insurance through an employer, the process will be similar. You’ll have fewer options from which to choose, but your employer might cover a larger portion of your plan than subsidies would.
“If choosing a plan though your employer, it usually makes sense to get the one with the lowest deductible,” especially if the premium is low, Brousse says.
Know What You Could Pay Out of Pocket
For any plan you consider, make sure you’re aware of what you could pay out of pocket, starting with your deductible.
“Investing in a lower-deductible plan may be wise if planned or probable medical care is anticipated,” Brousse says.
Expensive planned care may include a knee or hip surgery, or a pregnancy, but parents or those with chronic conditions might also want more coverage, which comes at a higher monthly cost.
Coinsurance is something you’ll want to keep an eye out for. Unlike copays, coinsurance kicks in after your deductible is met, adding to your total out-of-pocket cost. For example, if your coinsurance is 20 percent for outpatient services, you’ll pay your entire deductible out of pocket first, then an additional 20 percent of all charges until you reach your annual out-of-pocket maximum.
If you take prescription drugs, check your plan’s formulary to make sure it covers them. This is especially true for people who take a brand-name drug with no generic options, because those drugs tend to be the costliest. Ideally, your plan would cover a drug and your portion would be an affordable copay, but some plans require you to pay up to 40 percent of the cost. For some of the most expensive drugs, that could cost you hundreds or thousands per month.
After You’ve Chosen a Plan
Your work isn’t done once you select a plan. Choosing doctors and hospitals wisely is important, too.
“You don’t have to go to the hospital down the street or the surgery center nearest to you,” McCarthy says. “It’s about quality and financial outcomes.”
McCarthy advises calling providers ahead of time to get a custom estimate on any upcoming health services you need. Insist on a detailed upfront estimate based on your health plan, including your share and the insurer’s.
When shopping around, you might find provider options to be limited, or the service you need might be very expensive by nature. When that happens, McCarthy suggests discussing payment options with your provider.
“Most providers today will negotiate with you; they’ll offer discounts for faster payment, offer payment plans and they can also help you search for charity care,” McCarthy says.
Whether it’s your premiums or your share of a bill, arming yourself with information is the best way to combat high health costs — before and after care, and all year round.
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How to Ease the Pain of Rising Health Insurance Rates originally appeared on usnews.com
