What is this quote thing, and why do all of these numbers matter?

"In my field of health insurance, this question, or ones like it are frequently asked. I have a number of customers who, while having worked with an agent before, don't understand what a health insurance plan really does, but with a bit of guided reading, all of the numbers, networks, and plans become useful information as opposed to a bunch of insurance jargon.

When you are shopping for a plan, one of the most important things to keep in mind is that you as an individual have unique needs. If you are interacting with an agent or broker, a key topic to bring up is what medical services you need frequently. Every plan is different and some will fill your prescription, or cover your CAT scan, but some will not. With this in mind, and a list of insurance plans before you, there are some things to keep in mind as you look over your quote.

See the "deductible" and the "out of pocket maximum" categories on your quote? The dollar amounts listed are your responsibility. When you are paying for a plan, the insurance company gives some responsibility to you in order to reduce your monthly cost. For example, let's say that your plan has a $2,000 deductible and a $6,350 out of pocket maximum. Your responsibility is $2,000 in the course of a year, that includes the co-pays (dollar amounts for prescriptions, office visits, etc.), and usually 100% for things like hospital stays, surgery, and other large services. Once this deductible has been met, surgery, hospital stays, and other large services are attended to at a percentage of the cost. The out of pocket maximum is a sort of cap on expenses. That number (in our example $6,350) is the most you will have to pay for covered expenses per calendar year. (These numbers tend to double if there are two or more people on the plan together.)

You will also notice some letters near the plan name. Insurance plans have three structures, the HMO (health management organization),the EPO (exclusive provider organization), and the PPO (preferred provider organization).

The HMO was made popular by plans offered through employers. These plans tend to offer more services as every medical visit is prefaced by a trip to your "Primary Care Physician" or your family practice doctor. This physician determines whether or not you need to see specialists, or to receive testing.

The EPO is the next step up in terms of your access to care. The insurance company allows you to see specialists, get testing done, and many other services, but all doctors and hospitals seen must be inside the network of contracted doctors. These networks can be small in some zip codes, so it is always good to ask your agent if there is a large number of doctors in your area.

The PPO is the best way of accessing your doctors. In the past (before 2014), PPO networks were much larger than they are now, but you can still go outside of the network of doctors for care. This tends to come with higher medical costs as the insurance company does not offer the same coverage, but it is a viable way to have complete access to any doctor you want.

One thing that tends not to be on your quote is the Doctor list. In the past, it was easy to assume that if you signed up for a PPO, you would find plenty of doctors, but this is not always the case anymore.

I hope this short summary of insurance plans will help you assess which plan is best for you and your family, but I do encourage you to go to a local agent appointed with multiple insurance companies. They will have the resources to create a comparison of plans and find what will work best for you and your family (and they tend to not charge for service!).

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Post written by Johnny Savage. 

Link to post:

https://www.linkedin.com/pulse/article/20140708202446-279645557-what-is-this-quote-thing-and-why-do-all-of-these-numbers-matter?trk=prof-post

--Permission granted to use as blog by Johnny Savage as Employee of Aloha West Insurance-