It’s open enrollment season. You can tell because insurance carriers are flooding TV commercials touting that they have the perfect health plan just for you. Hospitals are popping up on billboards claiming they alone have the best doctors in the nation. They want your business, and that business hinges on your decisions during open enrollment.
If you’re like me, your company offers a passive enrollment -- meaning you will automatically be enrolled in the same medical plan as you are now, even if you do nothing. It’s easy to ride that passive groove for years, but things change, be it your salary, marital status, or overall health. The plan you had years ago may not be the most cost-effective plan for you now.
So, put down that pumpkin spice latte. Here’s a two-step plan on how to regain control of your healthcare spend in 2022, starting with open enrollment.
Step 1: Choosing a plan
Medical plan offerings differ for every employer. Typically, your company will partner with one or a few insurance companies (e.g. Blue Cross, UnitedHealthcare, Cigna) and offer one or a few medical plan options (PPO, HDHP). My talking points today focus on the latter. While there are many different medical plan options, all of them are created with the same five financial elements:
- Premium - The amount you pay for your health insurance every month. This typically comes out of your paycheck.
- Deductible - How much money you have to pay out of pocket before the insurance starts helping you pay for your medical services.
- Copay - A fixed amount ($20, for example) you pay for your medical services; your insurance pays the rest. Only kicks in once you’ve met your deductible.
- Coinsurance - A percentage amount (10%, for example) of the total cost you pay for your medical services; your insurance pays the rest. Only kicks in once you’ve met your deductible.
- Out of Pocket Maximum - How much money you have to pay out of pocket (inclusive of deductibles, copays, and coinsurance) before your insurance starts paying 100% of the costs for your medical services.
Understanding each of these elements and how they interact with one another is fundamental to choosing the right plan. At the end of the day, it’s a balance of how much you pay and when. Let’s look at how a PPO plan works vs. an HDHP (high deductible health plan).
The PPO plan typically comes with a higher monthly premium and a lower deductible. In exchange for paying more every month, you are rewarded with a lower deductible. Having a lower deductible gets you closer to fulfilling your deductible amount sooner, which means your insurance helps you pay sooner. Pay more in premiums, save more at the point of service.
The HDHP typically comes with a very low monthly premium and a very high deductible. In exchange for paying less every month, you are presented with a high deductible. Having a high deductible leaves you further away from fulfilling your deductible amount, which means your insurance helps you pay later. Save more in premiums, pay more at the point of service.
Everyone’s situation is different, so no one can tell you which plan is the most cost-efficient for you without knowing your medical and financial circumstances. Review the dollar amounts in your own company’s plan documents and determine what payment structure works best for you.
Sidebar: Many preventive services are paid in full by your insurance and come at no cost to you, regardless of your deductible. Check your plan documents for what services are considered preventive, and like Journey says, be good to yourself.
Step 2: Choosing your care
After choosing the most cost-effective medical plan for you, you can focus on how to receive the most cost-effective medical care. Read that sentence again. If your knee-jerk reaction was, “HA! You can’t shop for healthcare,” I don’t blame you. You would have been correct a year ago. On January 1, 2021, hospital price transparency legislation came into effect requiring hospitals to make publicly available both cash and insurance prices for 300 shoppable services.
Try it. Google “[your hospital of choice] price transparency”. If that hospital is compliant, one of the top results should be their webpage that houses their price transparency file or price estimator tool. We at Turquoise Health have combed the websites of all 5,500+ hospital providers in the United States, pieced together over 350M hospital price records, and made them available to you via our Provider Rate Search platform.
How to make best use of this platform? Let’s go over a quick use case.
After creating your free account, start by using our smart search bar to look for a shoppable service -- for example, a mammogram. Type that in, and hit Search. You now have the price for a mammogram at every compliant hospital across the United States at your fingertips, sorted by hospital. Distill this list down by city, state, health system, or even specific hospital by using the filters on the left. Once you have a more manageable list of hospital results, click on one result and watch an expanded list of prices cascade down. These are all of the prices for a mammogram offered by that hospital, including List Price (hospital billed charges), Cash Price (self-pay without insurance), and contracted (insurance) prices. Make note of the cash price, or your insurance price. Click and repeat for another hospital.
Do the prices for the same procedure differ from hospital to hospital? I bet they do. Can you now couple your cost-efficient medical plan with cost-efficient medical care? I bet you can.
Now grab another pumpkin spice latte. It’s open enrollment season, and you’ve got some decisions to make.