Open Enrollment: What To Consider When Choosing
a Health Plan
By Carolyn M. Clancy, M.D.
October 6, 2009
It’s open enrollment season, the time when millions of workers
will choose the health insurance plan they’ll have next year.
With premiums for health coverage offered by employers rising, it may
feel more like open season on your wallet. That’s all the more
reason you should understand your options.
To get the best value from
your health plan, you need to understand your different coverage options
and how they work. Then you need to make a choice that’s based
on your personal situation, such as whether you are single or married
or have a chronic health condition.
First, it’s important to consider
what you get when you purchase health insurance. Insurance helps protect
you from high health care costs that you probably could not otherwise
afford. It helps you pay for health care and ensures that you have
access to care when you need it. And research shows that having health
insurance is closely tied to getting quality, timely care.
pay for most or some of the premium costs of insurance premiums for
their workers. As a result, getting health insurance from your employer
is typically cheaper than buying coverage on your own. My agency, the
Agency for Healthcare Research and Quality, found that the majority
of uninsured American families who are not covered by health
insurance at work couldn’t afford to buy health insurance.
Sorting Out the Options
During open enrollment season, people can choose among different health
plans. This can be confusing. Not all health plans pay for the same
services or the same amounts for services. Different plans can include
different doctors, hospitals, and other care providers.
vary in how much you’ll pay before your insurance
covers you. These are called out-of-pocket costs and they usually are
in the form of deductibles or co-insurance. The deductible generally
is an annual amount that is not covered by your health plan. It must
be paid before your health plan starts to pay for your care.
is the percentage of your health insurance bill that you must pay when
you file a claim. This percentage is usually in addition to the deductible.
of the common
health insurance plans today offer several choices for coverage,
based on factors including cost, flexibility and how much of a role
you want to play in managing and paying for your own health care.
- Preferred provider organizations (PPOs). These
plans contract with doctors, hospitals, and other providers but typically
do not manage your care. PPOs allow you to see providers outside
the network, but you will pay more for your care if you do. These
are the most common work-based health plans.
- Health maintenance organizations (HMOs). Many
of these plans focus on preventing diseases and staying healthy.
If you join an HMO, you typically must receive all your care from
network providers, except in medical emergencies. When you join,
you pick a primary care doctor to manage your care. HMOs usually
have copayments rather than deductibles or co-insurance.
- Point-of-service organizations (POS). These plans
are a combination of a PPO and an HMO. POS plans have a primary care
doctor who manages your care but allow you to seek care from doctors
and hospitals that are not part of the plan. You pay more for seeking
care out of network, however.
- Consumer-directed health plans. These newer health
plans give you more control over your own health care, both
in choosing the care you receive and paying for it. They often require
you to pay a substantial deductible (often $2,000 or more) before
coverage starts, and are combined with a personal health savings
account or another similar product that allows you to pay for care
with pre-tax money.
Picking a Plan that Works for You
Health insurance can protect you from hefty medical expenses that
can easily bankrupt you if an accident or illness strikes. It also
lets you pay for access to quality and timely care.
That’s why I urge you to read the materials you get during open
enrollment season and ask questions. Understanding how your plan works,
learning what it does and doesn’t cover, and considering the quality
of care a plan provides are good ways to choose a plan.
My agency has developed a survey that provides information on consumers’ experiences
with health plans. The data are collected
by different organizations, including the Federal Employees Health
Benefits Program and Medicare. Some health plans also collect data
and provide it to consumers. You should check to see if your plan provides
To get the best plan at the right price to fit your needs, consider
- Avoid basing your decision only on the premium.
Lower premiums typically mean care comes with higher out-of-pocket
costs through deductibles, coinsurance, or copayments. If you’re
young and healthy, low premiums may be a good fit, but if you have
a health condition or are older, it may not be. Review all potential
costs before choosing your health plan.
- Understand what a plan covers. Read the materials
you receive with the following questions in mind: What type of doctor
visits, surgeries, and hospital care are covered? Is there a drug
benefit? If so, how much does it cover and what will it cost you?
Are dental and eye care covered? Are there limits on what you pay
or what the plan will pay for?
- Review last year’s coverage and care costs. Determine
if it was a typical year, what your out-of-pocket costs were, and
if it was a good plan for you after all.
- Find out if your doctor, hospitals, and other providers
are in your health plan’s network. Decide if you
are willing to see other providers, and if you aren’t how
much it will cost you to go out of the plan’s network for
- Look for ways to save money under the plan. Check
to see if you can get cheaper prescription drugs if you order them
by mail. If you have diabetes or another chronic illness, find out
if the plan lowers copayments on medicines to keep your condition
in check. Some plans even offer cash or incentives for you to get
checkups or join disease management programs.
Picking the right health plan takes some time and effort. Even if
you don’t have a choice of plans, you need to know how your plan
works. Asking questions and checking out your options isn’t only
good for your health, it can be good for your wallet too.
I'm Dr. Carolyn Clancy, and that's my advice on how to navigate the health care system.
a Health Plan (Transcript) Podcast
Agency for Healthcare Research and Quality
Questions and Answers About Health Insurance: A Consumer Guide
National Committee on Quality Assurance
HEDIS & Quality Measurement
U.S. Office of Personnel Management
Federal Employees Health Benefits Program
Current as of October 2009
Open Enrollment: What To Consider When Choosing a Health
the Health Care System: Advice Columns from Dr. Carolyn Clancy, October 6,
2009. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/consumer/cc/cc100609.htm