It's that time of year again! The holiday season is among us and many of us are busy planning trips to see family, holiday events, and wrapping up a year soon to be in the past. This is also a very important time of the year to prepare your health plan in the coming year.

In early to middle November most companies and health insurance marketplaces begin what is called open enrollment. Open enrollment is the time of year where you get to select an insurance plan for you and your family for the upcoming year. For many, this can be a decision with potentially large financial implications. In fact, healthcare is the third largest expense for American households after housing and transportation!

With such a large implication on finances, you would think healthcare costs would be well understood, however, it is one of the least understood aspects of most people's budget.

This article will break down the most important things you need to know to understand your health insurance options and help you make the right choice for you and your family when choosing your insurance plan in Tempe AZ.

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Assessing your Healthcare Needs in Tempe AZ

The purpose of health insurance has changed dramatically over time. Most insurance as we know it including auto, home, life, etc., is there to protect you from a large financial loss when a catastrophic event happens.

With the incredible rise in costs of health insurance plans and some of the basic changes in health insurance policies, Americans now use their health insurance not only to protect them from catastrophic loss but also to pay for simple services, routine medications, and preventative care.

A 60-year-old with hypertension and diabetes will have very different healthcare needs than an 18 year-old with no health history. These two patients therefore have different needs when choosing a health insurance plan.

No matter who you are, none of us can predict a catastrophic event. However, we can generally plan how many routine services and what types of preventative care we will receive throughout the year.

These questions must be asked first to determine healthcare costs before choosing a plan:

• Are you or your family on any medications that must be taken regularly?
• Do you or your family expect to have any large procedures, such as a surgery, in the coming year?
• Do you or your family use routine services such as primary care, chiropractic care, or physical therapy on a regular basis?

If the answer to any of these questions is yes, you may need to consider choosing a better health care plan that covers a significant portion of care. Patients who utilize more health services will often benefit by acquiring a better insurance plan. Although you may pay more monthly to your insurance, you will likely save significantly more throughout the year on your out-of-pocket cost to your doctors.

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Benefit structure

This is where plans can get very tricky and burdensome to understand. We'll keep this section down to what you must know.

Every insurance plan offers unique and specific benefits. For instance, one insurance plan may allow you 12 Chiropractic visits per year while another will offer you 50. This information is usually buried in a long document that few have the time to read. Unfortunately, these are usually not à la carte and the plan you choose will have a fixed comprehensive benefit structure where all this information is pre-decided.

For this reason, the best strategy is to focus in on the key benefits you already expect to use and making sure to read over those carefully. There's nothing worse than paying for a high priced insurance plan, only to find out that a service or a doctor you really wanted to use is not covered under that plan.

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What's a Premium?

"Cost is what you pay, value is what you get"
- Warren Buffet

This is great mantra to think about when choosing a plan. Many will focus on their premium, which is a fancy word that simply means your monthly payment to your insurance. The higher the premium, the "better" the plan usually is. It makes sense when you remember that the health insurance industry is a business and you are, effectively, betting on your health next year.

Premiums are not the only factor that are going to determine your total out-of-pocket cost at the end of the year. In fact, premiums only account for around 60 to 70% of total healthcare expenses for Americans. This can range dramatically, depending on whether or not you receive healthcare services..

Those who spend their money solely on premiums and don't receive services effectively received only peace of mind for their payments. That is a lot of money to pay for your peace of mind!

Those who utilized many of the great services included in an insurance plan at a discounted cost may spend more on premiums, but when you consider what they received for their money, they returned significantly more value for their dollar.

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Deductibles, Co-insurance, and Co-pays

These common insurance terms may be foreign to most, but are relatively simple to understand. Here's a few brief definitions:

Deductible: The amount of money you must pay out-of-pocket entirely on your own before your insurance company pays anything to your providers

Co-insurance: Once a deductible is mett, you and your insurance will now split the costs of your care. Each service will have a coinsurance, which is the shared amount of the bill. You still must pay a portion of your healthcare costs out of pocket.

Co-pay: A co-pay is what a patient pays at the time of service. This is not the total cost of the service. After a provider submits their claim to your insurance you may still receive a bill for an unpaid portion of the service.

Out-of-pocket Maximum: This is a dollar amount specific to each plan that effectively act as a stop loss. Once you have paid this amount in a single year, your insurance will pick up the bill of your providers 100% and you will no longer have out-of-pocket costs.

These numbers are important because they lay out your out-of-pocket cost throughout the year. For example, since your deductible is how much money you need to spend before your insurance actually pays for anything, a higher deductible plan means you will likely need to spend thousands of dollars before you start getting help from your insurance. For those who plan to use their insurance, lower deductible plans mean you will get to the point where your insurance coverage really kicks in faster.

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HMO, EPO, or PPO?

You may be familiar with these words if you have ever chosen an insurance plan before. Understanding these types of insurance plans can be complicated but you can boil them down to one important difference: which doctors you are able to see.

All doctors are faced with the choice whether to contract or to not contract with an insurance company.

For doctors, this choice is made based upon how they are reimbursed for their services as well as how comfortable they are acquiring their own patients.

If doctors do not have the means or interest to attain their own patients, they may decide to join an insurance network so that the insurance network will market them on their website and encourage you to go see the doctors who will accept a discounted rate.

Doctors who feel comfortable standing on their service alone and do not want to receive a discount rate may choose to stay out of network and not contract with these companies.

A key feature of an EPO or an HMO plan is that they only allow you to see contracted providers who will take the discounted rate.

A PPO plan is a plan that allows you to see any doctor you would like. There will usually be doctors contracted in network with these plans as well, however a PPO will often allow you to see providers outside of your insurance network.

Choosing a plan that allows you to see the doctors you want to see is extremely important and a big determinant of your overall costs for healthcare.

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Where do I get insurance from?

Even after you are armed with all of this knowledge, you may still be faced with the fact that choosing an insurance plan is often going to be dictated by access to these plans. Let's take a look at where the majority of Americans get their insurance from.

• Employer-Sponsored Insurance (ESI): 49%
  • Nearly half of Americans receive health insurance through their employers, making it the largest source of coverage in the U.S.
• Medicaid: 21%
  • Medicaid is the public insurance program for low-income individuals and families, covering over one-fifth of Americans.
• Medicare: 14%
  • Medicare provides health insurance primarily for Americans aged 65 and older, as well as for certain younger people with disabilities.
• Direct Purchase (Individual Market): 6%
  • This includes people who buy health insurance directly from insurance companies or through the Affordable Care Act (ACA) marketplaces.
• Military/Veterans Health Care (TRICARE, VA): 1%
  • TRICARE and the VA health system provide coverage for active-duty military, veterans, and their families.
• Uninsured: 8%
  • About 8% of Americans remain without health insurance.

As you can see, nearly half of Americans receive insurance through their employer. Medicare, Medicaid, and VA coverage are government sponsored plans that both require age and income demographics to be met before eligibility.

For those who do not meet the criteria for some of these plans, you may be left to search on the individual market.

You will have different options for insurance plans at different price points depending on your access to each of these.

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How to put it all together?

Hopefully, by now you feel comfortable with some of the important things you need to know to make the right choice for you and your family when choosing a health insurance plan. However, you may still want to know, how do I put all of this together?

The summarize all of the information we've gone over into a checklist, ask yourself these questions:

• What healthcare services do me and my family plan to use this year?
• Do I or my family have any major healthcare costs that I expect like a surgical procedure?
• Do I plan to use routine services like chiropractic care throughout the year?
• Which doctors or facilities are most important to me to be able to use?
• What health insurance market (employer, Medicare, VA, etc.) do I have access to?
• Among my options, which plans have the best benefits that support my family needs?
• Considering all of the cost structures of each plan, is it worth it to pay a higher monthly payment in the long run to get more value out of my plan?

When you are armed with this understanding you can surely pick the plan that will get the most value for your family.