Beyond cost, how health insurance impacts you


Paul SisolakBlog author Paul SisolakAs a personal finance journalist, Paul specializes in financial literacy, loans, credit scoring and the art of negotiation. He's covered some of the nation's most inspiring financial success stories for national publications including CNN, and US News & World Report and has a passion for helping Americans overcome their debt.

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Like many things in life, you can rarely have it all, even when it seems you’re paying an arm and a leg for something as important as health insurance.Financial blogger David Weliver found this to be a frustrating constant in his recent shopping search on the open market for the right family policy. "We wanted to try and save a little bit of money, and we were able to find a plan that we thought saved a little bit of money, and that we thought was comparable to what we were switching from," he said.[/embed]But, according to Weliver, the quest for the perfect policy has "ended up being a little bit of a nightmare. Between getting referrals to doctors, to finding out that facilities we typically use are out of network, and that benefits we thought would be there aren’t there. So, it’s been an extremely frustrating year, paying for something that is not giving us a whole lot back in terms of preventative care, at least."The Weliver family’s dilemma brings up an all-too-familiar topic: health insurance as a precarious balancing act, where no single policy seems to offer every single feature you want. You might find a plan that’s easy on the wallet, but then the potential savings may seem less valuable when using your policy becomes a big headache, causing all sorts of non-financial costs and repercussions to contend with.Knowing what some of those costs are before signing up for a health insurance plan can help save time, money, effort and your health.

Healthcare can cost you outside of price

When signing up for a new plan, affordability may take the driver’s seat in searching for the best coverage; how much money will a new policy cost you and save you? Sometimes, even with a significant cost savings in place (i.e. a plan with low premiums but comprehensive coverage) can still pose some non-financial impacts that may jeopardize, above all things, your health.

Network referral issues and plan types to look for

In a perfect world, the ideal health insurance policy would keep you fully covered and allow you to visit any doctor you want, anywhere, with no extra cost to you, the patient.One big drawback to some policies is the limitations on your network and the difficulty to finding a specialist for your needs within your plan when health issues arise. For instance, take HMO (health maintenance organization) plans; among the most affordable, and with co-pays often at a very low cost, many HMO plans come with no deductible to meet before your insurer takes over.But since HMO policyholders need to stay in network, they may be burdened with needing a referral from their primary care physician (PCP) to see a specialist. This can turn into a time-consuming cycle of finding the right doctor to treat your specific healthcare need. If one specialist doesn’t pan out, patients need to go back and receive another authorization from their PCP.Fail to connect with the right doc, and plan subscribers may be prone to simply giving up and dealing with their health issues on their own.Exclusive provider organizations, or EPO plans, for example, give patients a decent cost savings and convenience without the need for specialist referrals. But some of the non-financial drawbacks of EPO plans aren’t all that dissimilar to that of an HMO, however; while you may not need a referral to see a new doctor, there’s a good chance that a patient’s existing doctor might not be in the network, necessitating the time and energy to find a new provider and forge a new medical relationship.Now, some patients may prefer this type of autonomy since they’d rather look for their own doctor instead of being told who they can and can’t be treated by. But this can pose another drawback.Take PPO (preferred provider organization) insurance policies. They give patients a bit more freedom, since they can choose from most doctors within a wide provider network at a lower cost than an HMO plan. You can go straight to a specialist without a referral, or try out several without needing to consult your PCP every time. Yet when faced with a busy schedule, some people may find that they’ve become responsible for managing their own healthcare in the search for the right specialist.Even when that specialist has been found, there’s no guarantee that it’ll be the right fit, for various reasons. HMO-participating doctors are also tasked with meeting high quotas to promote efficiency, so they may be more hurried when seeing patients. This can leave a lot of people feeling like their medical needs aren’t being met.Then there are network errors passed onto the patient. Case in point: Once, I had a PPO plan and went directly to see a specialist. Only after I paid a few scheduled office visits and paid the co-pays was I informed by my provider that the specialist was actually out of network, but they neglected to update their database.This prompted an arduous series of events in which I ended up owing the full out-of-pocket cost to make up the difference, plus taking time to find a new specialist -- simply because my insurance provider hadn’t kept current with their database. What was the point, I wondered, of having a PPO when I was receiving HMO-level service?

Prescription drug and service limitations

It’s not always the cost of prescription drugs that can frustrate consumers, but the restrictions placed around them by insurers. These are usually listed in your insurer’s formulary, a tiered list classifying prescription medicine by cost sharing.Aside from the financial aspect, patients may often find themselves in a situation where certain drugs are only available full cost, out of pocket, because their insurance plan formulary doesn’t include them.Medicaid, the lifeline many low-income people need in a health insurance policy they might not otherwise afford, is one example. In many cases, it’s up to the discretion of Medicaid to determine if certain medical services or prescriptions are covered. For example: if your practitioner prescribes a procedure or drug that Medicaid doesn’t approve, you’re left without the care you need; and the consequence of going without care is letting your health suffer.Accessibility to medical care is also not quite as far reaching and comprehensive as one might like if they’re enrolled in Obamacare, so for people living in more rural or remote areas of the country, Affordable Care-run facilities may be sparse -- effectively leaving you underinsured since your care options are slim. (That’s not to mention the drawbacks of missing the short window of open enrollment, leaving one potentially uninsured for the rest of the year.)

How to find the right insurance

Some of the contingencies we mentioned could be a minor nuisance to your healthcare plan, or a major inconvenience that crosses the line from financial over to personal. Few policies are perfect outside of the most cost-prohibitive -- defeating the purpose of budget affordable healthcare to begin with."It’s a tradeoff, like everything," Weliver said. "You can’t have everything with health insurance. If you were wealthy enough to afford health insurance that gave you everything, you could probably afford to go without health insurance."Your health isn’t something to be taken lightly, so let your priorities lead the way when shopping around. Use tools and marketplaces that offer you insight and education along the way, including our own health insurance app that helps you categorize your plan benefit needs into ‘must haves’ and ‘nice to have’ segments."It’s the type of thing where the more you pay, the more you get," Weliver added. "And the less you pay -- which a lot of people need to look at the most affordable plans -- you have to realize what you’re giving up. There are options out there where you may give up one thing, but you keep something else, so it’s just a matter of knowing what the tradeoffs are."Still unsure which type of health insurance policy you need? Take five minutes for our free insurance checkup.

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Blog author Paul Sisolak

As a personal finance journalist, Paul specializes in financial literacy, loans, credit scoring and the art of negotiation. He's covered some of the nation's most inspiring financial success stories for national publications including CNN, and US News & World Report and has a passion for helping Americans overcome their debt.

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