Need to Pick an Insurance Plan? Start Here

Published by the New York Times November 1, 2016

By Margot Sanger-Katz

President Obama once promised that the Obamacare exchanges would make buying insurance as easy as selecting a TV on Amazon. Just a few clicks, and you could comparison-shop and pick the plan that’s right for you.

In a way, the president was right: The marketplaces set up under the Affordable Care Act make a really confusing and expensive purchase a lot easier. But insurance remains a complex financial product. Making the best choice is going to depend on your values and preferences, and some good luck in predicting your future health.

That’s why, even three years into Obamacare, many customers are still relying on one-on-one meetings with experts, who ask the right questions and help steer people to the plan that’s likely to be best for them. And it’s the reason I still get calls every year from friends and colleagues asking me which employer plan they should choose.

We wanted to try to help make a tricky choice a little easier. Obamacare customers can start selecting their 2017 plans today, and fall is open enrollment season for a lot of companies, too.

We made flow charts to explain how to choose, one for people buying insurance on the Obamacare marketplace, another for those choosing an employer-sponsored plan. We got advice from groups that provide in-person assistance, economists who have studied insurance choices and executives at companies that are devising products to help make choosing easier.

These are simple charts, so there may be special considerations for certain people with distinct needs (more about that later). But this boiled-down process is intended to address the most important questions you will face as you compare any array of plans with metallic names or obtuse abbreviations.

Let’s start out with one important point: Unless you can afford to pay millions of dollars without blinking, you should really have health insurance to protect against financial ruin. About one in five Americans spends more than $5,000 on health care in a given year, and about one in 20 spends more than $10,000. If uninsured, you are exposed to huge bills when unexpected things happen.

Insurance can be expensive, and some people still struggle to afford it. But if you can squeeze a health plan into your budget, our advice is: Do it.

Our questions are intended to help you think about three key issues in choosing insurance. The numbers are devised for single people buying coverage for themselves. Payment and income cutoffs will be a little different for people shopping for family coverage.

How sick are you?

This can be a tough question to answer, because health emergencies often come without warning. But some people know ahead of time that they are going to use a lot of health care services. If you have an expensive chronic condition that requires a lot of drugs and doctors’ visits, or you have a planned surgery or will be having a baby, you are better off buying more generous insurance that will pay for more of your health care.

A number of companies have now put together calculators that can help you estimate just how much health care you are likely to use for conditions you know about. And at least one is trying to use data from large numbers of patients to calculate the odds that something unexpected — like an accident or a heart attack — might happen to you. None of these tools are perfect, but they will probably get better over time, eliminating the need for patients to do their own back-of-the-envelope estimating about what their care will cost under different plans.

Generally speaking, the experts I spoke to said that anyone with known health problems should buy a plan with a deductible under $2,000 — for Obamacare shoppers, those plans are called silver. But people with major health care needs should shop for more generous plans, and may benefit more from reading the detailed “summary of benefits and coverage” documents about limits on certain kinds of visits, or the details of co-payments and deductibles.

For Obamacare shoppers, there is one exception to this advice: people who earn incomes less than twice the federal poverty level. A single person earning less than $24,000 or a family of four with an income less than $49,000 is nearly always best off buying a “silver” plan. Because of extra subsidies, you’ll end up with the equivalent of a more generous “gold” plan without paying extra.

How sensitive are you toward risk?

If you’re healthy, something bad might still happen to you, but it might make more financial sense to take a gamble and buy a cheaper, high-deductible plan, rather than pay for extra protection you might not need. That plan will still protect you from really high bills, but you’d have to dig out several thousand dollars from your pocket first for a big emergency. For people with employer coverage, these plans are often called “consumer-directed” or “H.S.A.” plans. In the Obamacare markets, they are called “bronze.”

Most insurance products — like car insurance or homeowner’s insurance — aren’t set up to pay for every last service. Instead, they are intended to protect you if something goes really wrong. Your car insurance doesn’t pay for oil changes, but it does replace your car if it is totaled in a crash. Some people think about health insurance in the same way, as a protection from financial catastrophe. The Obamacare law makes every plan cover preventive health care like checkups, flu shots and mammograms at no charge.

But, beyond that, plans that ask you to pay out of pocket for the first few visits and prescriptions tend to be cheaper than plans that have you pay a portion of every single bill. If you have savings or the ability to easily borrow some money, it often pays to buy a cheaper plan with a higher deductible. If you don’t get sick, you’ll save money. And if you do, you will have the financial cushion to pay a bigger share of health care costs that year.

If you don’t have any savings or the ability to borrow money, you might prefer to use insurance as a way to smooth out your costs over the year. Buying a more comprehensive plan will cost you more every month, but you might decide it’s worth the extra money to avoid the financial consequences of an unexpected bill.

How much will you pay for choice?

Some of the least expensive plans in the Obamacare marketplace are plans that cover only a limited set of doctors and hospitals. The plans, called narrow networks, can be a good deal. But buying one may mean you have to give up a doctor you already know well, or you’ll be steered away from a hospital you prefer because it is deemed too expensive to use. These are tough trade-offs, and different people will feel differently about what’s important to them.

If you have a lot of known health problems, and have strong relationships with doctors and hospitals, you will need to search through the plans’ network listings to make sure you can continue to receive the care you want. The same goes if you have a particular set of medications. This may require some shoe-leather investigation, since the network directories are often confusing and out of date. If there are doctors you can’t live without, call to make sure they are covered.

You may be able to get a more affordable plan if you’re willing to use a plan that covers a particular set of doctors and hospitals. Plans that do this are often called H.M.O.s or E.P.O.s — though other types of plans are also increasingly limiting their list of covered doctors.

Even some people who don’t currently have doctors might want to have a broad choice if they do get sick. Plans that allow patients to get coverage for so-called out-of network providers, generally called P.P.O.s, tend to be more expensive. Look at the plan summary to see what these plans will pay for a doctor who is “out of network.”

What about quality?

Ideally, health insurers would be competing on the basis of customer service, and not just price. But the experts I talked to said there’s still no good way to compare the plans on the basis of quality. So, if you have found a plan that’s a good deal, has a deductible you can afford and covers the doctors you care about, it’s probably a solid choice. There’s still a chance that you’ll end up having to fill out annoying paperwork or get stuck on hold for hours to make an appointment. But that might have been true with another insurance company, too. .

Eamonn Vitt