Open Enrollment for Health Insurance

by Erica Deerinwater, CPC, CPB
Client Financial Specialist

There have been so many changes this year that it can be hard to keep up! One change that can both surprise and overwhelm many parents each year is open enrollment for insurance through their employers. As a recent mother told me after her labor, transfer, and birth at a hospital, “This is more healthcare than I’ve received in my life!” 

In my five years doing benefits analysis and benefit estimates at Dar a Luz, I see that most people don’t fully understand how their insurance benefits work. Many are confused about the way insurance companies split their medical bills with them. For every provider visit, they receive a bill from the provider and an explanation of benefits from insurance, and it’s hard to understand how they fit together. Then at the end of each year, open enrollment puts options in front of them that are filled with jargon and symbols and strange math. 

Dar a Luz really wants you to understand your coverage and how it’s applied to your care. 

To help put this into perspective, I’ve made a little quiz:

A deductible is:

a)    the amount deducted off of total charges by the insurance company.
b)    the maximum amount you will pay out of pocket each year.
c)    the amount the patient pays to providers prior to insurance paying their portion.
d)    the amount of brain cells that were just deducted from my brain trying to answer this question.

Coinsurance is:

a)    a secondary insurance company, like Aflac or Medicaid, that covers your portion after your primary insurance pays for your care.
b)    a percentage of care that is your responsibility.
c)    the same as a copay.
d)    a mystery amount that is always higher when Mercury is in retrograde.

An insurance premium is:

a)    the highest level of insurance that covers all care at 100%.
b)    the amount you pay toward your out of pocket maximum each month.
c)    monthly payments the insurance company collects to keep your insurance policy active. This may be paid by your employer or by you.
d)    stupid.

How’d you do? If you answered “d” to each question, you’re not alone. But we’re here to help! 

Understanding your insurance options:

When you receive new options, look for the section called “Summary of benefits.” Pay attention to all of the things that add to your total annual healthcare costs:

• The deductible: what you have to cover before insurance kicks in
• The coinsurance: the percentage of the bill that you pay after insurance kicks in
• The copay: the flat fee you pay to providers per visit for some services (i.e. problem visit, Urgent Care, and sometimes ER)
• Included or excluded services (is a birth center an allowable place of delivery?)
• Providers you might want to use (are Dar a Luz midwives in-network providers?)
• The premiums: your monthly payments to the insurance company

All of these factors can change your total cost of your healthcare for the year. For example, a lower deductible means your insurance company is footing a larger share of any hospital bills, and that usually means you’ll pay a higher monthly premium for the privilege. Be sure to do the math and see if the lower deductible will really save you money over the course of the whole year.

Here are two example plans to compare. (Don’t worry, we do the math for you!) Which would you choose?

Plan 1

You receive care and the final bill is $6000. Your plan’s deductible is $2500, and your coinsurance is 20% (no copay for this example). Your insurance premiums are $250 per month.

You pay the first $2500 of the bill (the deductible).

Of the remaining $3500, your insurance pays 80% and you must pay the other 20% (the coinsurance), which is $700 ($3500 x 20%).

So your total payment to your provider will be $3200.

But wait, there’s more! Don’t forget to add in the $3000 in premiums to your insurance company for that year ($250 x 12). So, to receive benefits from your insurance company as well as pay your provider, your healthcare cost with Plan 1 for that year is $6200.

Plan 2

You receive care and the final bill is $6000, the same as Plan 1. This time your plan deductible is $1000, your coinsurance is 10%, and your monthly insurance premiums are $500 per month.

You pay the first $1000 of the bill (the deductible).

Of the remaining $5000, your insurance pays 90% and you must pay the other 10% (the coinsurance), which is $500 ($5000 x 10%).

Your total payment to your provider will be $1500. Sounds better, right?

However, you also pay $6000 in premiums to your insurance company for that year ($500 x 12). So, to receive benefits from your insurance company as well as pay your provider, your healthcare cost for that year for Plan 2 is $7500.

As you can see, there are lots of factors to consider when choosing your coverage. 

Ways your costs might come down:

If you are a healthy family and typically visit providers only for preventive visits, the higher deductible/lower premium plan will usually make the most sense. You will pay less for care during the course of a year. If your employer offers a healthcare savings account (an HSA, HRA, or FSA) and you can estimate your medical costs, you can save money as the account is funded by pre-tax dollars from your paycheck (just be sure to understand the limitations). See if you qualify for Medicaid, which can cover 100% of your care, here. Or see if it helps to purchase your own plan on the Marketplace, here.

If anyone on your insurance plan has ongoing problems that require more care, the lower deductible/higher premium plan could make more sense, as it’s possible that several high-dollar claims will be charged during the year. 

Insurance is a service that you are purchasing. And, just like you would research cell phone service, your kids’ schools, or internet providers, the same attention and care should be focused upon your health insurance selections during open enrollment. 

Don’t be discouraged by complicated benefits! Ask your employer’s benefits administrator or health care plan representatives all of your questions and make sure you understand how your insurance will affect your family’s finances in the new year.

Cheers to all of Dar a Luz’s educated insurance consumers! 

Erica

Erica is a native New Mexican who has worked in medicine for most of her career, from medical filing to front office to providing technical training to nurses and doctors. She is a certified professional biller and coder for the birth center. She also does insurance verification, submits prior authorizations and creates client financial agreements. She enjoys helping Dar a Luz clients make the most of their insurance coverage.

Her second child was born naturally at Dar a Luz in 2011. She feels so very lucky and honored be part of such an amazing group of women and the birth center’s mission.