MONEY Health Care

How to Pick a Health Plan That’s Right For You

Picking a card with medicine on it
David Emmite—Getty Images

HMO, PPO, EPO? The alphabet soup of insurance plans may leave you dazed and confused. Here's how to make sense of your choices and get the coverage you need.

What’s in a name? When it comes to health plans sold on the individual market, these days it’s often less than people think. The lines that distinguish HMOs, PPOs, EPOs, and POS plans from one another have blurred, making it hard to know what you’re buying by name alone—assuming you’re one of the few people who know what an EPO is in the first place.

“Now, there’s a lot of gray out there,” says Sabrina Corlette, project director at Georgetown University’s Center on Health Insurance Reforms.

Ideally, plan type provides a shorthand way to determine what sort of access members have to providers outside a plan’s network, including cost-sharing for such treatment, among other things. But since there are no industry-wide definitions of plan types and state standards vary, individual insurers often have leeway to market similar plans under different names. In general:

  • Health maintenance organizations (HMOs) cover only care provided by doctors and hospitals inside the HMO’s network. HMOs often require members to get a referral from their primary care physician in order to see a specialist.
  • Preferred provider organizations (PPOs) cover care provided both inside and outside the plan’s provider network. Members typically pay a higher percentage of the cost for out-of-network care.
  • Exclusive provider organizations (EPOs) are a lot like HMOs: They generally don’t cover care outside the plan’s provider network. Members, however, may not need a referral to see a specialist.
  • Point of Service (POS) plans vary, but they’re often a sort of hybrid HMO/PPO. Members may need a referral to see a specialist, but they may also have coverage for out-of-network care, though with higher cost sharing.

Although insurers identify plans by type in the plan coverage summaries they’re required to provide under the health law, one PPO may offer very different out-of-network coverage than another.

“You have PPOs with really high cost sharing for out-of-network services, which from a consumer perspective seem a lot like HMOs,” says Corlette. Some plans labeled as PPOs don’t offer out-of-network services at all, experts say. On the other hand, some HMOs have an out-of-network option that makes them seem similar to PPOs.

Then there are EPOs. “People have no idea what an EPO is,” says Jerry Flanagan, lead staff attorney at Consumer Watchdog, an advocacy organization that recently filed a class action lawsuit against Anthem Blue Cross in California. They claim, among other things, that the insurer enrolled people in EPO plans with no out-of-network coverage who believed they were being enrolled in PPO plans that provided such coverage.

“Materials at the time of enrollment and in member’s Explanation of Benefits have clearly stated that the plan was an EPO plan which may not have out-of-network benefits,” said Darrel Ng, a spokesperson for Anthem Blue Cross, in a statement.

This year, HMOs and PPOs dominated the plans offered by insurers on the health insurance exchanges. According to an analysis of plans sold in the 36 states for which the federal government runs the online insurance marketplace as well as the plans sold on the California exchange, HMO offerings made up 40% and PPOs another 40%. POS plans made up 12% and EPO plans 7%.

Higher premiums didn’t necessarily correlate with better out-of-network coverage, says Caroline Pearson, vice president at Avalere Health, a research and consulting firm. HMO plan premiums, in fact, were slightly higher on average than those for PPOs, according to the Avalere analysis.

Pearson says the explanation may be that insurers anticipated that people who bought a PPO would probably want to use out-of-network providers. Since out-of-network spending doesn’t count toward the out-of-pocket maximum that people are responsible for before insurance picks up the full tab, these people were likely to be cheaper to insure, she says. (Next year, the out-of-pocket maximum will be $6,600 for single coverage and $13,200 for a family plan.)

Based on the 18 states that have released their proposed products and rates for next year, it doesn’t appear that plan types are likely to change significantly, says Shubham Singhal, leader of the health care practice at management consultant McKinsey & Co.

“Perhaps a few more EPOs will emerge,” he says. “Some of the health plans that might have introduced metal-level plans through the HMO are viewing the EPO as way to introduce a non-gatekeeper product.”

Since you can’t rely on plan type to provide clear guidance on out-of-network coverage, there are three basic questions to investigate when evaluating a plan, says Pearson:

  • Is there out-of-network coverage?
  • Does that out-of-network spending accrue toward the member’s out-of-pocket maximum? Legally it doesn’t have to, but some plans include it.
  • Do members need a primary care physician gatekeeper?

That’s only the beginning. Once you figure out whether a plan covers out-of-network care, it can be difficult to find out whether your doctor is even in that plan. You can check with you doctor’s office, but sometimes they don’t know. You can also look at provider directories to see who is and isn’t in a plan’s network, however, that information frequently proved inadequate or inaccurate last open enrollment period. But understanding the alphabet soup of plan types is an important first step.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

MONEY Ask the Expert

When Parents Can Say No to Picking Up the Tab for Insurance

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Robert A. Di Ieso, Jr.

Q. My ex-husband has been responsible for providing health insurance for our kids until the age of majority. My sons are now 21 and almost 18. My ex has family coverage for himself and his new wife, but he wants me to put the kids on my insurance now that they have reached the age of majority. Covering the kids doesn’t cost him anything extra, but for me to switch from a single plan to a family plan is an extra $175 a month and I can’t afford it. Since the age of majority for health insurance is now 26, is it possible he still is required to keep them on his insurance?

A. No, he’s not obligated to keep them on his health plan. Under the health law, insurers must offer to cover young adults up to age 26, but parents aren’t obligated to provide it, says Timothy Jost, a law professor at Washington and Lee University and an expert on the health law.

Further, the requirement to offer coverage isn’t related to the age of majority, which is defined by individual states and is generally between 18 and 21, says Randy Kessler, an Atlanta divorce lawyer and past chair of the American Bar Association’s family law section.

The health insurance coverage arrangement that you describe is pretty typical, says Kessler. You could go back to court and try to get your child-support payments increased to cover the cost of providing health insurance for the kids, but “it would be unusual for the courts to be helpful,” says Kessler. Absent some significant change in your or your ex-husband’s finances, or unforeseen and costly medical expenses for your children, in general “you can’t have another bite at the apple.”

With no legal requirement to compel either of you to cover your kids, it’s something the two of you will just have to work out, says Kessler. In addition to covering your children on your own or your ex’s plan, it’s also worth exploring whether they might qualify for subsidized coverage on the state marketplaces or for Medicaid, if your state has expanded coverage to childless adults. If they’re in college, student health coverage is worth investigating as well.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

MONEY Health Care

How to Fix Your Finances…By Fixing Your Blood Pressure

Blood Pressure Gauge
Anthony Harvie—Getty Images

High blood pressure is hazardous to more than your health. Here's how to ease the impact on your finances.

High blood pressure affects one in three adults in the United States. It can have a major impact on your health, of course; as a financial planner, I’m also conscious of the negative consequences it can have for your finances, too.

The challenge with high blood pressure is that it does not cause a person to feel ill. With health care costing as much as it does, it is easy to forgo treatment for an illness that doesn’t cause many symptoms. So many people leave their high blood pressure untreated.

The end result of this inaction: greater illness and higher health care costs down the road. Untreated high blood pressure leads to heart disease, strokes, or heart and kidney failure. Not treating high blood pressure is a perfect example of being penny-wise and dollar-foolish.

So given the importance of treating high blood pressure, what can people do to control the current cost of their illness? A couple of actions can go a long way.

Improve Your Lifestyle

An unhealthy lifestyle is the most common way people develop high blood pressure in the first place. Weight loss, regular exercise, salt reduction, and limiting alcohol are cheap ways to potentially eliminate the disease. These aren’t easy changes at first, but by developing a new lifestyle as a habit, the new behavior gets easier with time.

A healthy diet is also important, but a diet heavy in vegetables, fruit, and unprocessed food can cost a lot and require time-consuming amounts of cooking. One way to mitigate this cost is to become an “Iron Chef”: work with the raw material at hand. Go with what’s on sale in the grocery aisle, or even better, hit the farmer’s market. Spend a couple of hours on days off to cook enough to last most of the week.

Manage Your Medicine

Doctors choose medication to treat high blood pressure based on a number of factors. Concurrent illness, other medication, demographics, and potential side effects all play a role. The good news is that most medication used to treat high blood pressure comes in generic form, and the generics work just fine. Generics are cheap. In fact, some pharmacies will provide generic medication for high blood pressure for free! Your doctor will know if these opportunities are available in your area; it’s up to you to ask about the options.

The most important part of medication management is consistency. Medication taken regularly and about the same time everyday results in better blood pressure control. Ideally, people brush their teeth every day, so why not put your medication by the toothbrush and make it part of the routine?

If your blood pressure is too high, the doctor will see you every couple of weeks or so until it is in a good range. If blood pressure is well controlled with lifestyle and medication, doctor visits are reduced to once or twice a year, depending on other health issues. Better control results in fewer doctor visits, which reduces the cost of care.

High blood pressure doesn’t have to be costly. By being forward-thinking about it, you can greatly improve the quality and length of your life — and lower your expenses along the way.

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Carolyn McClanahan is a physician, financial planner, and founder of Life Planning Partners. In addition to running her financial planning practice, she educates financial planners, health care professionals, and the public on the intersections of health and personal finance.

MONEY Health Care

WATCH: Walmart Wants to Be Your Doctor

Walmart is testing in-store health clinics in select parts of Texas and South Carolina.

MONEY

6 Surprising Reasons Eating Right Pays Off

French Fry Packaging with rolled up dollar bills
Saying no to the fries is a smart money choice. Mike Kemp—Getty Images

You know a better diet will make you fitter and healthier. What you may not realize is that replacing fries with a salad can help your finances too.

Eating healthy can make you look and feel better, but it can also be great for your wallet. Whether by reducing medical costs or helping you earn more, a healthy diet has benefits beyond a slimmer waistline. Consider these ways your diet can improve your finances:

1. You’ll Lower the Likelihood of Needing to Take a Sick Day

Fruits and vegetables contain vitamins and minerals that help boost your immune system so it can better fight off viruses and bacterial infections. Staying healthy during flu season means you can go to work and get that paycheck (or promotion), and you won’t have to spend money on meds and extra doctor’s visits.

Not only does consuming a lot of produce increase your immunity in the short term, but it also helps prevent disease in the long run. Notably, eating more vegetables reduces the risk of heart disease, which afflicts about a third of all adults and costs about $444 billion a year to treat in the U.S., according to the Centers for Disease Control and Prevention.

2. You Can Stay More Productive

Not much is better for your finances than making more money, and one way to do that is to work harder. According to 2012 research conducted at Brigham Young University, eating healthy can help you do that. The researchers evaluated 19,800 employees at three large companies and found that eating well every day may lower your risk of productivity loss by 66%. They also found that exercise lowered the risk of lost productivity by 50%, and getting five fruit and vegetable servings lowered the risk by 39%. (Other research has found that frequent exercise is connected to higher pay.)

3. You Can Take Fewer Pills

Disease costs a lot of money in terms of doctor’s visits, procedures, surgeries, and medical devices, but a large chunk of medical spending goes toward prescriptions that could be discontinued. In fact, three of the top five most commonly prescribed medications in the U.S. are for preventable heart conditions, adding up to more than 160 million scripts per year. Keeping your heart healthy and your weight down through diet will help reduce the need for these medications and the monthly expense that goes along with them.

4. You’ll Steer Clear of Complications

When you’re unhealthy or obese, you’re more likely to have complications with an existing condition. For example, obesity decreases lung performance and is thought to exacerbate asthma symptoms. But foods rich in antioxidants and omega-3 fatty acids can increase lung performance. In addition, high blood pressure and diabetes can complicate your pregnancy, according to the CDC, and those costs can add up. Eating a healthy diet and keeping a normal body weight can help you avoid these problems.

5. You’ll Age Better

When most people think of retirement planning, they think of 401(k)s and IRAs. That’s a great start, but if there’s anything that can deplete your retirement funds, it’s unplanned medical costs. Studies conducted over the past 20 years show that plant-based and Mediterranean diets increase longevity and health, helping you work longer (if you want), save more toward retirement, and hopefully spend less on health care later.

More recently, researchers in Rome and the Washington University School of Medicine jointly published a paper that concluded that calorie restriction may be the best way to prevent disease and lengthen lifespan—even for people at a normal weight. The paper, published in 2011, took into account studies on rodents and humans. More human studies are needed, but the paper provided a basis for in-depth trials to come.

6. Your Insurer May Reward You

Employers and insurers are doing what they can to get you to eat right and work out (and need less high-cost medical care). That can mean discounts on the food you should be eating. The health-care network Harvard Pilgrim rewards workers for buying healthy food (up to $20 a month) and recently announced that it would roll out the program to other employers. Blue Cross Blue Shield offers Jenny Craig discounts, and Humana gives members a 10% discount on healthy groceries purchased at Wal-Mart.

Read more from NerdWallet Health, a website that empowers consumers to find high quality, affordable health care, and insurance.

 

MONEY Health Care

How to Find Health Coverage To Fill a Gap

Short-term insurance plans have major shortcomings, but having one will at least protect your from catastrophic costs.

Consumers who missed open enrollment on the state health insurance marketplaces this spring or who are waiting for employer coverage to start don’t have to “go bare.” Short-term policies that last from 30 days up to a year can help bridge the gap and offer some protection from unexpected medical expenses. But these plans provide far from comprehensive coverage, and buyers need to understand their limitations.

In contrast to regular health plans, applicants for short-term coverage may be rejected because they have pre-existing medical conditions.

Even if they’re accepted by the plan, the drugs and medical care necessary to manage their diabetes, for example, generally wouldn’t be covered, says Carrie McLean, director of customer care at online health insurance vendor ehealth.com.

Nor do short-term plans typically cover preventive care or pregnancy and maternity services.

“It’s not going to function like a regular health plan,” says McLean.

Lifetime coverage maximums are typical as are high deductibles. Between April and June, the average deductible for short-term individual plans sold by ehealth.com was $3,391, while families faced an average deductible of $8,252. Premiums averaged $107 for individuals and $249 for families.

Plans with similar limitations and restrictions used to be commonplace on the individual market. But the health law changed that. Today, regular insurance plans sold on the individual and small group markets must all cover a comprehensive set of 10 “essential health benefits,” and they can no longer turn people away because they have pre-existing medical conditions.

The 2014 enrollment for these plans ended in March, but some people who have specific changes in their life, such as losing job-based coverage or having a baby, can still get a special enrollment period to sign up for regular insurance plans.

Because short-term plans don’t meet the standards of the health law for “minimum essential coverage,” they also expose consumers to the health law penalty for not having health insurance of $95 or 1% of income, whichever is greater.

So why would someone buy a short-term plan, anyway? Basically, it provides some protection against catastrophic hit-by-a-bus expenses. Some consumers are looking for just that.

Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Read more about the impact of health reform:

TIME

Obama Can Still Secure His Legacy

If he plays his last two years like the final quarter and not the back nine

+ READ ARTICLE

aspen journal logo

The article also appears in the Aspen Journal of ideas

A question that faces president Obama, however the midterm elections turn out, is whether he’s going to play his final two years as the back nine of a casual afternoon of golf, coasting toward the clubhouse of former presidents, or as the final quarter of a tight basketball game.

When I was working with Steve Jobs on a biography in 2009, he had an inkling that he might only have a couple of active years left. As his cancer kept recurring, instead of slowing him, it spurred him on. In those two years, he refined the iPhone and launched the iPad, thus ushering in the era of mobile computing.

President Obama has scored two monumental achievements: helping to restore the financial system after the 2008 collapse and making it possible for every American to get health care coverage, even if they leave their jobs or have preexisting conditions. Obamacare may be undermined if the Supreme Court guts subsidies for the federal exchanges. If so the sweeping nature of the reform will survive only if Obama mounts a rousing, state-by-state campaign to rally passion for protecting the new health benefits.

As for rescuing the economy, this could be remembered as a hollow victory unless the recovery restores economic opportunity for all Americans. Growing inequality—of income, wealth, and opportunity—is the economic, political, and moral issue of our time. The fundamental creed of America is that if you work hard and play by the rules, you can support your family with dignity and believe that your children will have an even better future. But that is being lost as the middle class continues to be hollowed out and the poor get left further behind.

From the Pope to Thomas Picketty, and from Paul Ryan to Rand Paul, there has been a renewed focus on the moral imperative of economic opportunity. Obama seems ready to make that the defining passion of his final two years. Fighting for a fair deal for every American goes to the core of what he believes, rounds out the narrative of his presidency, secures his historic legacy, and leads naturally into what is likely to be the mission of his post-presidency.

The foundation for such a crusade could be a simple goal, one with moral clarity and patriotic resonance: that every kid in this country deserves a decent shot. He’s got a fresh team in place, and he’s already proposed many elements of an opportunity agenda in his My Brothers’ Keeper Initiative and other speeches. Among them: Universal preschool, so that no child starts off behind. Quality after school activities and summer internships. Apprentice programs like the bill proposed by Senators Cory Booker and Tim Scott. What also could be included is a public-private effort to create a service year program so that every kid after high school or college has the opportunity to spend a year serving their country in a military or domestic corps.

I’ve been reading Doris Kearns Goodwin’s magisterial narrative of the Teddy Roosevelt era, The Bully Pulpit. In 1903, Roosevelt felt a fierce urge to energize the American people around what he dubbed his “Square Deal for every man, great or small, rich or poor.” He spent nine weeks crossing the country by train, delivering 265 speeches. Most were carefully-crafted explanations of why corporate trusts needed to be reined in and workers needed to be respected. But when he arrived at the Grand Canyon, he began adding passionate calls to protect the environment and preserve nature. The trip not only refreshed his presidency, it refreshed him personally. The old boxer relished not only the “bully pulpit” but also being “in the arena.”

It’s probably not feasible for President Obama to embark on a weeks-long whistle-stop tour barnstorming for a new Fair Deal and a dedication to preserving the planet, though it would sure be fun to watch. It’s hard to break through all of the static, but after the midterms, it may be possible for him to propound a narrative that ties together his proposals for economic opportunity, poverty reduction, and immigration. A vision of a land of opportunity would appeal to most Republicans as well as Democrats.

For the final two years of his term, President Obama could stay above the fray and recognize that it would be pointless, given the dysfunctional nature of Congress, to try to accomplish anything significant. A rational calculus of risks and rewards, and a sober assessment of the possibilities for accomplishing anything in Washington, would argue for that approach. But I can’t help but hope that he decides to race against the clock rather than run it out.

MONEY Health Care

Why the Good News for Retiree Health Care May Not Last

With overall health-care costs in check, Medicare didn't hike the premiums seniors pay again this year. But once economic growth picks up, rising prices could come back too.

Medicare turned 49 years old last week, and the program celebrated with some good financial news for seniors: Premiums will not rise in 2015 for the third consecutive year.

The question now: How long can the good news persist? Worries about Medicare’s long-range financial health persist, but for now persistent low healthcare cost inflation will translate into a monthly premium of $104.90 next year for Part B (outpatient services), according to the Medicare trustees. Meanwhile, the Centers for Medicare & Medicaid Services (CMS) says the average premium for a basic Part D prescription drug plan will rise by about $1, to $32 per month.

The Part B premium has been $104.90 since 2012—except for 2011, when it actually dropped by about $15, to $99.90. The moderation is good news for seniors, since premiums are deducted from Social Security checks. Beneficiaries will keep all of next year’s Social Security cost-of-living adjustment, which likely will be about 1.7%.

Meanwhile, the average Part D premium has been $30 or $31 since 2011. That’s because of a dramatic shift to cheap generic drugs, and innovation by plan providers competing for customers.

“Seniors can expect to see more of what they’ve been getting over the last few years, which is increasing effort by Part D insurers to offer very-low-premium plans,” says Matthew Eyles, executive vice president of Avalere Health, a consulting firm specializing in healthcare.

As in recent years, Eyles says, the best deals will be found in plans that require enrollment in preferred pharmacy networks. Those plans offer lower premiums and co-pays. “We’ll also see plans limiting or eliminating deductibles, and encouraging the use of generics by offering them free or at nominal prices,” says Eyles.

But the average figures mask a more complicated story. Part D enrollees will find significant regional variations in premiums around the country. CMS data shows average premiums will be as low as $21.19 in New Mexico, and $25.83 in Florida—but as high as $39.74 in Idaho and Utah.

Eyles says it is not entirely clear why premiums will vary so extensively, although the prices tend to track the overall cost of healthcare, and are related to the overall healthiness of seniors by state.

“The plan providers have to submit bids for regions that take into account differences in the enrolled populations, including prescribing and utilization patterns,” he says. “It could be that one state tends to have more people using statins, or a diabetes medication.”

Another complication in Part D is the “doughnut hole,” the gap in coverage for Part D enrollees with high drug costs. Higher-cost plans are available to provide gap coverage, but the hole’s size is being shrunk under a provision of the Affordable Care Act (ACA), and the gap is set to disappear in 2020.

The coverage gap begins after you and your drug plan have spent a certain amount for covered drugs. Next year the gap starts at $2,960 (up from $2,850 this year) and ends after you’ve spent $4,700 (up from $4,550 this year).

Seniors who enter the gap also get discounts on brand-name and generic drugs, and those breaks will be larger next year. Enrollees will pay 45% of the cost of brand-name drugs in 2015 (down from 47.5% this year) and 65% of the cost of generic drugs (down from 72% this year).

Can the recent good news on lower healthcare costs continue indefinitely? Medicare spending reflects our overall health economy, and the big picture is that the United States does not have effective controls on spending growth. Healthcare outlays have quadrupled since the 1950s as a percentage of gross domestic product, to 17.7% in 2011. What’s more, our spending is more than double any other major industrialized nation, according to the Organization for Economic Cooperation and Development.

Still, our per capita Medicare spending growth averaged 2% from 2009 to 2012, and it was nearly zero last year.

The Obama administration often points to the ACA, but outside experts are more skeptical. Research published this month by Health Affairs, a leading health policy and research and journal, credited 70% of the recent spending slowdown to the slack economy. Absent further changes in the structure of our healthcare system, the researchers expect higher healthcare inflation to resume as the economy improves.

“A significant amount of it is due to the economic slowdown,” says Eyles, “although we know that changes in the way providers deliver care, and how providers are being paid are also making a difference in the overall rate of growth.”

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