When starting a new job, there may be optional perks and benefits that you will have to review to decide whether or not to opt-in. One of the most common of these is group health insurance plans. Each plan provider offers different coverage in their plans and tailors them to each employer. In assessing your company's health insurance plan and the available options, you may find some more applicable to your situation than others. You may even find that obtaining a private health insurance policy makes more sense than opting-in to the group plan. Here are five areas of group health plans to evaluate so you can choose the best options for you.
TUTORIAL: Intro to Insurance
Every health insurance plan stipulates who may provide the included services. Some plans allow you to use any physician or facility you choose, while others restrict whom you may see to certain networks or groups of healthcare providers. Before signing up, make sure that you know for certain that there are covered providers in your area, otherwise you may have to travel long distances for care. Be sure to find out how much these covered providers charge for common services. For example, if your current doctor charges $65 for an office visit, and the group health plan dictates that you see a doctor who charges $140 and the plan pays half, you are better off with no coverage.
The services covered also change between healthcare plans. Some plans only cover unexpected costs, such as a hospital stay or an emergency room visit. Some cover regular checkups and screening procedures such as mammograms and prostate exams. Your plan may also include additional coverage for drugs, eyeglasses and dental care. Your particular situation will determine if the coverage is a benefit to you. If you have young children, coverage for checkups and dentist visits may make sense. If you are over 40 and living alone, on the other hand, coverage for non-emergency medical conditions and drugs may be more important. (For more on what is not covered, see Services That Health Insurers Often Decline.)
Many group health insurance plans have optional add-on coverage available. To know whether these coverages make sense for you, compare the cost of the annual coverage with the cost of what is being covered. An easy one to assess is eyeglasses, because the need for new glasses can be reasonably predicted. For example, let's say you need a change in prescription on average every five years. Your group health plan offers vision coverage for an additional $96 per year. New lenses and a vision test costs $175. In four years, you will have paid $480 in premiums in order to cover a $175 expense. In this case, the coverage is not worth having.
In your company's healthcare plan documentation, there will be a list of exclusions from coverage. One of the most common is the pre-existing condition exclusion. That means that, if you have a medical condition that requires care or monitoring at the time you sign on to the policy, any medical costs pertaining to the condition are not covered. Read the list of exclusions carefully to understand what claims you will not be able to make. If you do have an existing condition, it may make more financial sense to find an individual policy that covers the condition, even though you will likely pay higher premiums. (For more, read Health Insurance: Paying For Pre-Existing Conditions.)
Cost, Deductibles and Co-Pays
This is the area of group health plans that confuses most employees. The cost of the premiums of the plan is usually clear, but the rules surrounding deductibles and co-pays can be difficult to navigate. Knowing the premium rate without understanding the other two inputs into your out-of-pocket costs does not give you a good overview of the benefits or drawbacks of the plan. A deductible is the amount of medical expenses you will have to incur before the coverage kicks in. The lower the deductible, the more you will have to pay out of your own pocket in any given year.
A co-pay is how much of each expense you will have to pay. For example, the plan may cover 80% of a doctor's visit and you will have to pay the other 20%. The higher the co-pay, the more you will have to pay in medical expenses. Both the deductible and the co-pay affect the premium cost, and all three must be taken into consideration. If you are comparing your employer's group health plan to an individual plan, you will have to compare all three costs for each plan.
The Bottom Line
Not all group healthcare plans will match up with your needs. Comparing coverage and costs will help you determine what you need and how much it should cost you. (For help on private coverage, check out Buying Private Health Insurance.)