Open Enrollment Guide: Health Insurance Plan Types
Updated October 2020 for 2021 Open Enrollment.
Choosing a health insurance plan doesn’t have to make you shake with fright.
As we launch into another health insurance open enrollment season – both for most employer-provided coverage and for the Affordable Care Act marketplace and Medicare – Beyond Type 1 is here to help you navigate the glut of overwhelming options.
HMO versus PPO. High deductible versus low deductible. First, what do these acronyms even mean? Next, how do you know what’s best for you and your family’s health needs?
Below, we will walk you through how to enroll and what to think about based on the type of coverage you have or are looking to get. You can also visit the T1D Health Insurance Guide to dive a bit deeper into the elements of coverage you may want to consider.
Open enrollment is the yearly period where people can openly enroll in health insurance plans on the Affordable Care Act marketplace, also known as the Healthcare Exchange or Healthcare.gov, for the upcoming year. The enrollment period opens on Sunday, November 1 and closes on Tuesday, December 15, 2020. That’s a six-week window to secure health care for the upcoming year.
If you don’t act by December 15, you’ll only be able to get 2021 coverage if you qualify for one of the marketplace’s Special Enrollment Periods, such as a life event like losing job-based health insurance, getting married, having a baby, or losing insurance in a divorce or separation. Those who qualify for Medicaid or the Children’s Health Insurance Program (CHIP) can apply for coverage at any time.
The most important thing to keep in mind is that a plan with lower up-front costs (i.e. your monthly premium) may end up costing you more money overall, because it may have lower coverage for your needed medications and supplies.
Be sure to pay close attention to the plan’s prescription drug/pharmacy coverage, DME (durable medical equipment – often insulin pumps and/or continuous glucose monitors) coverage, and the deductible (the amount you will need to pay out of pocket for medications or supplies before insurance will begin helping with costs).
So what are the prevailing options and differences?
HMO stands for “health maintenance organization.” These plans provide access to doctors and hospitals that are within a network established by your insurance plan. The networks consist of providers that have agreed to provide their health services at prices they’ve negotiated with the insurance company.
This often means that providers are paid less by the insurer than they might get normally. They make this concession because of the large and easy access to patients the plans provide them.
Lower costs sound great, right? Well, they are. In exchange for accepting the limitations of an HMO (we’ll get to that next), patients usually pay lower monthly insurance payment premiums (your monthly fee for having insurance). Deductibles (the amount you pay out of pocket before your insurer starts picking up your healthcare costs) tend to be lower as well.
The largest drawback of HMO plans is that they only contract with a certain number of doctors and hospitals in an area. Insurers won’t pay for healthcare received at out-of-network providers. So, if you veer out of your network, you’re suddenly looking at huge health care costs.
When you enroll in an HMO plan, you have to choose a primary care doctor when you sign up. You then have to get a referral from your primary care doctor before seeing any specialist. It’s important to note that some health services, like yearly screening mammograms, don’t require a referral. Generally, though, you’ll need a referral, which often means an office visit before the office visit you’re searching for.
Other HMO drawbacks include an annual limit on the number of office visits, tests, and certain treatments.
Choose an HMO plan if lower healthcare costs are your biggest priority. While you will face limits on who you can see based on your plan’s network, your monthly premiums and deductibles will be lower. Be aware, though, that you’ll need to get referrals for specialist services and that there may be yearly plan limits on office visits and certain health services.
PPO stands for preferred provider organization. These plans offer much more leniency when it comes to seeing out-of-network health care providers without a referral. Generally, you can see who you want when you want. The issue: that freedom and flexibility usually comes with increased costs.
Like their counterparts, PPO plans also establish provider networks. The plans simply have fewer restrictions about going out of network. With most PPO plans, you can also bypass the referral process and simply make an appointment with a specialist (an endocrinologist, for instance, for those with T1D). You don’t have to go through the step of seeing your primary care physician and chalking up another office visit first.
But it’s important to be aware of the cost consequences of stepping out of network and remember that seeing an out-of-network provider will generally be more expensive than staying in network. While PPO plans include an out-of-pocket maximum for in-network care, money spent out of pocket outside the network doesn’t generally count against that limit. That means you can simply pay, and pay, and pay for health care services. PPOs also generally carry higher premiums and higher deductibles as well.
Choose a PPO plan if you want the flexibility to go out of network and avoid referrals and are the type of patient who uses your health care services regularly and has a need to see specialists.
For most people, Medicare eligibility is based on age. You can sign up during a window starting three months before the month you turn 65 and ending three months following your birthday month, or you can sign up during Medicare Open Enrollment, which is Thursday, October 15, 2020 through Monday, December 7, 2020 for 2021 coverage.
If you are already covered under a Medicare plan, this Open Enrollment period is the only time in which you can make changes to your coverage, so it is worth reviewing your plan to see if any changes are needed.
Traditional Medicare, the fee-for-service government health plan, has two parts (A is for hospital insurance and B is for medical insurance). Medicare Advantage is a Medicare health plan offered by a private company that contracts with Medicare and offers Parts A and B. You can also enroll in supplemental coverage or choose a drug plan (Part D).
Under the Affordable Care Act, having Medicare Part A is enough to meet the law’s requirements for minimum essential coverage, but if you have diabetes, it is more cost efficient to be covered under Part B and/or Part D as well. Medigap plans are supplemental plans that offer more help with costs.
A key difference for 2021 is the new Medicare Part D Senior Savings Model. Under these plans, out of pocket insulin costs are capped at $35 per month with no deductible. However, not all plans offer this insulin cost cap, and only those who take insulin via syringes or pens qualify. Even though the same insulin is often used, those who take insulin via an insulin pump are considered to be taking an “infused drug”, therefore insulin used via an insulin pump is covered under Medicare Part B and does not offer an insulin cost cap.
You can sign up for Medicare online, via phone at 1-800-MEDICARE (1-800-633-4227), or by visiting your local Social Security office. Medicare Advantage plans are sold through private insurers. To review Medicare plans, use the Plan Finder. Be sure to select that you do want to see your drug costs when you compare plans, and choose to add the brand name of each of your insulin prescriptions instead of the generic. Once you land on the page that shows you plans available, click “Filter Plans” on the top right and select “insulin savings.” When comparing each plan, click on “view drugs and their costs” to find out what your true out-of-pocket costs will be before and after your deductible.
Important to note: many people qualify for coverage under both Medicare and Medicaid, which offers more help with costs. To find out if you qualify, or for help with any and all Medicare questions, visit SHIPtacenter.org. This free service offers localized, expert help in choosing all of the different aspects of a Medicare plan that will be right for you.
Employer-Offered Plans (Private/Commercial Insurance)
The types of plans offered by your employer are very similar, if not often the same, as plans offered through the Healthcare Exchange, but your employer will often cover part of the cost as part of your employee benefits package. Many employers offer several tiers of coverage, which you can choose based on your personal needs. To learn more about what to consider when choosing your plan, visit the T1D Health Insurance Guide.
People who take insulin require consistently affordable and predictable sources of insulin at all times. If you or a loved one are struggling to afford or access insulin, click here.