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Open-enrollment survival guide
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October 17, 2001: 4:32 p.m. ET
Tired of guessing which health plan is best? Here's a smarter strategy.
By Jeanne Lee
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NEW YORK (CNNmoney) - This year, average monthly premiums for employer-sponsored health insurance rose 11 percent, the sharpest increase since 1992, according to the nonprofit Kaiser Family Foundation. Premiums could rise another 14 percent in 2002, according to a recent Lehman Bros. survey of large corporations. As companies look to cut expenses, you can expect them to pass those rising costs on to employees. Now, more than ever, it's important to be a savvy consumer.
To help you do that, we've prepared this step-by-step guide using the health plans offered by AOL Time Warner (CNNmoney's parent company) as examples. Depending on how many plans your company offers, the whole process should take only a few hours.
So open your enrollment packet, and let's go.
Step 1: Decide what type of plan you want
First, here's a quick rundown of the important differences between plans. With HMOs, only visits to the plan's network of doctors qualify for coverage. Open-access HMOs, also called POS plans, give you the option of bypassing the network for an extra fee plus a deductible. The most liberal plans, called PPOs, are like old-fashioned indemnity insurance with a managed-care twist. You can see any doctor anytime, but "preferred providers" -- that is, network members -- are cheaper, and if you go outside the network, you'll have to pay a deductible.
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 HEALTH INSURANCE TYPES
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HMO: Only visits to doctors in the plan's network are covered.
POS: You can visit doctors outside the network for an extra fee plus a deductible.
PPOs: You can see any doctor anytime, but "preferred providers" (network members) are cheaper. Outside the network, you'll pay a deductible.
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We've had it drummed into us that HMOs are best for families with young children, since they offer free or low-cost well-baby care and vaccinations. But HMOs also offer more care, for less money, to people with chronic conditions that require frequent maintenance visits, says Pat Schoeni, spokeswoman for the National Coalition on Health Care in Washington, D.C.
Some HMOs offer special programs tailored to chronic disease sufferers: Group Health Inc. of New York has its Diabetes Management Solutions program; Highmark Blue Cross Blue Shield, a Pennsylvania plan, offers the Dr. Dean Ornish Program for Reversing Heart Disease. "HMOs used to be a one-size-fits-all product, but now they're recognizing that people have different needs," says Steve Richter, senior consultant for benefits consultancy Watson Wyatt Worldwide. To look up special programs, go to each plan's website.
Yet HMOs still fall short in mental-health care, a facet of overall well-being that is often overlooked. "HMOs spend a much smaller percentage of their money on mental-health care than PPOs do," notes Mary Graham, senior policy adviser for the National Mental Health Association. (Discrete data on POS plans are not available.) Anyone insuring a family whose members could be at risk for depression, eating disorders or substance abuse -- adolescent children, for example -- should make sure they have adequate mental-health coverage. The other serious issue with HMOs is that doctors have started leaving them. If you want to maintain a relationship with a particular doctor, it's safer to go with a PPO or POS. "Many people are pretty dedicated to their provider," says Marcia McCarty, a health-care consultant at William M. Mercer in Minneapolis. "HMOs are constantly in negotiations with providers, and sometimes those go sour."
AOL Time Warner allows me to choose among 10 plans: seven HMOs and three POS plans, but no PPOs. My primary consideration is to make sure that I can see out-of-network specialists, because I have chronic allergies. Since I'm single, have no children and can handle the financial risk of a deductible, a POS appeals to me. I eliminate the HMOs right off, keeping just three possible choices: Aetna U.S. Healthcare, Oxford Health Plans and United Healthcare.
Step 2: Check the limits on coverage
The next step is to make sure you're buying enough insurance to take care of you when you need it most. So check each plan's annual and lifetime caps. Many HMOs have no ceiling on their coverage, but some PPOs do, and they can be as low as $500,000 per person. "No one should get a policy that pays less than $1 million for the lifetime," says Schoeni. "That may sound like a lot of money, but if you had a heart condition, you could hit that limit in a couple of years." Also check for restrictive caps on mental-health care. Federal law requires that dollar limits be the same for mental-health as for medical care but doesn't regulate limits on hospital stays or outpatient visits for mental-health diagnoses. Several states do have laws requiring such parity. The NMHA Resource Center hotline (800-969-6642) can give you specifics for your state. My company's POS plans contract out their mental-health coverage to United Behavioral Health. Each one covers up to 100 outpatient visits a year if I go out of the network, which seems reasonable to me.
Step 3: Estimate your real costs
It's hard to say, even when looking at two plans side by side, which would be more expensive to use. You can't total up the premiums alone. For a look at the other factors you'll need to consider see Open enrollment guide: Your real costs.
A recent Kaiser Family Foundation study found that, on average, employees now pay about the same for all types of plans: A family policy costs employees $158 a month for an HMO, $157 for a PPO and $142 for a POS. The significant difference shows up in employers' contributions, which range from $387 for HMOs to $443 for PPOs. And there lies trouble. As companies pass on more costs, that difference in premiums will become more meaningful.
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WHAT YOU'LL REALLY PAY
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To compare the true costs of health plans, add obvious expenses -- like premiums -- to others, such as co-payments, that are harder to track. Add up:
1. Total premiums for the year
2. Estimated co-payments or co-insurance (based on how often you went to doctors last year)
3. Cost of services that are partially covered. Include payouts to meet the deductible and subtract any reimbursements.
4. Cost of services that aren't covered, such as acupuncture or infertility treatments (if needed)
5. Annual co-pay for prescriptions you take regularly
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After the premiums, look at the co-payments and deductible (if any) and estimate what's actually going to come out of your pocket. The best place to start: last year's appointment calendar and checkbook. How often did you go to your doctor? To specialists? Did you visit practitioners who weren't covered by your plan, such as nutrition counselors and acupuncturists? Add up the visits -- and what you shelled out.
Step 4: Look at plan ratings
The National Committee for Quality Assurance, a nonprofit agency, issues report cards on insurers based on access to care, quality of service, preventive programs and more. Logging on to www.ncqa.org to check out my three finalists, I see that Aetna U.S. Healthcare is rated "excellent." Oxford Health Plan gets a respectable "commendable." I knock out United Healthcare, though it too was rated "commendable," because the report card said it lagged in two important categories: monitoring doctors' qualifications and preventive care. That leaves Aetna and Oxford.
Step 5: Check hospital access
It's important to have access to regional research hospitals as well as the local medical center. If your enrollment booklets don't have detailed info, call the toll-free member-services numbers. The specifics negotiated by your employer will vary, but many POS plans cover a significant percentage of costs at an out-of-network hospital and may also limit your total out-of-pocket expense. HMOs are likely to be more restrictive.
In cases of grave illness, the ideal plan would send you to what HMOs call a "center of excellence," a hospital renowned for treating a particular condition. Pat Schoeni suggests calling each plan and asking how sick you'd have to be, and how you'd apply, to go to a research center such as Johns Hopkins or the Mayo Clinic. The POS plans I'm weighing would let me go without a referral, but I would have to pay about $5,600 before I qualified for 100 percent coverage -- a risk I'm willing to take.
Step 6: Talk to your own doctor
Ask if your doctor has had problems with referrals to specialists or ordering tests. Can you get your bloodwork done in the office? Is he or she thinking of dropping the plan? If you'll need a new primary-care doc, make sure the physicians in the directory will accept new patients; directories are frequently out of date. I hear from my primary-care doctor and learn that he accepts both plans I'm considering. But then my allergist tells me that he has dropped Oxford. He does take Aetna. Folks, we have a winner. 
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