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How to Judge the Quality of a Health Insurance Plan Posted: March 12th, 2010

Health insurance plans can be a confusing maze of benefits, exclusions and deductibles. Finding a quality plan takes more than getting a free health insurance quote -- it takes research to do a solid health insurance comparison. Failure to thoroughly research a plan can lead you to buy inadequate coverage, have limited access to health care, or, worse, an illness that could have been prevented.

To find a quality plan, consider several factors:

  1. Coverage
  2. Exclusions
  3. Cost
  4. Access to Care
  5. Customer Service & Consumer Complaints
  6. Financial Strength

Does Coverage Meet Your Needs?

When you compare health insurance plans, examine the benefits promised. Consider your health care needs and look for plans that provide you with the benefits that fulfill those needs.

For example, if your child has asthma, make sure the plans you consider cover visits to an allergist or a pulmonary specialist. Also, check for emergency room coverage in case an asthma attack requires such a visit. For those planning to start a family, compare health plans that cover prenatal care, maternity costs and well-baby visits.

You should also analyze the plan's preventive care coverage. High-cost procedures, such as colonoscopies or cardiovascular stress tests, could become costly out-of-pocket expenses if a plan only provides partial coverage -- or doesn't cover them at all.

Examine the Plan's Exclusions

Look into the health insurance plan's exclusions: Do you know what the plan does not cover? For example, many plans exclude or limit coverage for mental health treatment. If you or a family member see a mental health specialist, knowing that such visits are excluded is important. You would need to factor this into your out-of-pocket expense budget.

Factor Cost into the Equation

Premiums vary depending on the insurer, state of issue, type of plan, coverage included, and numerous other factors. The cost may be your primary decision-making factor when selecting health insurance; however, cheap rates do not always lead to the most affordable medical plan. In other words, premiums are not the only expenses you should consider when choosing health insurance.

In addition to premiums, factor in the following costs to determine the overall expense of a plan:

  • Co-payments: Does the plan cover 100% of the cost of a doctor's visit? If you have a $25 co-payment each time you go to your family doctor, and you are a frequent visitor, factor co-payments into your overall cost.
  • Prescription Coverage: Look at the plan's prescription drug coverage. Drug costs add up if not covered, especially if you are taking prescriptions regularly.
  • Deductibles: Deductible levels are relevant to your health insurance costs, as well. High deductibles lead to a less expensive premium payment, but remember that you are responsible for health care costs incurred up to the deductible amount before coverage kicks in.

Access to Care

Access to care is one of the most important aspects of your plan. If you are ill and no one on the health plan's provider list can give you an appointment in a reasonable amount of time, the plan lacks access to care.

Analyzing a plan's provider list is a good starting point. Are doctors you already see, and others who come highly recommended, in the plan's network? The plan's provider lists may not be updated, so check with doctors to see if they are accepting new patients under that health plan.

Customer Service

When there's a need to contact an insurer -- whether to dispute a bill or inquire about a procedure -- how does its customer service or billing department compare to others? To see how health insurers rate in these areas, J.D. Power and Associates' 2009 Insurance Plan Satisfaction Study offers valuable insight. Health plans are rated on several factors, including overall member satisfaction, choice of doctors and hospitals, customer service, and claims processing.

Is the Company Financially Stable?

Investigate the financial strength of the company issuing the health insurance policy you are considering. Several ratings companies, such as A.M. Best and Standard & Poor's, assess the financial statements of insurers. Selecting a financially sound company is important. There have been cases where health insurers are declared insolvent and are forced to liquidate -- leaving policyholders and doctors dealing with uncertainty.

Plan Rankings

Several organizations have tools to help make plan comparisons easier.

The National Committee for Quality Assurance (NCQA), a non-profit organization that focuses on the insurance industry's quality of care, does an annual ranking of commercial health plans. The ranking are done in conjunction with U.S. News & World Report. Their list of America's Best Health Insurance Plans is rated in three areas: Customer satisfaction, prevention, and treatment. Check to see if any of the plans you are considering have made the list.

In addition to ranking health plans, the NCQA also makes health plan comparison easier with its Health Plan Report Card. The report card allows you to examine many plans simultaneously with side-by-side comparisons.

Consumer Complaints

State insurance departments can be a great resource for information on health insurance companies. For example, the New York Insurance Department provides residents with a premium rates index.

State insurance departments receive complaints against insurers and many publish complaint rankings on their Web sites. For example, Florida has a Company Complaint Comparison search page. The resource logs complaints against insurers and provides consumers with the number of member enrollees and the number of complaints for each health plan.

This information could be an important deciding factor. If a medical insurance plan has low premiums and great coverage, but many complaints, you may not be getting the best deal.

Consumer Resource

URAC, a health care accreditation and education organization, introduced a Consumer Education Initiative to help consumers make informed decisions about health care. The organization is a great resource for information on consumer health insurance rights and ways to navigate the U.S. health care system.

While choosing a health plan may not be easy, it's more difficult to live with a plan that doesn't meet your needs. Taking the time to properly evaluate health plans will pay off.

Mary Lou Byrd