How to shop for a health insurance plan in Minnesota

Buying health insurance is big money.

Across the U.S., employers and workers collectively have been spending an average of about $24,000 per year on family coverage in commercial health plans. Spending is similarly big for the government and, to varying degrees, individual consumers when it comes to health insurance via Medicare, Medicaid and the individual health insurance market.

Insurance experts say there are important terms and concepts consumers need to understand — such as networks, formularies and out-of-pocket maximums — when evaluating options and picking the right plan. There’s also some information on the performance of competing health plan companies, although it can be tough for individual consumers to use these reports.

And then there are some general consumer tips, the most important being: Find help.

Insurance options can vary considerably depending on age, income, geography, employment status and the market, so individual factors tend to be key.

“This is a complicated decision,” said Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University.

Here’s what you need to know about how to shop for a health plan:

Some health insurance terminology is pretty straightforward.

The premium — the sum paid for coverage, usually on a monthly basis — is the first aspect consumers often look at when considering options. A second key concept is the deductible, which consumers must pay out-of-pocket before full benefits begin.

Finally, there’s the “maximum out-of-pocket” cost. This sets an upper limit for what consumers might pay as they’re visiting the doctor and using health care services.

“Even if you’re healthy, you need to think about both the premium and maximum out-of-pocket hand-in-hand, because that sort of represents the worst-case financial liability that you could face,” Corlette said.

With medication coverage, consumers need to check whether the health plan’s general limit on out-of-pocket costs governs drug expenses. This maximum usually applies to both drug and medical costs with coverage through employers and the individual market, but there are separate limits on medication spending in Medicare health plans, said Lisa Talcott, president of the National Association of Benefits and Insurance Professionals Minnesota.

Another key term with pharmacy benefits: Formulary.

This is the list of drugs the health plan covers. It’s usually divided into a number of tiers. Depending on the tier, the health plan will require different amounts of out-of-pocket spending at the pharmacy counter.

Out-of-pocket spending the health plan requires can come in the form of a copay, which is a fixed-dollar amount, or co-insurance, which is a percentage of the allowed cost.

Copays, co-insurance and deductibles fall under the term “cost sharing.” This general description applies to the various ways health plans “share” the expense with consumers as they’re using benefits, and it likely has never prompted a consumer to say: Thanks for sharing, health plan!

Minnetonka-based UnitedHealthcare, the nation’s largest health insurer, has an online list of common health plan terms and concepts, available in three languages, at justplainclear.com/en.

Understanding the health plan’s network also is key, particularly for consumers who want to visit certain doctors and hospitals.

In-network health care providers have contracts with the health plan to provide services at a negotiated rate. So, a consumer’s cost generally is lower when they stay within the network.

Higher costs with out-of-network providers have generated horror stories through the past decade or so, prompting federal legislation to prevent surprise medical bills. Another wrinkle with networks: Health plans often have higher out-of-pocket maximums for out-of-network providers, which can significantly worsen the worst-case financial liability, Corlette said. Finally, make sure there actually is out-of-network coverage, since it’s not always a given, except with emergency care.

Employer health plans often have very broad networks, although some offer the chance to select a limited network option at a lower premium. This trade-off between premiums and choice is a key challenge for consumers in the Medicare market.

The vast majority of health care providers participate with Medicare, so staying with the original program while purchasing a Medicare Supplement (Medigap) policy for certain out-of-pocket costs tends to be the clearest way to avoid network problems. But premiums for Medicare Supplements can be more expensive than with Medicare Advantage plans, which, to varying degrees, have limited provider networks.

Whether it’s the breadth of the network or drug formulary, health plan consumers often must weigh trade-offs between up-front premiums and richer benefits when they use care, said Tricia Neuman, a senior vice president with California-based KFF, a health policy group.

“Some people say: ‘I can only think about the monthly premium because I want health insurance, but I need to have insurance that I can afford,’” Neuman said. “Those people sometimes will say: ‘I can’t afford the luxury of thinking about some of these other aspects that matter to me a great deal, but I have to put premiums first.’

“There are other people who would say: ‘The most important thing for me is to have my doctors and specialists and a certain hospital in-network. I have a serious illness, and I can’t mess around,’” she added. “For them, the decisionmaking is really different because it is a priority to determine whether they can have continuity of care under the plans that are available in their area. ... And there are people who have serious illnesses that don’t want to take a risk that their drugs are not covered by the plan.”

For people with employer-sponsored health plans, HR departments set the choices, frequently selecting just one insurer to administer the health plan, which can have options in terms of premiums, deductibles and networks.

With Medicaid coverage in Minnesota, consumers typically have a choice of at least two health plan options depending on the county where they live. People in Minnesota’s individual market have at least 27 choices, depending on the county, while many seniors on Medicare confront dozens of options.

Shopping by health insurance brand is tricky, experts said, but there are some resources.

The federal Centers for Medicare and Medicaid Services (CMS) publishes annual Star Ratings for Medicare Advantage health plans as well as companies selling stand-alone Part D drug coverage.

Ratings include measures about the experiences of enrollees receiving needed care, scheduling appointments quickly and having access to needed prescription drugs. They show when seniors consider options through the online Medicare Plan Finder tool.

“The Star Ratings include information about the percent of enrollees filing complaints with Medicare about their health or drug plan,” CMS said in a statement. “It also includes information about how often members decide to leave the plan.”

Ratings for individual market coverage are part of MNsure’s plan comparison feature, as well.

The National Committee for Quality Assurance (NCQA), which accredits health plans, has consumer information on patient experience, prevention/equity and treatment at different commercial health insurers. Consumers can sort through the group’s report cards to the state level, with data coming from patient surveys as well as certain quality measures, such as how often health plan members receive recommended vaccinations and care services.

J.D. Power conducts surveys to measure satisfaction among members of 147 health plans in 22 regions throughout the U.S. The Michigan-based consumer research firm, which released its most recent results in May, also has some information on Medicare health plans.

Through the years, however, the utility of quality data for consumers has been limited, said Corlette of Georgetown University.

Some report card systems have tended to provide high marks to almost all options, she said. There’s very little consumer-friendly information, Corlette said, to know if a health plan is more likely to issue coverage denials or make it harder to use benefits through prior-authorization rules. And the fundamental issue is “different consumers are going to be looking for different things in their health plans,” she said.

Corlette recommended consumers with options should ask to see the summary of benefits and coverage, a four-page document health plans must provide. From there, consumers should seek help for further questions.

People in employer plans should turn to their HR departments, experts said, for assistance understanding the features of their coverage.

In the individual and Medicare markets, health insurance agents are a key resource. Consumers can check with the state Commerce Department to make sure an agent is licensed and in good standing. The state’s MNsure program has resources about individual market coverage. The Department of Human Services and counties have information for people picking a Medicaid health plan.

Finally, the Senior Linkage Line has help for Medicare consumers at 800-333-2433. And every fall, the Minnesota Board of Aging publishes a comprehensive summary of Medicare options for the coming year.