How choosing a health insurance plan took years off my life… and three things I learned in the process

I turned 26 last week and like any other mid-twentysomething year old I spent the weeks leading up to my birthday planning the biggest party ever. Jokes! The only thing I planned and researched were various healthcare options.

Over the past couple of months I’ve spent the beginning of every day and the end of every night poring over various health care plans. My boss — having tasked me as the one to research new plans for our office coverage — has been privy to many a complaint at my recent research excursion. Last week I lamented that I still didn’t feel like I actually learned anything. But when a friend innocently asked me, “How exactly does a deductible work?” I found myself ranting and raving and realized that maybe I did learn something. Maybe, I thought, I’m the martyr who needs to suffer through pages of healthcare options and ridiculous-looking charts in order to help my fellow twentysomethings choose a plan of their own. Okay, that’s probably not true. But here are three thing I did learn, in the hopes that it helps the rest of you who are wandering around in a daze:

1.  What The Hooey Is A ‘Deductible’ Anyway?: defines “deductible” as “[t]he amount you owe for health care services your health insurance or plan covers before your health insurance or plan begins to pay.” Umm…what? The definition then goes on to include an example even more confusing than the term it was clarifying.

So here’s the deal: most plans use a deductible as a cap on what they are actually willing to pay for your health care services. For instance, if you pay $416.00 a month under a certain health care plan your deductible might be something in the range of $2500.00. Your plan might list that a visit to the doctor, say if you had the flu or strep, costs $50.00 after the deductible. What this actually means is that you are paying the full amount of whatever your visit costs and that money goes into your “deductible bank.” Once you’ve personally spent and accumulated $2500.00 in health care costs you still have to pay $50.00 towards your next health care expense but then your health care provider picks up the rest of the tab. Oh goodie! You’re paying $416.00 a month and only after you’ve spent an additional $2500.00 will your health care plan start to pitch in. Doesn’t that sound totally reasonable? Are you picking up on my sarcasm? I hope so, because above all else health care is a business.

2.  Why Am I Paying So Much But Feel Like I Am Getting So Little?:  I had this thought run through my head on numerous occasions. I was feeling incredibly despondent at the thought of turning 26 and losing coverage under my family’s “Cadillac plan” only to switch to a less than stellar health care plan but with comparable costs. It also didn’t help that rumors of doctors giving discounts to the uninsured flooded the internet.  But here’s the thing about that rumor: it’s not entirely true! Or more accurately, it’s not as true as it used to be.

The Affordable Care Act sparked a change in health care across the board. Most plans have comparable rates with only slight differences between them. The influx of people signing up for healthcare also means that health care plans and doctors are the ones brokering agreements on your behalf. So those expenses I kvetched about in the first paragraph are not retail prices. Maybe a doctor will normally charge $300.00 per visit, but health insurance companies negotiate on your behalf, by saying, “Our clients only pay $150.00 per visit and not your marked price of $300.00 per visit. We have X number of individuals in New York enrolled with us, so if you want our patients, you’ll agree to our rates.” This means that while you might have to pay for your doctor’s visit you won’t have to pay face-value; it usually ends up being only about a third of the price. [On a side note, this is also how some insurance companies have bad reputations with doctors, for being “cheap,” but are loved by their clients.]  And furthermore, as a young person –even if doctors were brokering deals with uninsured individuals– could you actually afford those doctor-offered discounts? Probably not. The best way to think of these “doctor deals” is to imagine walking into a boutique store and saying, “If I pay cash will you not charge me tax?” While they might respond, “Sure!,” the doctor deal only offers a minimum discount because uninsured individuals don’t have the same leverage as health insurance companies.

Additionally, as an uninsured individual doctors won’t create an “out of pocket maximum” to ensure you don’t go broke trying to pay your health expenses (see point number 3 for further explanation on “out of pocket expense” limit).

3.  Dear Health Insurance, You Are So Far From A Perfect (And Not Even Close To) Perfect System: The thing about choosing health insurance and choosing one as an otherwise healthy young person is that it basically forces you to imagine all kinds of worst-case scenarios.  Suddenly you find yourself thinking: “Okay, so I’ll get the plan that’s only $200.00 a month and doesn’t cover any ER expenses…but what happens when there’s a thunderstorm and I GET STRUCK BY LIGHTNING?!” Okay, so maybe that’s the overly anxious part of your brain working on overdrive. But, it’s not that wild to want health insurance for those “what-if” scenarios. The best health insurance plans are the ones that anticipate the horror scenarios for you and then equate that into their price quote.

The best health insurance plans also put a cap on your “out of pocket expense.” This is the most amount of money you will ever have to pay regardless of what ailment befalls you. Another thing that health care reform did was make this “X amount of out of pocket expense” pretty uniform across health care plans. This means that most plans in the $400.00 monthly range have an out of pocket expense in the $6000.00-$6500.00 range. And plans with a higher monthly quote might have something in the $2500.00 range. Be wary of the plans that seem to offer you great coverage for only $200.00 a month but have no out of pocket limit. Remember—health insurance is a business and this is how health care companies anticipate making their money. It’s terrifying to think about, but if you were to get hit by a car, and your health insurance plan includes no out of pocket limit you will be stuck with thousands and thousands of dollars in medical fees.

So, as you can see, turning 26 has been filled with difficult choices! But am I to complain?! I am an otherwise healthy 26 year old and for that I am eternally grateful.

About the Author
Born and raised in the big BK. Rachel is a young attorney trying to make sense of and change the world around her.