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Shopping for a health insurance plan

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"HMOs provide more benefits for the dollar in some cases because they are managing their risk more," says Michael Malasnik, author of "What You Need to Know About Health Insurance" and an independent insurance broker who owns Arizona Benefits Connection in Phoenix.

According to Hungelmann, you can get substantial savings in premium costs by choosing an HMO over other options. "But if you'd prefer to go to the Mayo Clinic, if necessary, without having to beg for a referral, then having more choices would be an important issue," he says.

Your need for certain benefits may also dictate which plan you select. For instance, not all plans cover maternity, and those that do are considerably more expensive. If you're not interested in maternity benefits, you can skip those products and save money on your premium.

Prescription drug coverage, especially with managed care plans, is another major consideration. Managed care plans usually include a formulary, or a list of the drugs they cover. Your co-pay at the pharmacy will depend on whether you get a generic drug, a brand name drug listed on the formulary or a brand name drug that's not on the formulary. Check to ensure that any plan you are evaluating will cover all the prescriptions you and your family take.

Look beyond the premium
Don't try to compare plans, or judge the cost of a health plan, by looking at the premium alone.

"In order to compare option A with option B, you need to look at three factors: what your contribution to the premium is, what your additional out-of-pocket costs are and what's covered," says Susan Pisano, vice president of communications for America's Health Insurance Plans, an association of nearly 1,300 health insurance providers.

Those additional out-of-pocket expenses may include a deductible and a co-payment.

"What's covered includes ... what services are covered, which providers are covered and to what extent," Pisano says.

The number you really need to get to is your maximum out-of-pocket expense, also known as the stop-loss -- the amount you have to pay out before the plan begins providing 100 percent coverage.

"You might be looking at two policies that have a $1,000 deductible and an 80/20 co-insurance" -- meaning the insurer pays 80 percent of medical fees and you pay 20 percent -- "but one has a stop-loss of $2,000 and the other has a stop-loss of $5,000," says Malasnik.

As for what determines the cost of the premium itself, the general rule is that the higher the deductible, the lower the premium. "That's going to be the case whether you're talking about a PPO, an HMO" or any other plan, Malasnik says.

Beware of the underwriting effect
Unless you live in one of the five states where individual underwriting is illegal (Maine, Massachusetts, New Jersey, New York and Vermont), an insurance company can refuse to cover certain medical conditions, make you pay extra for covering them or deny you any coverage at all because of them.

"We've even seen people turned down because they have acne," says Eliza Navarro Bangit, senior research associate and an attorney with the Health Policy Institute at Georgetown University. "I think the explanation for that is there is the possibility they may use Accutane, which is a very expensive prescription drug."

Next: "'But don't take no for an answer. ...'"
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Out-of-pocket health care costs
Dealing without health insurance
Disability insurance primer
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