Shopping for a health insurance plan

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."

The five states that have outlawed individual medical underwriting instead require community rating, a system in which every consumer is eligible for coverage regardless of health condition, and everyone pays the same premium for the same policy.

Malasnik agrees that underwriting has a huge influence on the availability of health insurance. "When people are going online ... to these automated Web sites where you put in information and you get a bunch of rates, somebody with high blood pressure and high cholesterol, for example, might think they are healthy," he says. "But six out of 10 insurance companies are going to deny them once they see that combination. It's very important that people understand what companies will accept which health conditions."

A number of Web-based brokerages sell health insurance online, including InsureMe, a Bankrate company.

Get the full explanation of benefits

When you've narrowed your choice down to a few plans, get your hands on the official explanation of benefits, or EOB, for each of them. It may not be easy, since according to Bangit the general practice among insurance companies is to send this document only after the consumer has enrolled in a plan.

But don't take no for an answer," Bangit says. "Just insist that they provide it, and if they don't, you move on."

In Bangit's view, simply reading the brochure or the executive summary is not sufficient. Only the EOB will spell out exactly which of your health care expenses count toward your deductible and maximum out-of-pocket liability.

"In most of the plans we looked at in California, for example, the prescription co-pays do not count toward the out-of-pocket maximum," she says.

Other caveats: Look out for benefit limits, exclusions and coverage caps. And don't assume a procedure is covered just because it's not listed in the "excluded benefits" section of the plan.

Use some assessment tools

Finally, check out some additional helpful resources. To sort the wheat from the chaff among health plans, it's a good idea to talk to several independent agents that specialize in health insurance. Some helpful information is available on the Web.

At the Health Policy Institute, you can access the "Consumer's Guide for Getting and Keeping Health Insurance." The HPI has produced a guide for each state and the District of Columbia.

On the Web site of the National Association of Insurance Commissioners, you can link to the page for your state insurance department, which lists licensed insurance carriers., a project of the nonprofit National Health Law Program, educates consumers about their legal rights and provides a wealth of information about health plan options.

The Health Insurance Association of America also recommends checking the financial soundness of any insurer you are considering through a rating firm such as A.M. Best, Standard & Poor's or Moody's.

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