Most of us would rather have a root canal than read the paper work that comes with our health insurance plan. Now this process is a bit less painful thanks to new rules that require all private health insurance companies to provide a “Summary of Benefits and Coverage.” This eight-page form highlights what the policy covers and how much specific benefits cost.
Because every company must use the same format to provide this information, it should be much easier to comparison shop, whether you are buying coverage on your own or choosing a plan at work. This new form comes just in time for the annual open enrollment period when employees get to pick their coverage for next year.
“Instead of having a huge document with lots of fine print and gobbledygook, now in a relatively short document you’ll get clear language that will help you compare one plan from another,” said Ron Pollack,executive director of Families USA, a national organization for health care consumers.
Even if you aren’t choosing between plans, it’s important to know how you are protected. The new form, required by the Affordable Care Act, uses a question-and-answer format to accomplish that. On it are the following questions:
- What is the overall deductible?
- Are there other deductibles for specific services?
- Is there an out-of-pocket limit on my expenses?
- Is there an overall annual limit on what the plan pays?
- Does this plan use a network of providers?
- Do I need a referral to see a specialist?
- Are there services this plan does not cover?
If you don’t know the answers to these questions, you could make decisions that are not in your best interest and wind up paying more than expected for medical care out of your own pocket.
“We need all this because insurance companies have been hiding stuff from consumers for years,” said Nancy Metcalf, a senior editor at Consumer Reports. “Many people who had bad plans didn’t realize it because things were hidden. Now, every plan must have this form so you can lay them all out side-by-side and compare, something that’s been extraordinarily hard to do up to now.”
The new Summary of Benefits includes an extensive list of common medical events — such as a hospital stay, outpatient surgery, pregnancy, prescription drug purchases and treatment for mental health or substance abuse — and what you’ll pay if you use a preferred provider or an out-of-network provider.
The new form shows the types of expenses the plan would pay for if you had a baby or needed treatment for Type 2 diabetes. By using these two examples, you can get a general idea of how much financial protection is provided by different plans.
There’s also an explanation of common but often misunderstood insurance terms, such as deductible, copayments and preferred providers.
The insurance industry opposed the new rule when it was proposed, calling it a burdensome requirement that was too expensive. State insurance regulators welcome the change.
“Every day we hear from people who are concerned that they had a medical treatment that may not be covered by their plan,” said Stephanie Marquis with the Washington State Insurance Commissioner’s office. “All of this can really impact the family budget.”
That’s why it’s so important to consider more than just the monthly premium when you choose a health insurance policy. You need to know what’s covered, what’s not covered and how much you’ll spend in deductibles and copayments.
“A surprise medical bill these days can be devastating to a family,” Marquis said. “That’s why this new summary form is such a big deal.”
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