Do This Before Purchasing a Health Plan

A Key Feature To All Health Plans

Now that open enrollment is here you need to be aware of a key feature about all health plans offered on and off the health insurance exchange. That key feature is called the Out Of Pocket Maximum.

The Out Of Pocket Maximum, OOP, is an all inclusive number.
Included in the OOP is the deductible, the coinsurance, all copayments and all prescription copayments.

In short, the Out Of Pocket Maximum represents the maximum amount of money you would need to pay if you have a major catastrophic medical issue.

There is one good thing about insurance plans that comply with the Affordable Care Act rules and that is how Out Of Pocket Maximums are defined.

If you enroll in an HMO, the OOP is the maximum amount you will pay using network providers. If you choose a PPO plan, You will have an in network OOP and an out of network OOP.

For the year 2016, the out of pocket for most health plans will be $6850. Some plans may have lower out of pocket amounts because they have richer benefits and have a higher monthly premium.

Watch the Numbers

Health insurance is expensive so do not spend extra money on buying a low deductible plan if the low deductible plan has the same out of pocket maximum as a high deductible plan.

You need to remember that under both a low deductible plan and a high deductible plan, you may have the same OOP under both.

If you are hospitalized for three days under either plan, you will blow through the deductible and most likely hit the Out Of Pocket maximum under both. Most individuals do not realize that a $6850 Out Of Pocket Maximum is an extremely low number compared to the actual cost of a hospitalization or out-patient procedures.

If you are generally healthy and do not have a lot of ongoing medical issues, it does not make good sense to have a low deductible health plan if your odds of meeting the deductible are low.
If you have a lot of medical issues and use insurance a lot, then purchase a low deductible, low Out Of Pocket Maximum plan. Health insurance is an expensive item, spend as little as possible on this product if you are in good health and are an infrequent user of medical services.

Remember, the worst case scenario under most health plans is $6850.