Everything you need to know about purchasing a Nevada health insurance plan.
Insurance companies publish a few different guides to try and explain how your Nevada health insurance plan works. It’s important that you start by looking at the right guide.
Evidence of Coverage
This is usually the most detailed document. It’s universal among all plans that the company sells. For example, all Anthem PPO plans might share one Evidence of Coverage. This means all Anthem PPO plans are for the most part the same. It’s about 100 pages long and includes specifically what the policy does and does not cover. It’s extremely comprehensive and detailed. For example, cosmetic surgery is listed as not covered in the Evidence of Coverage. Since this is a universal exclusion across all plans, it’s in the Evidence of Coverage and not the Summary of Benefits.
Summary of Benefits
A summary of benefits will be specific to the exact plan you decide to purchase. An insurance company will have multiple Summary of Benefits available. The Summary of Benefits will highlight differences between the plans. Deductible and copay amounts will be listed here as well. It’s usually around 5 to 10 pages long.
Benefit Comparison Sheet
This comparison is very brief. It explains just a few of the most common services covered by the plan. It’s usually a 1-page restatement of the Summary of Benefits. Sometimes this includes one plan, but the most helpful guides include multiple plans side-by-side.
The most common form we use is the Benefit Comparison Sheet, and sometimes the Summary of Benefits. The Evidence of Coverage (100+ pages) usually doesn’t change significantly from year to year, or even from one insurance company to another. It’s good to be familiar with what it covers but most of these questions can be answered by an experienced Nevada health insurance broker.
How much is your doctor worth to you?
One of the most important decision-making factors isn’t even on the page. The doctors, hospitals, labs and other medical facilities covered by the plan are extremely important to know. In insurance jargon, this entire group is lumped together as “providers”. This is because together they provide you with medical services. Before looking at the benefits, you’ll want to make sure your doctor is going to be on the plan. If you don’t have a specific doctor you need, then this could save you some money. Leaving yourself open to choose any doctor leaves yourself open to choose more plans from more insurance companies. Once you specify a doctor, your selection of plans and prices narrows down. Lesser expensive plans might not be available because they don’t cover a specific doctor.
The drug problem
As drug costs continue to rise, it’s important to know how your insurance plan covers prescriptions. Whether you’re currently taking them or not, you need to know at least a good selection of drugs are going to be covered by your plan. For members regularly taking prescriptions, it’s very important to find out the cost.
Prescriptions are usually categorized into 4 areas. Generics, Preferred brand name, non-preferred brand name, and specialty drugs. Each tier will have a separate cost. The least expensive being generics and the most expensive being specialty drugs. Insurance companies publish a list of the drugs they cover called a formulary. You can research a specific drug on this formulary to find out which tier it falls under. A drug that’s not on the formulary “NF” is not covered by the plan. However, other alternate less expensive drugs that are used to treat the same condition may be covered.
PPO vs. HMO
Here are the main differences between PPO plans and HMO plans:
- Usually, a smaller doctors list for HMO plans
- HMO plans require you to establish a Primary Care Physicians from their network.
- HMO plans require you to receive a referral from your Primary Care Physician before seeing a Specialist.
- There are not out of network benefits with HMO plans except in an emergency.
- Today, HMO plans are roughly 15% cheaper in premiums than PPO plans.
One small note about out of network coverage.
I frequently receive calls from members wanting to choose a PPO plan. They say, “You know, the one that allows you to choose any doctor you want…” well, not quite. The PPO options allow you to choose any primary care doctor on their list, which is almost always bigger than an HMO list. However, it’s still a list. Both the HMO and PPO plans have a list of doctors they cover called a network.
PPO plans do cover “out of network” doctors. (The network is your doctor’s list, so out of network means not on your doctor’s list.) A lot of people read this to mean they can go to any doctor they want. You can, but the amount you pay is going to be significantly more. The insurance company pays an amount they would have paid an in-network doctor for that same service. To go beyond that, it’s extremely rare the insurance company pays ANYTHING towards out of network services. If they do, it’s going to be a token amount at most.
Balancing cost vs cost.
Every year I see clients who purchase a bronze plan only to pay out thousands more than if they were on a silver or gold plan. The cost you see per month (aka the premium) is not the only cost out there. When evaluating Nevada health insurance, you’re balancing out how often you’re using medical services with how much the monthly cost (premium) is. The least expensive medical plan available (Bronze plan) will cost the most to see a provider. Likewise, the most expensive plan (Gold plan) will cost the least to see a provider. You also don’t want to purchase a Gold plan if you haven’t used medical services in the past 10 years and don’t plan to. Likewise, a Bronze plan will be useless if you’re seeing a doctor every month. It’s a balance.
You’re trying to purchase the least expensive plan that’s still going to cover everything you need. That sounds obvious, but who knows what your medical needs will be in the future. Your best bet is to see how much you’ve used it in the past, then estimate.
Deductibles, Co-pays, and Co-insurance, Out of Pocket and a Negotiated what?
There are only a few terms you need to be familiar with in order to understand your Nevada health insurance policy.
Deductible: Your deductible is not a deduction. Deductions on your taxes are good things. Deductibles on your Nevada health insurance are bad. Large deductibles are very bad. Typically, most medical services require you to pay your deductible first before the insurance company starts paying out. This is different than the out of pocket maximum (see below).
After you pay your deductible, the insurance company usually picks up most of the cost but not all of it. They still want you to pay some of the expense. They split it with you. Usually, it’s 20% or 30% of the cost. Some people know this as an 80/20 plan, or a 70/30.
They’re usually a good thing. This is usually a smaller amount you pay WITHOUT paying your deductible. For example, the doctor’s office might be a $25 co-pay. It doesn’t matter if you’ve paid your deductible or not, when you go to the doctor’s office you pay just $25. These are usually only available on Silver and Gold plans, and it can’t be an HSA plan either.
Out of Pocket Max:
If all these terms are too much for you, this will be the easiest to understand. The out of pocket max is your limit. If all of your medical expenses add up to this number, you’re finished paying for the year. This includes your deductible, co-pays, co-insurance, prescriptions… everything except your monthly rate (premium). If it all adds up to your out of pocket maximum you’re done paying for the year. However, even after you reach your out of pocket max, you still need to see in-network providers in order to not pay anything further.
The least understood and possibly most significant part of Nevada health insurance is the negotiated rate. In short, the insurance company rewards you for going to providers on their list. They have agreements with these providers so they do not charge you the same amount they would charge someone walking in without insurance. This amount isn’t published because it’s different for each provider. However, it’s a significant advantage of having Nevada health insurance. This applies to all qualified health plans. It can be the biggest advantage of purchasing a bronze plan with a high deductible. In my experience, it might reduce the rate for primary care doctors by only 10% or so. Although for lab services, this might take 80% or more off the price!
Post-2014 (Affordable Care Act or Obamacare) all plans are now put into metal tiers. They are Bronze, Silver, Gold, and Platinum. As you probably guessed, the Nevada health insurance coverage gets better with each metal tier. However, the price also goes up correspondingly. Since the only people purchasing Platinum plans were very ill individuals willing to pay high rates, insurance companies have virtually stopped offering them. All companies offer bronze silver and gold options.
You generally fit into this category if you visit the doctor two times or less per year. Most members have no prescription drugs they’re taking. They haven’t been in any car accidents or other major surgeries in the past 10 years.
What it covers:
Bronze plans are the catastrophic coverage of Nevada health insurance. For the least expensive monthly cost, you have protection against financial devastation. It’s most useful for unplanned emergencies. Hospitalization and ER services may still cost quite a bit on a bronze plan, but it will be significantly less than uninsured members pay.
Pro’s vs Cons
These plans have the highest deductibles possible in order to save you the most amount of monthly premium.
Purchasers of silver plans might use the insurance 5 or more times per year. They may take brand name drugs. Alternatively, they may be a low use consumer who is smart about their spending. Many people know that one visit to the ER will wipe out any savings they would have had by going with a cheaper bronze plan.
What it covers:
Most silver plans don’t require you to pay your deductible for many routine services. Instead, you would pay a co-pay. This might include the primary care doctor, specialist, x-rays, lab work, urgent care, and prescriptions. If your medical services are limited to these, you may save the most amount of money by choosing a silver plan. The silver plans also have lower deductibles than bronze, but not as low as gold.
Pro’s vs Cons
Silver plans are a great value for the occasional user of healthcare services or the infrequent user who doesn’t want to pay a lot if they happen to go.
Purchasers of gold plans tend to know they are high users of medical services. They may be taking expensive drugs. Also expecting mothers might choose a gold plan to try to reduce the cost of labor. Some individuals know they’re having surgery for shoulders, knees and so on. Elderly individuals (pre 65) who have been high users of medical services in the past may also elect a gold plan.
Before the affordable care act, these individuals would be asked health questions and could be denied based on their pre-existing conditions. Today that’s not the case. You cannot be denied based on your health history. The insurance companies don’t even ask.
What it covers:
Gold plans offer the highest level of coverage. They have the lowest deductibles available. Many of their services including in-patient hospitalization or an outpatient surgery may be covered at a co-pay. They also have a lower maximum out of pocket than other plans.
Pro’s vs Cons
Most purchasers of the gold plans know they’re going to be using the Nevada health insurance regularly.
Occasionally there may be another factor when it makes sense to buy up.
For a ridiculous example, a client of ours chose a gold plan because her x-husband was required to pay the monthly premium. Her portion was the co-pays and co-insurance. In order to reduce her liability, she purchased the most expensive plan.
For younger individuals, it’s almost always worth it to buy up to a better plan. The additional amount they’re spending per month is peanuts compared to the thousands they’re saving in deductible cost. Today the difference between the least expensive bronze and most expensive gold plan for a child is about $120 per month ($1,440 per year). The difference in the deductible amount is $7,400. Also, there are numerous co-pays and added benefits on the gold plan not available on the bronze. Most people would agree the spending of $120 per month would be well worth the savings of $7,400 were something to happen.
Sometimes it’s NOT worth it to buy up, even if you know you’re going to be using the insurance regularly. For older individuals, it’s expensive to buy-up. The difference between the least expensive bronze plan and the most expensive gold plan for a 64-year-old today is around $427 per month or $5,124 annually. For this extra amount, the benefits do not increase correspondingly. The difference between the out of pocket maximum is only $3,900. If the older member knew they were going to incur significant medical expenses and hit the max out of pocket, they should buy the bronze plan, not the gold. They would pay more up-front for their medical services but over the course of the entire year, they would be saving $1,224.
Health Savings Account (HSA’s)
Health Savings Accounts, or HSA’s offer another way for employees and business owners to save with Nevada health insurance expenses. HSA’s are not complex. They come in 2 parts. First is the major medical health insurance plan. The second is the savings account with a bank.
The medical plan: In order to be an HSA compliant medical plan, it must meet certain requirements. Insurance companies have already figured these out for you. If the plans say HSA in the plan name, you know it’s compliant.
The savings account: It’s best to call the bank you normally bank with and ask if they offer an HSA compliant savings account. These are specific accounts that categorize your spending as either a qualified medical expense or not. This is important because you can be penalized for spending money from an HSA account on nonqualified expenses.
The main advantages: There are 3 major tax benefits with an HSA account. First, money contributed to the savings account from a business is tax-free. No social security, Medicare or personal income taxes are paid on this money. Second, any growth through investments is tax-free. Third, this money remains tax-free if it’s spent on qualified medical expenses. This is more liberal than a typical health plan would cover. For example, anyone filing taxes with the HSA owner can use it. It can be used for medical, dental, vision, chiropractic or other services.
For more information regarding HSA’s or the tax benefits please contact your CPA or CFP.