Seven health plan mistakes I see every enrollment season, and how to avoid them

The short list

The biggest mistakes people make when choosing a health plan are picking on premium alone, assuming their doctors are in the network, skipping the prescription check, buying a plan that is not really insurance, choosing a high-deductible plan without a way to cover the deductible, renewing without looking, and being careless on the application. Each of these is avoidable with an hour of checking before you enroll. None of them requires an expert, though a licensed agent can do the checking for you at no cost.

I am Rex Slover of Slover Agency, and I help employers, families and Medicare beneficiaries around Murphy, Plano and Dallas choose coverage. I see these mistakes every year, usually after the fact, when someone calls about a bill that should never have happened. Here is each one, the myth behind it, and what to do instead.

Mistake 1: treating the lowest premium as the cheapest plan

The myth is that the plan with the smallest monthly payment saves the most money. The Texas Department of Insurance explains the trade-off in its health coverage guide: plans with higher deductibles, copayments and coinsurance usually have lower premiums, but you pay more when you receive care. A low premium is only a good deal if you rarely use care.

The fix is to compare the total cost of a realistic year. Add twelve months of premium to what you would likely pay in deductibles, copays and coinsurance for the care you expect. Then do it again for a bad year, using the out-of-pocket maximum. For a healthy person the low-premium plan often wins. For a family with a child in regular therapy or a spouse with a chronic condition, it often loses by a wide margin.

Employees choosing between two plans at work fall into the same trap from the other direction. The richer plan costs more out of every paycheck, so people pick the leaner one, then discover in the spring that a planned surgery or a new baby lands squarely inside the deductible. If you know a big medical event is coming in the next year, that knowledge belongs in the comparison.

Mistake 2: assuming your doctor is in network

The myth here is that a doctor who takes a carrier takes every plan from that carrier. In reality, one carrier can offer several plans with different networks. TDI notes that HMO and EPO plans generally require you to use network providers except in emergencies, so if your doctor is not in that specific plan's network, you may pay the whole bill yourself.

In a metro the size of Dallas–Fort Worth, networks can differ a great deal from plan to plan, including which hospital systems are in them. Search each plan's directory for your doctors by name, then call each office and ask whether they accept that exact plan for the coming year. Directories lag behind reality, and the front desk will know.

Do not stop at your primary care doctor. Check the specialists you see, the hospital you would want for surgery or a delivery, and, if your child sees a pediatric specialist, that practice too. The doctor you see once a year matters less than the one you would need if something went wrong.

Mistake 3: skipping the prescription check

TDI's guide makes the point directly: a plan will not pay for drugs that are not on its approved list. Two plans with the same deductible can treat the same medication very differently, and one expensive prescription can outweigh every other difference between them.

Write down every regular medication with its dose before you compare. Check each one on each plan's drug list, note the tier, and ask whether prior authorization or step therapy applies. If a drug is missing, ask your doctor whether a covered alternative would work before you rule a plan out.

Pharmacy matters as well. Some plans steer you to particular pharmacies or to mail order for maintenance drugs, and the price of the same prescription can differ depending on where you fill it. If you have a pharmacy you like, check whether it is preferred on the plan you are considering.

Mistake 4: a high deductible with nothing set aside

High-deductible plans paired with a health savings account can be an excellent choice. The myth is that the HSA plan is automatically the smart one. It is smart when you actually fund the account, or when the lower premium leaves enough room in your budget to cover the deductible if something happens.

IRS Publication 969 explains why an HSA is worth using: amounts left at the end of the year generally carry over, the account stays with you if you change employers, and withdrawals for qualified medical expenses are not taxed. The mistake is enrolling in the high-deductible plan for the lower premium, putting nothing in the account, and then facing the full deductible with no cushion. If your employer contributes to an HSA, find out how much and when. Your tax preparer can help with the tax side.

Mistake 5: buying something that is not health insurance

Every enrollment season someone is offered a plan with a surprisingly low price that turns out not to be major medical coverage. TDI's page on alternative health plans warns that such plans may not cover all injuries or illnesses, including preexisting and chronic conditions, do not have to follow federal rules, and do not let you get federal subsidies. It also notes that health care sharing ministries often exclude preexisting conditions, are not regulated by state or federal government, and leave members with no legal protection if a claim is not paid.

Short-term medical has a legitimate place. As my agency's individual benefits page explains, it is meant for people between jobs or waiting for employer coverage, it is not regulated by the Affordable Care Act, and it does not cover preexisting conditions. If you are using it as a bridge, that can be fine; I cover that use in health insurance options after losing a job. If you are using it as your permanent plan to save money, you are taking a risk you should understand clearly first.

A simple test helps. Ask the seller, in writing, whether the plan is major medical coverage that follows the Affordable Care Act and whether it covers preexisting conditions. A clear yes means one thing. Anything else means you are looking at a different kind of product.

Mistake 6: letting the plan renew on autopilot

Renewing the same plan feels safe, and sometimes it is the right choice. The myth is that the plan you renew is the plan you had. Premiums, networks, drug lists and cost-sharing can all change from one year to the next, and you agree to the new version when you renew.

Every fall, read the notice of changes from your plan or your employer, recheck your doctors and prescriptions, and compare at least one alternative. For Marketplace plans, HealthCare.gov lists December 15 as the last day to enroll or change plans for coverage starting January 1. Medicare has its own fall window with its own dates. I lay out the full review for both in the fall coverage checkup.

Mistake 7: rushing the application

Applications ask about household members, income and, for some products, health history. TDI warns that leaving information out on purpose can lead to canceled coverage or denied claims. Even honest mistakes, such as a wrong date of birth or a missing dependent, can delay coverage or create billing problems that take months to untangle.

On the Marketplace, savings are based on the income you estimate for the year, so a careless estimate can mean a surprise when you file taxes. Take the time to get the numbers right, keep copies of what you submitted, and update the Marketplace if your income or household changes during the year.

Employers have their own version of this mistake. A census with wrong birth dates or missing dependents produces quotes that do not match the final bill. When I work with a company, I check the census line by line before it goes to any carrier, because fixing it later costs time nobody has during enrollment.

How to avoid all seven in one evening

You do not need to become an expert. You need a list, a quiet evening and the patience to check before you click. If you are shopping on your own, my guide to buying your own plan on HealthCare.gov walks through the order step by step.

• List your doctors, hospital preference and prescriptions with doses
• Narrow plans by network first, prescriptions second, price third
• Compare a typical year and a bad year on your top two or three plans
• Confirm the plan is major medical coverage, not a limited or alternative plan
• If you choose a high-deductible plan, decide how you will fund the deductible
• Fill out the application carefully and keep copies

When a second set of eyes helps

If you would rather not do all of this alone, a licensed broker can. I compare plans across carriers for individuals, families, employers and people on Medicare, check networks and prescriptions, and explain the trade-offs in plain language. Then you decide.

My services cost nothing, because the carriers pay the broker, and the premium is the same as it would be if you enrolled on your own. Whether you are in the Dallas area or elsewhere in Texas, the best time to get help is before you enroll, not after the first surprise bill.

Questions people ask me