By Lisa Zamosky
Many people who get their health insurance at work are in the midst of annual open enrollment, the time to choose your health plan for 2013.
Health insurance, as I’ve discussed before, is one product most people find confusing and difficult to properly evaluate against their needs. Maybe that’s why so many people opt out of the process entirely and simply default to the health plan they already have.
But that’s a mistake.
Plans can change from year-to-year, so failure to check what’s different often causes people to leave money on the table. In fact, according to a recent report by Aflac, mistakes made with regard to health insurance benefits leads to as many as 56% of American employees wasting up to $750 each year. Don’t be one of them.
Here are five tips for choosing next year’s health benefits.
1. Pay now or pay later?: High-deductible health plans paired with a Health Savings Account (HSA) or a Health Reimbursement Account (HRA) are on the rise. According to the consulting firm, Mercer, about 58% of the country’s largest employers offer this type of health plan.
Generally people with fewer medical needs can save money by paying a lower monthly premium and socking away the difference into a tax-free health savings account like an HSA or HRA.
Next year, nearly 20% of employers will only make a high-deductible plan available. But if you’re among the 80% with a choice, here’s the bottom line: “All of the employer’s plan choices generally come down to this basic consideration: Do I pay more out of my pay check or at point of care?” says MikeThompson of PricewaterhouseCoopers’ Health and Welfare Practice.
2. Do your math: Next, consider the types of medical care you typically need, the number of times you see the doctor in a given year, and how many prescription medications you take. Calculate all out-of-pocket costs associated with those services, including deductibles, co-pays, and co-insurance. Then add that number to the cost of your insurance premiums. That’s a good estimate of what the plan will cost you next year.
Feel overwhelmed by the numbers? “Employees need not go it alone,” Thompson says. “More employers and health plans are offering calculators to help employees make informed choices.”
In addition, as a requirement of health reform, this year health plans are required to include a Summary of Benefits Coverage to help you make an “apples-to-apples” comparison between plans and what each covers.
3. Plan for your worst-case scenario: To get a full picture of how much your health care could cost next year, you need took beyond the medical services you expect to use and consider how well your plan would cover you if an unexpected illness hits. “No matter what our current state of health is, all of us potentially could have serious conditions,” Thompson says.
It’s critical to understand what your maximum financial responsibility is in a worst-case medical scenario with each plan and how much flexibility you’ll have to decide where you get the care you need.
4. Are you in or out?: Don’t forget to confirm that your doctors are included in a plan’s network of health care providers. Failure to do so could require you to switch doctors or get saddled with a surprise out-of-network bill.
You’ll need to do the same for any medications you take. Be sure to check each plan’s formulary, or list of covered drugs, to make sure you’ll get help paying for the medication you need. If a plan you’re considering doesn’t cover your medications, talk with your doctor now about whether another similar drug that is covered would work for you.
5. Choose to be “well”: Thompson points out that many employers offer discounts on the cost of health insurance for employees who take an active role in the company’s wellness programs. In addition, employers are increasingly designing benefits to financially encourage workers to choose plans that use doctors, hospitals and medications that have a track record of delivering higher value care. Employees who choose these plans can save money.
Your turn: What choices do you have for next year’s health insurance coverage? Share your questions, concerns or thoughts in the comments section below.