In choosing health insurance, Cariann Moore used an online spreadsheet tool provided by her employer to compare insurance plans. She found that a high-deductible plan with a lower price tag would save her money.
“For me, it makes it so much easier and demystifies what can be a little overwhelming when you have all these options,” said Moore, who works for C3 customer-service firm in Plantation, Fla.
With health insurance premiums up an average 7 percent for 2013, employees are finding they need to be savvier consumers. To deal with rising costs, employers are putting the onus on workers “to take control over what their health expenses are,” said Terri Byers, national benefits enrollment manager for West Palm Beach, Fla.-based Oasis Outsourcing, which handles payroll and benefits for companies.
Here are seven tips on choosing health insurance and reducing costs:
– Make sure you enroll. If you don’t re-enroll in your benefits or are given new plan options, you could end up without coverage for 2013. Check your enrollment dates, often in early November or in the spring, and make sure you sign up.
Most people who are offered employer-sponsored health insurance should take it, said Keith Mendonsa, consumer insurance specialist for eHealthInsurance.com, which provides insurance quotes online. And people with pre-existing conditions should definitely take it, since they could be declined on their own, he said.
– Pay attention to your insurance costs. Look at three things: your premium cost contributions this year compared to last; your maximum “out-of-pocket,” which is your financial obligation for a catastrophic health issue; and your deductible.
Byers offered an example: “If my deductible is $2,500 and my out-of-pocket max is $5,000, I know I’m going to have to pay $2,500 if I go into the hospital. Can I afford that?” But if the deductible and out of pocket are both $2,500, then all your health care expenses will be covered by your insurance after the deductible is met.
Consumers make the mistake of picking what they think is the “richer” plan, Byers said. But check whether your doctors are on the less-expensive HMO plan, as well as the pricier PPO insurance.
“It’s really understanding your plan,” she said.
– Compare traditional with high-deductible plan options. More employers are offering a high-deductible plan, which generally offers a lower premium.
But be prepared to pay the amount of the deductible in the coming year if you have serious health care issues, said Mendonsa.
Moore, 34, chose a high-deductible plan because she’s relatively healthy and doesn’t have to buy many prescription drugs. “It made more sense for me,” she said. “Knock on wood; I haven’t been in an emergency room for a very long time.”
But a family that has frequent visits for the children to the pediatrician or even an emergency room may prefer the co-payments and lower deductible of an HMO, Byers said.
Ask your employer if there’s a “gap” plan available, which is combined with high-deductible insurance to offset the cost if an employee lands in the hospital. Under a high-deductible plan, the employee has to pay the deductible, which can be $5,000 or more, before surgery or other major health care expenses are covered.
– Use incentives to reduce costs. “Employees should think about how they can be better consumers with the services a carrier offers,” said Heather Leck, president of Corporate Benefit Advisors in Delray Beach, Fla. Some plans offer a hotline to a nurse or doctor, price checks on tests ordered by a doctor, or where to find the best deal on a prescription.
– Set pre-tax dollars aside. Use a flexible spending account either from your employer or a third party, such as a bank, to deposit money to cover health costs not covered by insurance. Find the list of IRS-approved expenses on your health insurer’s website.
Note that contributions in 2013 for flexible spending accounts have been lowered to $2,500 in 2013, but Byers said she doesn’t think it will affect most people. “I don’t see many people using the full $5,000,” she said.
Employers that offer high-deductible plans also may have the option of a health savings account, which also allows pre-tax dollars to be socked away. The difference: In a flexible spending account, money must be used by year-end, while a health savings account rolls over to the next year. If you have a number of healthy years where you don’t use what you deposit, you could rack up extra retirement savings.
“Take advantage of the services that can help you save money,” she said.
– Mix and match coverage. Your spouse or domestic partner may have less expensive coverage. Or it may be less expensive for certain family members to be insured on an individually purchased health plan. Note that employer-based plans are more likely to cover pregnancy, according to eHealthInsurance.
Mendosa said some employees may find their employer’s health plan no longer meets their needs – perhaps they need a brand-name prescription and the plan only covers generics. Or perhaps the monthly cost for premiums is more than the employee can afford. If you have no pre-existing conditions, look at options to purchase insurance on your own.
But don’t cancel or disenroll from existing coverage until approved for a new one, he said.
– Review coverage options for adult children. Since 2010, the health care law has allowed adult children to retain coverage under a parent’s health insurance policy until age 26. But make sure adult children who live in another state have access to your in-network health care providers.