This time of year, many of us with employment-related health insurance confront a dizzying maze as we choose a benefits plan.
The insurance terms typically are confusing, and the types of coverage are hard to figure out.
And sometimes, the changes from the year before can be profound, especially with increases in deductibles. A deductible is the amount you have to pay before your insurance coverage kicks in.
Benefits consultants say that over the next 18 months, one-quarter to one-half of Americans who get insurance coverage through their employers will pay more of their medical bills themselves due to health plans with higher deductibles, Reuters reported this week.
Consumer expert Clark Howard says that if you are young and healthy, and if you can afford to pay a good bit out of pocket, a high-deductible plan “could be the right fit for you.”
The deductible can be several thousand dollars, with some in the $10,000 range. But if you don’t use much health care in a typical year, “that kind of number shouldn’t faze you,” Howard says.
A high-deductible plan is often paired with a health savings account (HSA). Money is set aside from your paycheck, tax-free, in a special savings account for you to pay out-of-pocket expenses. Unlike flexible spending accounts in traditional health plans, an HSA is not a “use it or lose it” proposition: Any money unspent at the end of the year stays in the account. And you have the option to invest some of the money through your plan administrator, Howard notes.
But he adds that if you’re older, or if you or a family member on your plan has a chronic condition, or money is tight, a traditional plan “probably is the way to go.“
HSA plans generally work better for people who are younger, healthy, and who have enough spare money to put into them, experts say. They can be used for co-pays, deductibles, co-insurance, and items such as hearing aids.
High-deductible plans and substantial co-insurance payments make the price of medical services more important than ever, says Nancy Metcalf, a health insurance expert at Consumer Reports magazine.
If you have a health plan from a major insurer, you should check the insurer’s website and sign up for their pricing information on services such as elective surgeries, she says. That can save you hundreds or thousands of dollars.
“It’s shocking the variation in price, even within the network of a health plan,’’ Metcalf says.
Here are some other tips to help guide your decision-making during this “open enrollment’’ season:
* Health plans are now required to provide standardized, consumer-friendly summary of benefits and coverages, including information on co-pays, deductibles, and out-of-pocket limits. This will make it easier for you to compare plans, Metcalf says.
* Check to see if your family’s physicians are in the network of the plan you’re considering. A good relationship with a primary care doctor is important to your health.
* If you have a choice of plans, you may want to compare them on quality measures. Consumer Reports has a link evaluating health plan quality in a state.
* Understand the differences between an HMO and a PPO and Point of Service (POS) plan. HMOs restrict your choice of doctors and other medical providers, but often perform better on quality scores.
* Read the plan materials thoroughly. Review any pre-existing condition exclusions and prior authorization requirements, the National Association of Insurance Commissioners says.
* Explore what a plan’s deductible really means. Co-pays and prescription drugs, for example, may or may not count toward meeting a deductible, depending on the health plan.
* Note that preventive care is free under employer plans that didn’t get ‘‘grandfathered’’ status under health care reform.
* Your adult child can remain on your health plan till age 26, a result of the Affordable Care Act. If your child is living in another state, though, you may want to consider picking a health plan from a national insurer rather than a regional plan, Metcalf says. That way, they can use your national insurer’s network in that state, she noted.
* Make cost calculations based on your medical history. Calculate your health spending from recent years and try to estimate what your costs might be for the coming year. Don’t forget to include the cost of visits to the doctor, prescriptions and any procedures you may be planning. Also, make a list of the premiums, out-of-pocket expenses and benefits under each plan.
* You may be able to contribute pre-tax dollars to a flexible spending account (FSA), a health savings account or a similar health reimbursement arrangement (HRA). The amount that you can sock away in an FSA is limited to $2,500 in 2013.
* Check to see whether your employer offers a wellness program or incentives for healthy behavior such as exercising regularly or not smoking.
* Find out what your plan’s annual out-of-pocket spending limit is, and what counts toward it, such as deductibles and co-pays.
* See whether your medications are on the list of approved drugs in each plan. Your co-pays on drugs can vary among health plans.
Most health plans that pay for prescription drug benefits have pharmacy benefit tiers. Brand-name drugs that are usually in the top tier are the most expensive, while generic medications are in the lower tiers and are the least expensive.
If you are taking a ‘‘biologic” drug, your health plan choices may put that medication into a separate tier, and charge you a lot more than typical brand-name prescription. People taking biologics ‘‘will go straight to a plan that does the best job covering them,” Metcalf says.
Another change has to do with increased financial information about benefits. Your W-2 next year will include the total value of your employer health benefits. Don’t worry — you won’t be taxed on it.
“It will be interesting for a number of people to look at,’’ says Metcalf, who predicts that “a lot of people will be surprised’’ at the amount their benefits represent.
Employers must calculate this cost before hiring a new person, she says. “From an employer standpoint, you health benefit is part of your salary.’’