As companies approach the “open enrollment” period for employees choosing health insurance, it pays to research benefit options and read the fine print.
Logically, that makes sense. Practically? That’s another matter.
According to a survey commissioned by Aflac, one of the country’s leading insurance providers, nearly one in four respondents (23%) would rather clean their toilet than research their health insurance benefits.
Yes, those are odd choices to give employees, but the survey results only emphasize how unpleasant a task it is for people to play the health insurance game.
The fact is, however, as open enrollment season begins — and employers distribute the familiar-looking hefty packet of information that can make an average consumer’s eyes cross — it’s best to have a plan.
According to a 2015 study by the National Bureau of Economic Research, 63% of employees at a Fortune 500 company selected a health insurance plan that was not the most cost-effective option. Meanwhile, the American Journal of Pharmacy Benefits found that most people subscribing to Medicare Part D plan offerings selected plans more expensive than needed, stating that “annual plan re-examination remains critically important.’’
According to the Kaiser Family Foundation, half of American consumers have employee-based health insurance, 19% belong to Medicaid and 13% belong to Medicare. Meanwhile, 6% have individually purchased plans (including the Affordable Care Act), 2% have military/veteran coverage, and 10% are uninsured.
Premiums Continue to Increase
Regardless of your coverage, one thing is clear. The health insurance premiums aren’t decreasing. Despite the appearance surface numbers, they aren’t flat, either.
The Kaiser Family Foundation says that premiums for employer-sponsored family coverage rose only 3% for this year, a seemingly encouraging statistic considering the increases were almost twice that amount for 2015.
But the Kaiser survey indicated lower premiums are at least in part due to the shift of more health care costs to employees, who often pay higher out-of-pocket costs and larger deductibles. The Kaiser survey showed that American workers are paying deductibles that are 50% higher than five years ago.
It also put the annual average premiums for employee-sponsored family coverage at $4,955 (compared to $2,661 in 2004) and individual coverage at $1,071 (compared to $558 in 2004).
There’s an expected spike ahead for ACA premiums as well after large insurers such as Aetna, Humana and UnitedHealthcare have dropped out of many plans. That likely means an increase in premiums and a decrease in coverage options.
The insurance process begins with open enrollment, the period each year when you’re allowed to start, stop or change your health insurance. For marketplace plans (such as ACA), the period runs from Nov. 1 through Jan. 31. For Medicare, it’s Oct. 15 through Dec. 7. There are no date restrictions on Medicaid, while employer-sponsored health insurance plans generally have fall enrollment periods.
You have the packet.
You know your medical history.
So what do you do?
6 Ways to Save Money on Your Health Insurance
There are several things to consider that can help you save money this open enrollment season.
Check into the Health Savings Account
Most high-deductible plans allow consumers to contribute to a Health Savings Account (HSA). If you change jobs, the money will stay with you. In 2016, the maximum contribution was $6,750 for families and $3,350 for individuals.The tax advantages are abundant:
Always Compare Plans
It’s not enough to assume the most expensive plan has the greatest value. One size does not fit all needs. Coverage changes each year — sometimes drastically — so it’s best to examine all of the options (along with options from your spouse’s or partner’s employer because a shift in primary insurance could make sense).In some cases, high-deductible plans are best in the long run, depending on premium discounts or wellness discounts. But those with heightened medical needs could find that low-deductible options are the best fit.
Understand the Fine Print on Your Health Insurance Plan
It’s typical to consider the amount of the deductibles — how much you spend before the insurance company begins covering expenses — but that’s not enough. Look at the co-pays (the flat fee you pay for every visit to the doctor or hospital) and co-insurance (the percentage of the bill you must pay for treatments).There’s also the out-of-pocket maximum, the most you must pay for covered services in one year. Lower premiums generally mean higher out-of-pocket maximums. Contributions are pre-tax; The account earnings grow tax-free; Withdrawals for qualified health-care expenses also are tax-free; Some companies add contributions to employee HSA accounts. The company’s advantage is giving an incentive for employees to choose the lower-cost option. If it’s offered, it’s an enticing free-money option for consumers.
Examine the Prescription Drug Coverage
If you need a high-priced specialty drug, you should call the insurer or drug company to make sure the medicine is part of the plan. If not, consider the extra co-pay expenses.
Re-evaluate Your Options
The Aflac survey indicated that nine out of 10 workers keep the same benefits each year, while different research showed that only 13% of Medicare users switch drug plans each year, despite the ability to save money. Meanwhile, a 2015 Department of Health and Human Services analysis found plans with lower premiums were available to eight in 10 consumers if they studied enough to consider a switch. The lesson? Review each offering during open enrollment each year because changes can be seen in overall benefits, participating doctors, and the coverage of prescription medications. Also, if you quickly hit your deductible in the last year, choosing a plan with a higher premium and lower deductible could result in worthwhile savings.
Study Your Health Care Needs
It’s useful to estimate the amount of health care spending you’ll have for the upcoming year (granted, no one can foresee all health issues). But a little research — studying your out-of-pocket costs on your insurer’s website, calculating your monthly premium expenses on your pay stub and checking in with your pharmacy for prescription costs — can make you a more educated consumer.
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If a family member was diagnosed with a medical condition or you’re considering surgery for a non-urgent procedure, your insurance needs might be changing.
Consider All Your Options
Just like household chores — such as cleaning your toilet — it’s necessary to become an educated health insurance consumer. Instead of checking the same boxes, consider all the options. It just might save you some significant money.
Logically and practically, who wouldn’t welcome that?
Joey Johnston has more than 30 years of experience as a journalist with the Tampa Tribune and St. Petersburg Times. He has won a dozen national writing awards and his work has appeared in the New York Times, Washington Post, Sports Illustrated and People Magazine. He started writing for InCharge Debt Solutions in 2016.
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