For those lucky enough to be working for an employer offering group health care coverage, now's the time to make your health plan choices for next year.
The so-called "open enrollment" period, which typically runs for several weeks in November, is your chance to tweak and tune up your health care plan for 2011.
And this year, with health care costs climbing for employees and employers alike, it could be more financially beneficial than ever to review your options.
(Even if you're not covered by an employer's health plan, I'll cover some new health care provisions that could affect you.)
For starters, we're all going to pay more. For large employers, the average total health care premium – per employee – will be $9,821 in 2011, up nearly $800 from this year. Employees, on average, will be asked to contribute $2,209 of that cost, a 12.4 percent increase from 2010, according to a recent analysis by Hewitt Associates, a global human resources consulting firm.
By 2011, employees' health care costs – including premiums and out-of-pocket expenses – will have more than tripled in the last decade, according to Hewitt.
So when signing up for next year's health care plan, "don't just go on autopilot," said Wendy Barnes, consumer health insurance expert at eHealthInsurance.com. "Pay attention to what you're paying. It's not just the premium, but check to see what may have changed with the deductible, co-pays, prescription drug costs."
Too much or too little?
Are you paying for benefits you never used last year? Did you set aside too much – or not enough – in a medical savings account?It can take as little as 60 minutes to review your medical expenses, said Tracey Baker, a certified financial planner in Fairfax, Va., and co-author of "Navigating Your Health Benefits for Dummies."Check to see how many doctor's visits you and your family had and how much you paid out of pocket for prescriptions, co-pays and other medical expenses.
Then look for ways to save. For instance, with prescriptions, consumers can shave a big expense by opting for generics or mail-order renewals through their health plan. If you go to a three-month refill, for example, you might only have to pay two months of co-pays.
"That one extra $50 co-pay every quarter could save you $200 a year," said Baker. "Mail-order prescriptions are highly underutilized but they save time and money."
Another saving: If you typically only visit the doctor for annual checkups, it may make sense to go to a higher-deductible plan and pay a lower premium. But be mindful: If a medical emergency occurs and you have a $5,000 deductible, you would be responsible for the full amount before insurance kicks in.
Also, check to be sure your doctors are still considered "in-network"; many plans charge more if you see doctors who aren't covered by your health plan.
"For every benefit, there's a cost," noted Baker. "If you've got benefits you're not using, don't pay for them. Maybe it's time to get a more pared-down package."
What's new
Under the federal health reform bill signed in March, consumers will see a number of changes, including:• Starting Jan. 1, co-payments or deductibles are eliminated for most preventive care, including annual checkups, vaccines, cancer or diabetes screenings, blood-pressure checks and cholesterol testing. The idea is to cut medical costs by helping people stay healthy. (For a complete list of eligible procedures, go to: www.healthcare.gov.)• Adult children up to age 26 can now be covered on their parents' health plan, even if they're not a student or are married. (This does not apply if the child is working and eligible for individual health care through an employer.)
If your child lives out of state, check to be sure your health plan provides coverage, Barnes said. If a California health care provider doesn't operate in New York state, for instance, you might need to make other health care arrangements.
• Starting Jan. 1, if you're using a Flexible Spending Account (FSA), over-the-counter drugs (allergy and cold medicines, acne treatments, etc.) will no longer be eligible for reimbursement, unless you have a physician's prescription. Other standard eligible expenses – contact lens, eyeglasses, bandages, etc. – can still be reimbursed.
What to anticipate
Don't be surprised if your employer conducts a "dependent audit," asking you to verify that your spouse, children and other dependents are eligible for health care coverage. It's part of efforts by employers nationwide to curb rising costs.If you have a grandchild living with you or an adult child under 26 whose job provides health coverage, for instance, they're likely not eligible under your plan. Same for ex-spouses.Additionally, some employers are dropping other types of dependent coverage, such as dental and vision for children over 18.
You also could see more "cost sharing" by employers: higher deductibles, larger limits on out-of-pocket costs and higher charges for using out-of-network doctors, according to Hewitt. Other potential changes: some employers could add a surcharge for covering a spouse or shift from fixed-amount co-pays to "co-insurance," where employees pay a percentage of costs for health care services.
Take advantage
Don't overlook wellness programs and other stay-healthy incentives offered by health care providers, such as programs for losing weight, managing diabetes, quitting smoking or preparing for childbirth/parenting. Some plans offer subsidies for health clubs or gym memberships."Go to open enrollment meetings and ask about what your company offers. It really makes sense to tap into those programs," said Barnes, who discovered during her pregnancy that her company's plan offered a month-by-month pregnancy book and a 24-hour advice line staffed by a nurse that was sometimes more accessible than calling her obstetrician's office in the middle of the night.Set it aside
Consider using either an FSA (Flexible Spending Account) or an HSA (Health Savings Account), which let you set aside pretax dollars to pay certain medical costs.An FSA lets you set aside up to $5,000 for qualifying medical or "dependent day care" expenses. You submit receipts or use a debit card to get reimbursed. A note of caution: This is a use-it-or-lose-it account. If you set aside too much money and don't use it all or forget to file your claims by the deadline, you don't get it back.And note: If you're currently using an FSA account for medical or day care expenses, you have until Dec. 31 to incur expenses. You'll have a grace period – usually a month or two into 2011 – to submit claims for those costs.
An HSA, however, does roll over and is considered a savings account that can grow over time. It's paired with a high-deductible plan and lower premiums. You open an HSA through your employer or at a financial institution, up to $3,050 for individuals or $6,150 for a family.
Baker recommends setting it up with automatic, pretax payments from your paycheck and fund it to at least cover your deductible. "If you're younger and healthy with no chronic medical conditions, it's a way to keep your costs in line and build a savings vehicle," Baker said.
Above all, ask questions. Attend your company's open enrollment sessions. Use comparison tools and health expense calculators at websites such as www.hmohelp.ca.gov, www.planforyourhealth.com or eHealthInsurance.com, among others. (For additional resources, see accompanying box.)
"Everyone's financial situation and everyone's health situation is different," said Barnes, the EHealthInsurance expert. "It pays to look at what's out there."
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