Which plan should I choose? Selecting the best workplace healthcare plan for you

With nearly 150 million people in the U.S. covered by employer-provided health insurance plans, they are the leading source of such coverage for non-elderly people, according to 2012 data from the Kaiser Family Foundation and the Health Research and Educational Trust. The average worker-contributed premium was $5,615 for single coverage and $15,745 for family coverage, although such contributions can vary significantly from company to company.1

However, beyond the premium, workers may find themselves responsible for a variety of other costs such as deductibles, co-payments, co-insurance, prescriptions, and other expenses. Because of the highly personal and individualized nature of healthcare, the best choices for one person or family might not be the same for another. Before signing up for your employer’s healthcare plan, look closely at a number of facts and factors to make the best decision for you.

Understand the plan. According to the LIFE Foundation, a nonprofit insurance information and advocacy organization, there are five types of health insurance:

  • Fee-for-service: The insured chooses the healthcare provider based on the services needed and provided, and the insurer reimburses those costs.
  • Health Maintenance Organizations (HMOs): One doctor typically manages the insured’s care, and referrals from that physician are necessary to access covered care from other healthcare professionals, except in emergency situations. Referrals are issued based on whether they are deemed necessary by HMO guidelines.
  • Preferred Provider Organizations (PPOs): The insured is typically permitted to choose his or her own doctors and access healthcare services as needed within a specific network of participating healthcare providers. The policy may cover only a portion of services provided by an “out-of-network” provider. Care is not usually coordinated through a primary care physician.
  • Point-of-Service Plans (POS): This type of plan combines elements of HMOs and PPOs. Patients may choose to coordinate care through a primary care physician or may self-direct their care within a network of providers. Physician-coordinated care, self-directed in-network access, and self-directed out-of-network access may be reimbursed at different rates or require different co-payments and co-insurance.
  • Health savings accounts (HSAs): Created by Congress in 2003, these medical savings accounts allow people to save for current and future healthcare needs in a tax-free way when combined with a high-deductible healthcare plan. Participants may pay for medical services with these savings.2

Consider your health history. Saving money on your health insurance is more involved than simply choosing the least expensive plan. In fact, if you choose a plan that has lower monthly payments, but a large deductible and high co-payments, you could find yourself actually paying more than if you opted for a “more expensive” plan with lower limits on your out-of-pocket contributions. If you or your family members have a history of health issues or are aging, choosing the lower-deductible plan with prescription coverage, if offered, might be a less expensive option than the low cost of the bare-bones HMO plan.

Check with your doctor. The differences between plan types might not seem significant, but depending on your health status and the doctors you use, the plan types may make a big difference in the quality of your care. For example, if you opt for an HMO, you may find that your longtime doctor or some specialists don’t accept that type of insurance, leaving you with the decision of whether to switch doctors or pay to see your preferred provider out of your own pocket. If you become ill and prefer to see a particular specialist that’s not in your POS network, you may be responsible for paying 20% to 30% of the cost in co-insurance. In addition, some plans allow you to cross state lines for care while others require that you only see doctors in your state, except in cases where you have a medical emergency while out-of-state. Make sure the plan you choose allows you to see the doctors you want and need.

Look for hidden costs. Ask questions about the different obligations the plan requires. For example, copayment or “copay” is different from coinsurance. A copay is typically a portion of the service paid at the time of service delivery. Coinsurance is the responsibility to pay for a percentage of a healthcare service or services up to a certain amount. The policy’s deductible is the portion you need to pay for healthcare services before any insurance applies. Ask your human resources consultant or benefits director to explain the portions of healthcare costs for which you will be responsible.

Seek out exclusions and limitations. Be sure to compare your individual healthcare needs to the plan’s coverage provisions. Some plans exclude or limit payment for certain services. Dental and vision care are often not covered by healthcare plans. Certain procedures may need pre-approval and failure to obtain such approval may result in coverage denial.

Shop around. Healthcare pricing varies significantly from provider to provider and in different regions. If you are responsible for a percentage of your medical costs, it can pay to shop around, as costs can vary widely. The Centers for Medicare and Medicaid Services (CMS) released aggregate cost data for various services on its website . The data revealed that average inpatient costs for joint-replacement surgery ranged from $5,300 at an Ada, Oklahoma hospital to $223,000 in a hospital in Monterey Park, California.3 In addition to saving money on services, prescriptions, and other out-of-pocket expenses, employers are increasingly offering incentives to employees who actively seek out lower-cost providers. Check with your employer to find out if they offer such a program or if the insurer has tools to help you compare costs before purchasing healthcare services.

Use health flexible spending arrangements (FSAs). If offered by your employer, employees can fund FSAs with pre-tax salary contributions each year that can be used to reimburse the employee for qualified medical expenses incurred in that year. Beginning January 1, 2013, the contribution limit became $2,500 per year. The account can be used for qualified medical expenses that include prescription drugs, over-the-counter drugs for which a prescription has been issued, dental care, and other expenses. For more information on how FSAs can be funded and used and the parameters for qualifying expenses, consult IRS Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans . Unused contributions are forfeited and generally do not carry over from year-to-year.

Look for wellness opportunities. Some companies offer incentives to participate in wellness programs. These may include health club membership reimbursement or even health insurance premium discounts for participation.

Review your needs every year. As you get older, start a family, or experience changes in your health, your health insurance needs will change. Consult your human resources contact or benefits director to learn about the latest insurance and other healthcare-related offerings. It’s important to begin the review process as early as possible before your renewal date to ensure that you have enough time to go over plan options and pricing, ask questions, and make the best possible choice for you and your family.

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