This time of year, many companies are going through the benefits open enrollment process, which will determine the benefits that you have during the next year. Once open enrollment I closed you will need to have a qualifying event to make benefit changes.
This is an important time to consider what type of healthcare plan you want to enroll in for your health insurance coverage. There are a lot of factors to consider regarding which insurance option that you might want to choose.
Consider some of the following items when selecting your coverage:
- What level of healthcare do you normally use? Do you rarely go to the Dr? Do you normally exceed the deductible and/or out of pocket maximums?
- Assess your current health – how does it compare to the level of healthcare that you have typically used? Do you think you will need more care next year than this year? Do you think you will need less care this year than last year?
- Does your doctor, hospitals, and other caregivers participate in the different plans that are being offered? You need to ensure that your caregivers participate in the plan that you choose to ensure that you can continue your care with out a significant cost increase by paying for Out-of-Network care.
- Do you travel frequently? Ensure that the locations that you travel too have participating providers in the area. Does one option cover more areas than the other options?
- What is the cost of the different options? There are several components that make up the costs of your healthcare such as:
- Insurance premiums – the amount that you pay each month
- Deductibles – the amount that you typically pay before the insurance pays
- Co-pays or co-insurance – the amount you typically pay after the deductible is paid – this is usually a % or flat amount. The % or amount of the co-insurance that may depend on the type of services being used – ie: Dr office vs emergency room visit.
- Prescription drug costs. Drugs costs can be a large portion of your healthcare costs. Are they paid differently depending on the type of coverage that you choose?
- Cost of care that is not covered by health insurance
- Are the services that you are likely to use covered the same under the different policies.
There are a lot of factors to consider when making this decision. I recommend creating two or three different health care scenarios that you might expect to have over the next year and project what your out of pockets costs are for the care in each scenario and with each insurance option.
Often employers will offer incentives to choosing a high deductible insurance plan and contributing to your Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA). These contributions by your employer can be used to help cover the additional costs of the higher deductibles. You may be able to make contributions to these accounts as well.
Intuitively, these high deductible policies are shifting the responsibility of paying for the initial costs of your care to you, which should make you a more discriminating consumer of healthcare services. If you are managing your healthcare costs, then this should result in a lower healthcare costs to you as well as the insurance company. This should allow the insurance company or employer to provide this coverage at a lower cost to the employee. However, I have seen employers that offer these types of policies have taken the “basic” level insurance offering added the amount that was being contributed to the HSA or HRA account and that is the amount of the premium that the employee pays. This begs the question, why would I select this option and take on more risk and essentially pay for the employer’s contribution to my HSA or HRA? This is one of the reasons that I recommend evaluating each insurance option with several different scenarios to get an understanding of how much each option will cost. With this information you can make a more informed decision of which option may be best for you and your family.
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