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Five Things to Consider When Choosing a Health Plan

Studies show the more you know about your insurance plan the more you can save. Consider these five things when you choose your health plan for next year
Saturday, 02 November 2013

open enrollment healthcare"Why does health insurance have to be so complicated?" one might ask, particularly in this season of health exchanges, health savings accounts and broken healthcare web sites. Hey, at least it's not as difficult as the U.S. Tax Code, but just give it time. Health insurance is just one of those things that people don't want to learn about; until they need it, that is. Most of us have had company benefits explained to us time and time again, only to need a refresher course every time open enrollment rolls around. Well, get ready, because if you think it was complicated before you may be blindsided by what's on the horizon.

As educated as we may be, there seems to be some kind of disconnect when it comes to choosing a health insurance plan. But take heart; there is help available. In a recent article on CNN.com, "5 things to think about when picking your health insurance plan," the author speaks to consumers who are earning doctorate degrees and doing scholarly research, yet they dread open enrollment season just as much as everyone else.

Fortunately, despite the media's constant "buzz" about Obamacare, the majority of Americans don't need to buy their insurance policies through the new health insurance exchanges. Most will continue to get coverage through employer-sponsored group plans. In fact, you probably have an email in your inbox right now reminding you to choose a plan for 2014. The question is, do you have confidence in your ability to pick the right one?

Studies show the more you know about your insurance plan the more you can save. Consider these five things when you choose your health plan for next year:

Take a realistic approach

You will only need to look at three numbers: the amount of your deductible, the monthly premium, and your maximum out-of-pocket costs. Of course, you should always look at how the new plan compares to last years. Many employers are giving employees incentives to move to a high-deductible plan with a health savings account, which can be a very cost effective option. However, this year's plan might look a lot different from last year's, with changes in annual deductibles and maximum out-of-pocket costs.

Understand the terms

When it comes to healthcare coverage, you need to take your current needs into account when you choose a plan. Are you a healthy young person with few health concerns? Then it may be best to go with a high-deductible plan and put money away in an HSA plan. Are you expecting to have minor surgery next year? You might want a plan with more coverage for hospital stays and follow-up visits. Keep in mind, however, that according to the CNN article less than 10 percent of the population is admitted to the hospital every year.

One of the best ways to understand your coverage needs is to look at what you spent last year. Did you run through the HSA funds too quickly? Then maybe this year you should contribute more. Did you find that a PPO was more cost-effective for your family? Then maybe you should keep it. If you don't go to the doctor very often and don't use many prescriptions, choose the plan with the least expensive monthly premiums. And remember, with Obamacare most plans are required to cover preventive health services whether you meet the deductible or not. These include annual check-ups, standard blood tests, blood pressure tests, mammograms, immunizations, diet counseling and other services.

Don't be afraid of change

Many people find that as their life circumstances change they need less and less insurance, or sometimes they need more. Choose the policy that gives you the right amount of coverage to meet your current lifestyle needs. Most employers offer three types of plans: Point of Service, Preferred Provider (PPO) and Health Maintenance Organizations (HMOs.)

If you aren't attached to a specific doctor or medical practice, an HMO might be the most economical in terms of premium costs and out-of-pocket costs. A PPO plan will have a higher premium but it will also allow for a wider selection of doctors. POS plans are actually a hybrid of HMOs and PPOs, typically providing more doctors but with the expectation that you will choose a primary doctor who will refer you to specialists. The latest addition to many plans is the HDHP, or High-Deductible Health Plan. Inexpensive monthly premiums make this attractive, and a health savings account allows employees to accumulate tax-free dollars to pay for pre-deductible expenses. Take the time to read through the summary of benefits pages to make a fair comparison between plans.

Stay healthy

This might sound like a no-brainer, but you can save a lot of money on healthcare costs by practicing healthy habits. Why not try to save some money this year on healthcare by taking better care of yourself. According to a recent study by the New England Journal of Medicine, preventable illnesses make up 70% of health care costs. Join your company's wellness challenge, exercise regularly, watch your diet, don't smoke and drink less alcohol. The fewer unhealthy habits you maintain, the lower your healthcare expenses will be.

Ask the experts

If you find you're just "guessing" at the plan you need for 2014, don't do it! Find a trusted adviser in the HR department or call the insurance companies directly. Ask a health insurance broker to explain the terms and help you figure out the best healthcare plan.

Photo Courtesy of ImageryMajestic / FreeDigitalPhotos.net

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