The open enrollment period for your health-insurance plan comes once every year, usually during the fall. The corresponding paperwork typically generates as much enthusiasm as your yearly tax forms. But don't be tempted to just put a check mark next to your current plan. With so many insurers and employers raising health-insurance premiums and scaling back benefits, you need to know how your health plan stacks up against any others offered to you at work and whether it's the best choice for you.
After all, you're stuck with your decision for a whole year. If you don't know that your plan is dropping coverage for your brand-name prescription allergy drug, you'll be in for a rude awakening next year when the pharmacist asks you to hand over $180 for 100 tablets rather than your usual $25 co-payment. You won't be able to go back to your benefits administrator and ask to switch to a plan that will pay for your prescription.
The following information will help you make the best decision during the open enrollment process.
What types of changes can I make to my health-insurance plan during open enrollment?
If you're not currently enrolled in a health-insurance plan, you may enroll at this time. If you are enrolled, you may switch plans (if this is an option), correct inaccurate information, or add eligible dependents, such as a spouse and children not previously covered.
Which is more important when choosing a plan: cheaper premiums or less expensive co-payments?
It depends on your situation. If you're young and healthy, you can go for lower premiums and higher co-pays. But if you're older, have a chronic health condition, or have young children who make frequent visits to the doctor, you're better off with higher premiums and lower co-pays. You also have to weigh the value of your health plan vs. price. If you go with a cheap health plan but it doesn't pay for the benefits you need, you are not getting good value for your health-insurance dollars.
What is a lifetime maximum benefit?
A lifetime benefit maximum is a cap on the amount of benefits available to a policyholder. The cap is designed to keep the cost of benefits affordable and to stabilize potential future costs. Many health plans cap lifetime benefits at $1 million and are most often applied to mental illness, drug and alcohol treatment, or organ transplants.
If a plan has a relatively low lifetime maximum cap, think carefully about how much risk you're willing to assume. Even if you're healthy, the expenses incurred from one severe car accident -- including hospitalization and outpatient physical therapy -- could easily exceed a $100,000 cap.
Can I switch health plans without undergoing medical screening for pre-existing conditions?
Yes. This is the one time a year (unless you experience a "qualifying event," such as the birth of a baby) during which you may make changes to your plan without having to sit out any pre-existing condition exclusion period. Otherwise, late enrollees in group health plans may have to wait up to 18 months for coverage of pre-existing conditions.
What's better, an HMO, PPO or POS? And what is an HMO, PPO and POS?
There are several health plan varieties, including traditional indemnity fee-for-service plans (FFS), health-maintenance organizations (HMOs), point-of-service plans (POS) and preferred provider organizations (PPO). Each plan has its own features to consider before making your choice.
HMOs are the least expensive, but also the least flexible. They require that you select a primary care physician (PCP) and obtain pre-authorizations for certain medical procedures and in order to see specialists. POS plans are more flexible than HMOs, but they also require you to select a PCP.
PPOs give policyholders a financial incentive -- in the form of reasonable co-payments -- to stay within the group's network of practitioners, but you can usually visit out-of-network specialists without pre-approval.
What is a drug formulary and what are pharmacy benefit tiers?
A formulary is the list of medications for which a health plan pays. Most health plans that pay for prescription drug benefits have pharmacy benefit tiers that group certain medications together for pricing purposes. Brand-name drugs that are usually in the top tier are most expensive, while generic medications are in the lower tiers and are least expensive. Your prescription drug co-pay for a medication in the lowest tier may range from $5 to $10, while your co-pay for drugs in the highest tier may range from $25 to $50. Most health plans have three or four pharmacy benefit tiers, but some have as many as seven.
What are FSAs and HSAs?
A flexible spending account, or FSA, is a benefit plan that allows companies to give their workers the opportunity to pay for their out-of-pocket health and dependent care costs on a pre-tax basis, which -- over time -- lowers payroll-related taxes for both the employer and employees. However, if you don't use the money you've set aside by the end of the year you lose it.
A Health Savings Accounts, or HSA, is technically a trust. It's designed to let you save money specifically for health costs, and receive a tax break in the process. HSA funds not used in one year can roll over to help pay for future expenses the next year, unlike the flexible spending account.
How can I judge the quality of competing health-insurance plans?
For those who have a choice of health plans, price and whether the family's doctors participate in the plan's network of doctors are the most important factors. However, there are other criteria to use.
Accreditation groups, such as The National Committee for Quality Assurance, measure plans using a variety of quality standards. Ratings companies, such as Standard and Poor's, A.M. Best, and Moody's Investors Service, give you a picture of a health plan's financial strength. "Report cards" published by consumer groups, independent Web sites, and state insurance officials are another good source of consumer satisfaction with health plans.
Who can help me if I have questions?
Your human resources director or benefits administrator at work, and/or insurance company customer service departments, can answer most of your questions. Health-insurance analysts with your state department of insurance can also answer your health-insurance questions.
If you have questions about a self-insured health plan (meaning your employer pays all your health-insurance claims), contact your regional office of the United States Department of Labor (DOL). Self-insured plans are governed by the Employee Retirement Income Security Act (ERISA) and are regulated by the federal government, not your state department of insurance.
On the Internet since early 1995, Insure.com is a leader in providing insurance information and is unequalled in its breadth and depth. The site currently hosts more than 20,000 pages of content, including interactive tools to assist consumers in their insurance decisions, and adds 30 to 40 new items each week. Insure.com is regularly ranked as one of the Web's best providers of consumer insurance information and guidance.
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