By and large, the chance to change insurance plans came and went for many people several months ago. But new employees of companies offering healthcare get a second chance to choose a plan that best suits them in terms of coverage and cost. Note to each of you folks: Don’t blow it. And, here’s a great article from the LA Times that may be of help.
The LA Times is reporting that employees who opt for employer-sponsored health insurance for 2009 will pay an average of $3,826 in out-of-pocket costs, including premiums, according to data from benefits consulting firm Hewitt Associates, based in Lincolnshire, Ill. That’s an 8% increase over 2008, according to Sara Taylor, annual enrollment leader at Hewitt.
Despite that cost, however, most employees “continue to take a passive role when choosing their benefits,” Taylor says. Even when changing jobs, many people simply choose coverage similar to what they had before. “To truly manage costs, Americans need to put as much deliberate thought into their benefits choices as they would for any big-ticket item,” she says.
The LA Times talked with Kirby Bosley, a healthcare consultant in the L.A. office of benefits consulting firm Watson Wyatt, about how to choose wisely.
What advice do you have for someone with the chance to evaluate new employer-sponsored health insurance this year?
Employer-based medical coverage is often a better deal than what you can obtain on the open market, but not always. If you’re young and healthy, and if you’ve purchased an individual health insurance policy while between jobs, you should certainly check which plan is cheaper. You might want to hang onto your own policy. However, if you’ve continued your coverage from your prior employer under COBRA, then your new company’s plan is very likely to be a better deal.
How do you go about evaluating your options?
Most companies continue to offer choices among health plans for their employees. In Southern California, it’s common to have a choice between an HMO [where you select a primary-care physician] and a PPO plan [where there is a choice of physician at the point of care]. Many large companies have also added “high-deductible health plans” which cost less in premiums but require larger payments for those who actually obtain care. [Before signing on for coverage] any employee, whether a new hire or an old-timer, needs to think about questions such as:
- What coverage is offered, if anything, through a spouse’s employer’s plan?
- Do you expect to use the plan — in other words, do you have ongoing medical expenses?
- Can you afford the deductible if you have catastrophic expenses?
- Is your doctor in the network? How important is that to you?
- Are you able to participate in programs that might reduce your costs — e.g., completing a health-risk appraisal and getting an incentive to do so?
Many companies offer modeling tools online that employees can use to help them reach the right decision. If your company does not offer this, try the work sheet offered by the California Medical Assn. [under “public resources,” then “for patients”].
What should people look for in terms of costs?
Look for premiums you can afford to pay, and whether you can manage the deductible (if there is one) in the event of a major health expense. Look for opportunities to maximize the benefits, such as using network doctors, switching from brand name to generic drugs, using the mail-order option and taking advantage of wellness and disease-management programs.
What is a “must have” in terms of health insurance?
Ideally, you should always have some level of basic health coverage in the event of a major medical expense. This is much more important, financially, than dental or vision or extra life insurance. Some companies offer a small, base amount of disability coverage free, and then require employees to pay for a “supplemental” or “buy-up” amount of disability coverage. I always advise taking this extra coverage — it’s not a lot of money and it could substantially affect your future quality of life if you become disabled.
And what do you recommend avoiding?
I am not a fan of cancer policies or any specific disease policies that some companies offer. Medical plans cover these diseases, so this is just double insurance. If the company asks you to pay for vision coverage, check the premiums and exactly what’s covered against what you normally might spend on exams, glasses, etc. Sometimes you are better off just budgeting for these expenses or running them through a flexible spending account [accounts set up by some firms that let you put aside money — tax-free — to be used for medical expenses not covered by your insurance plan] versus buying the coverage.
Is there anything new to look for in health insurance coverage this year?
We’re going to continue to see companies asking employees to take better care of themselves — often helping to make this happen through programs and incentives offered through work. Employees may be able to take advantage of these plans at any point in 2009, even if they did not specifically sign up before the benefit year began.