While many Americans groan at the prospect of reviewing our benefits -- so much paperwork, so many confusing terms -- open enrollment is an important chance to ensure we're getting the most bang for our health care buck. To that end, I spoke with Winkler and Michael Mahoney, vice president of consumer marketing at the insurance broker GoHealthInsurance.com, for tips on the most cost effective ways to select benefits.
In the first installment of this two-part series, the experts discuss how to save money on employer-offered benefits. In the second part, we'll consider cost-saving strategies for people who don't have employer-offered health insurance, and instead purchase individual plans.
1. Learn the Lingo
Health insurance terminology is vast and complicated, so find a website that can provide you straightforward definitions and explanations that you can refer back to as you work through your benefits. Good ones include Wisegeek.com, AARP and Bankrate.com,
2. Identify Which Benefits You Need ... and Which You Don't
"A lot of people take employer benefits for granted. They don't dive in on the details, they just know they've always had insurance through work," says Mahoney. "But it may be that you have benefits you don't need. For example, if you're not planning to have a kid soon, you may not need maternity coverage." In instances where your employer's plan offers benefits you don't need, Mahoney suggests pricing an individual plan that only includes your needed benefits, and comparing the two.
However, the opposite is also true. If you know that you need certain benefits, your employer-offered plan may be the cheapest way to get them. "I have three kids," says Winkler, "and everyone in our family wears glasses, so it would be foolish for me to pass on the vision benefit given the cost of contacts, glasses, annual eye exams." According to Winkler, many employers offer additional benefits such as vision, dental, disability and critical illness coverage for relatively low-cost premiums.
3. Establish Your Priorities
Once you know what you need, you can determine how important various aspects of your coverage are to you. You might have a certain doctor you want to use, or a specific medical facility. Is that more important to you than saving money on your monthly premium? These are questions you have to answer as you select your plan. For example, most employers offer access to both an HMO or a PPO plan. "Traditionally the HMO is cheaper but has fewer options," explains Mahoney. "They have a smaller list of providers that insurance will pay for, and they won't cover the service if it's out of network." In contrast, a PPO costs more, but has a wider range of providers and will cover some portion of the cost of service even if the provider is out of network (say, for example, that you require medical assistance while traveling out of state).
4. Compare Treatment Costs
Like most everything else in the world, the cost of medical services varies by provider and insurer. This is due in part to the fact that different providers negotiate different rates with different providers, and in part because each provider determines its own prices. As a result, most insurance providers offer tools that allow you compare the costs of various physicians and facilities, and Winkler suggests consumers use them.
"Comparing gives you a better sense of how much is paid by you versus the health plan for various services," she says. "They give you a sense for discounts that apply that health plan has negotiated, and helps you to understand average cost of care."
5. Determine Your Risk Tolerance
"Insurance should be a financial protection product," says Mahoney. "It should protect you when you have an accident or an illness." To that end, Mahoney stresses the importance of thinking long and hard about your comfort with risk when you select your plan. "If you earn $25,000 a year and you have an accident and have a $15,000 deductible, that insurance really didn't provide any protection. If your deductible is $2,000, that's a lot more protection, but you have to pay more per month for that privilege."
6. Take Advantage of Preventive Care
Basic preventative care -- medical services intended to help you stay healthy -- is covered 100% by health care providers, irrespective of whether or not you have a low- or high-deductible plan. That's a great thing not only for your wallet but for your long-term health as preventative care can identify problems before they become serious. So, if you aren't currently taking advantage of these free services, which usually include annual physicals, well-baby care, immunizations, mammograms and colonoscopies, get started.
7. Know the Bells and Whistles
These days, employers are offering all sorts of extras to help employees get, and stay, healthy, and most of them can fatten your wallet while helping your health. For example, many employers are now offering incentive-based plans that "give employees the opportunity – and maybe dependents – to earn dollars for healthy actions," says Winkler. "Sometimes it's credit towards the premium, credit towards the deductible, or maybe even a gift card. We have an employer, an international company, who offers employees the chance to win a car in a raffle when they do various healthy actions." The activities can be as simple as taking a screening exam to educate yourself about "your numbers" -- that is, your cholesterol, your blood pressure, your glucose level.
According to Winkler, another popular program is the Health Savings Account. Unlike a Flexible Spending Account, the funds of which must to be used up within the year and cannot be transferred between employers, the Health Savings Account is "like a personal bank account specifically related to health expenses," explains Winkler. "Those dollars are yours, so if you leave, that money can go with you. It's interest-bearing and tax-free. There are limits on it -- for 2012, single coverage is capped at $3,100, and family coverage is capped at $6,250 for the tax year. But it can be deposited pre-tax from your paycheck, so there's a lot of tax advantage to it and it's very worthwhile."
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