Make Smart Choices During Benefits Open-Enrollment Period
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If such terms as deductibles, health savings accounts, flexible spending accounts and preferred provider networks are swirling in your head, then it must be open-enrollment period at work.
Published: October 12, 2009
If such terms as deductibles, health savings accounts, flexible spending accounts and preferred provider networks are swirling in your head, then it must be open-enrollment period at work.
Most jobs that provide health-insurance benefits give employees a chance annually to change health-insurance plans or health-plan options.
Fall is that time for many companies with the new benefit year starting Jan. 1.
The choices can be confusing for workers—unsure whether to opt for a plan with lower premiums, higher deductibles and more risk, or to stick with a traditional low-risk plan that takes a bigger bite out of weekly pay.
“I always get the cheapest plan,“ said Ladelle McWhorter, 49, a philosophy professor at the University of Richmond.
“The way that it was when I was first employed here, if you took the least expensive plan, they picked up the entire cost. All you had to do was the co-pays. The other plans, you have to do the co-pay plus you have to pay every month.“
She knows she should spend more time scrutinizing the plans but confesses: “I usually don’t process it very well.“
A lot of consumers feel likewise and go with what they know.
A changing array of options, however, makes it worthwhile to at least give other plans a look. The economic downturn is putting financial pressure on companies to trim costs, and many are shifting more costs to employees.
“Probably more so with smaller companies, they are probably taking a little more drastic steps, but I think companies in general right now are decreasing benefits or decreasing their contribution amounts, or holding those flat,“ said Jeff Ricketts, regional vice president of sales at Anthem Blue Cross and Blue Shield.
“That’s why it’s especially critical in open enrollment for people to look really closely at what changes there are in their benefits,“ Ricketts said. “What we often find is people don’t understand their plan or don’t want to understand until they need it.“
About 60 percent of employers offer health-insurance benefits, according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust. Among firms with 200 or more employees, 98 percent offer health plans. That drops to 87 percent of companies with 25 to 49 workers.
The health-benefits survey, in its 11th year, tallied responses of 3,188 randomly selected non-federal public and private firms contacted between January and May.
For family coverage, the annual premium in 2009 is $13,375, up about 5 percent from the year before. On average, the employee pays about $3,515 of that, with the employer picking up the rest.
Also in the survey: More workers are enrolling in plans with an annual deductible of $1,000 or more. At small firms (fewer than 200 workers), 40 percent of covered workers were in such plans. At larger firms, the percentage was 13 percent.
HEALTH SAVINGS ACCOUNTS
High deductibles are a feature of health plans that are paired with health savings accounts, or HSAs. Such plans typically come with lower monthly premiums and let workers put pretax dollars into savings accounts that can be used to pay medical bills as they arise. Unused funds in the account can be rolled over from year to year and the account can be moved from job to job.
“HSAs are becoming more popular as people understand them a little better,“ said Tracey A. Baker, a financial planner in Northern Virginia and co-author of a consumer guide, “Navigating Your Health Benefits for Dummies,“ supported by Aetna.
Employers often contribute to an employee’s HSA. Workers who don’t have a lot of medical costs can come out ahead financially, but they are also taking a risk if hit with big bills during the year.
“Premiums are a little lower,“ Baker said. “The thing I do caution folks, if you are going to do that high deductible, you need to be sure the health savings account piece is also being funded.“
Flexible spending accounts are often confused with HSAs.
The flexible spending accounts allow workers to put pretax dollars into an account to use to pay medical expenses and other services such as child care.
That money, however, does not roll over and what you don’t use you lose.
And whereas HSAs can be used only with high-deductible plans, flexible spending accounts don’t carry that restriction.
LaMonte Thomas, market leader for Cigna Healthcare in Virginia, said HSAs seems to be catching on slower in the Richmond area.
“Part of me wants to believe that from a cost perspective, this area is not necessarily feeling the pain just yet,“ Thomas said.
“We are seeing it at the larger companies. When I look at Richmond, from the makeup of company size, you have more of the midsize and smaller companies. So it’s coming, the adoption rate is just not as fast.“
WELLNESS PROGRAMS
Another trend that might jolt some employees off their couches are wellness programs that reward healthy behavior, such as getting recommended preventive health screenings, enrolling in a smoking-cessation class or maintaining a healthy weight.
On the flip side, workers might get penalized with a higher premium if they continue to smoke.
With some estimates that 70 percent of medical costs are attributed to lifestyle choices, it’s another way to reduce costs, Thomas said.
“As opposed to tweaking benefit plan design, they are putting more emphasis around resources and support for changing lifestyle and putting incentives in place,“ Thomas said.
But is it fair to ask employees to meet a standard when there are multiple factors that contribute to health status, including genes and even a stressful workplace?
“When we do coaching, we really try to find out what is going on, where is there willingness to change,“ Thomas said.
“So if you are a smoker and stressed and overweight but say you are not ready to stop smoking, there are other places we can help with change, such as dealing with the stress, which in turn can help deal with the smoking.“
DEPENDENT AUDITS
Some companies are starting to look for savings by making sure dependents covered by health plans are eligible for coverage.
These dependent audits ask for proof. If, for instance, you have a niece living with you but are not the legal guardian, you could get hit with a penalty if you try to have coverage for her.
“I think the state just did one. We, in all likelihood, will do a dependent audit,“ said Sharon Jahn, employee benefits manager for the Virginia Commonwealth University Health System. “You have an outside company come in.“
Examples of proof that may be requested: marriage license, birth certificate, child support order for a child claimed. Parents also may have to prove that their older dependents are college students and are properly enrolled.
Some audits have found 15 percent of “dependents” ineligible for coverage.
The state of Virginia’s dependent audit was initiated after the new benefit year started July 1. In early September, about 52,000 employees and retirees were sent affidavits asking them to certify eligibility of their dependents.
“We are currently in the middle of the audit, so results are not yet in,“ said Anne F. Waring, spokeswoman for the state Department of Human Resource Management.
“This audit is an effort to manage health-benefit costs and protect the benefits of those who are eligible to receive them,“ she said. “We are committed to being good stewards of the commonwealth’s resources in these tough economic times.“
COMPARE
When selecting a plan, according to the Agency for Healthcare Research and Quality, compare:
- Premiums. Avoid basing your decision only on the premium. Lower premiums typically mean care comes with higher out-of-pocket costs through deductibles, co-insurance or co-payments.
- Coverage/benefits. Read the materials you receive with the following questions in mind: What type of doctor visits, surgeries and hospital care are covered?
Is there a drug benefit? If so, how much does it cover and what will it cost you? Are dental and eye care covered? Are there limits on what you pay or what the plan will pay for?
- Review last year’s coverage and costs. Determine if it was typical, what your out-of-pocket costs were, and if it was a good plan for you after all.
- Find out if your doctor, hospitals and other providers are in your plan’s network. Decide if you are willing to see other providers, and if you aren’t, how much it will cost you to go out of the plan’s network for care?
- Look for ways to save money under the plan. Check to see if you can get cheaper prescription drugs if you order them by mail.
If you have diabetes or another chronic illness, find out if the plan lowers co-payments on medicines to keep your condition in check.
- Other things to consider: Access to after-hours and emergency care or exclusions and limitations. When do you need prior approval to ensure coverage for care?
HEALTH-BENEFITS TERMINOLOGY
Here are some definitions of common terms. Some policies may define terms differently, so check your plan’s terminology:
Co-insurance: Portion of incurred medical expenses, usually a fixed percentage, that the patient must pay out of pocket.
Co-payment (co-pay): The flat rate that managed-care subscribers pay for a provider’s medical service. May also refer to a percentage of a cost that the patient must pay under an indemnity plan.
Deductible: Amount of covered expenses that must be incurred and paid by an insured (enrollee/member) before benefits are payable by the insurer.
Enrollee: The person who is the primary insured. This term is usually used to reference people covered by an indemnity insurance plan.
Exclusions: Services that are not covered by a plan. Sometimes called limitations. These exclusions and limitations must be clearly spelled out in plan literature.
Fee-for-Service plans: Method of payment for provider services based on each visit or service rendered.
Flexible Spending Account (FSA): A spending arrangement set up by employers to allow employees to set aside pre-tax money to pay for qualified medical expenses during the year. Only employers may set up an account, and employers may or may not contribute to the account. Also, there may be a limit on the amount that employers and employees can contribute to a health flexible spending arrangement.
Formulary: Published list of medical substances and formulas, typically pharmaceuticals.
High-Deductible Health Plan (HDHP): Often called consumer-driven insurance, it is a health plan with lower premiums and a higher deductible for major care, like a hospitalization or surgery.
Health Maintenance Organization (HMO): An organization that provide enrollees with a wide range of comprehensive health-care services. These health-care plans emphasize maintenance or preventive care.
Health Savings Account (HSA): A type of medical savings account that allows consumers to save for medical expenses on a tax-free basis. They are linked with High-Deductible Health Plans, and together these insurance and savings options represent a new approach to health care.
Limits: The provision in a health insurance policy that states the limits of the insured’s coverage. There are typically two limit categories: the time limit and the dollar limit.
Managed care: Typically, health-care insurance that utilizes a specific group (network) of physicians, hospitals and other health-care professionals.
Medical Savings Account (MSA): A health-insurance program that typically combines a high-deductible major-medical insurance policy with the insured’s qualified savings account. Opportunities for tax advantages relevant to the savings portion of the plan exist in the law.
Medically necessary: Term used by insurers to describe medical treatment, equipment or devices that are appropriate and are rendered in accordance with generally accepted standards of medical practice.
Network: The providers—clinics, hospitals, medical groups, physicians and others—that can constitute a managed-care health plan.
Open enrollment: A set time of year when you can enroll in health insurance or change from one plan to another without benefit of a qualifying event (for instance, a marriage, divorce, birth of a child/adoption, or death of a spouse).
Out-of-pocket fee: The insured’s portion of a covered claim or benefit paid on an annual basis that may include co-payments.
Point of Service (POS): A feature of a managed-care plan that allows insured members to seek care from medical providers outside a network or may add some coverage for preventive-care services.
Pre-authorization: Prior approval for a specialist referral or for non-emergency health-care services.
Pre-certification: A requirement of some health plans for the individual or provider to notify the insurer before a hospitalization or surgical procedure.
Preferred Provider Organization (PPO): A network of physicians and hospitals that agrees to provide health services for prearranged fees.
Premium: The amount charged by the insurance company to provide the insurance coverage detailed in the policy.
Usual, Customary and Reasonable Fees (UCRs): Charges by health-care providers that are consistent with charges from similar providers for identical or similar services in a given locale.
SOURCES: Virginia, Health Information; Agency for Healthcare; Research and Quality
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