A Health Care ReviewIf you’re covered under an employer’s health plan or by Medicare, your open enrollment period, which began this month for many organizations, may require you to take stock of what you need and how much coverage you can afford. Here are some of the main points to keep in mind when you’re going over the often confusing and sometimes overwhelming paperwork.
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Premium IncreasesOne of the first things you might notice about plans for next year is that the amount taken out of your paycheck will increase.
As insurers’ prices go up, but employers reduce their spending or can’t afford to pay more, employees might be liable for a larger percentage of their insurance premiums.
Overall, insurance premiums are expected to increase by 5% to 7% nationwide, according to The Boston Globe. Employees themselves are expected to pay 10% more out of their own pockets, about $4,023 on average, including premiums and other out-of-pocket fees, according to a Report from Smart Money.
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The Insurance LandscapeAs insurers increase their rates for many Americans nationwide, health coverage may also decrease. That means what you pay out of pocket for medical care, vision care and dentist visits may go up, even as your coverage declines.
And getting adequate coverage at an affordable price may be even more difficult for workers at smaller companies, since smaller employers often have to pay more than larger ones, The Boston Globe reports. But during open enrollment season, you may have the chance to opt for a less expensive plan.
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Consider Life ChangesWhat they offer: Open enrollment gives you an end-of-year chance to reassess your family and financial situation as well as your health.
When you might want to: If you haven’t already changed your plan right after a major life change like a divorce, or if you obtained your own health insurance coverage, now would be a good time to make that change. Your premiums will likely be much lower. If you were married, had a baby or were diagnosed with a chronic condition in the past year on the other hand, you’ll now be getting insurance that covers more people than just you, so your premiums will go up.
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Decisions: Cheaper PlansWhat they offer: As you decide which health plan to pick for next year, it’s important to evaluate how much you’ve used your insurance this year. Have you been getting regular checkups? Have you had to see specialists and get several prescriptions?
When you might want one: If you’re relatively healthy, you don’t foresee major health problems and you’re not even close to the age when hereditary health problems like heart disease are expected to be an issue, you may not need to pay for the most expensive health care plan your employer offers. That’s where cheaper plans come in. Those include the plans for which you’ll pay the lowest premium as well as plans that require you to pay more out of pocket before benefits kick in, like a high deductible health plan, which we’ll discuss in more detail later.
Opting out of health insurance coverage altogether might not be a good idea. If you get into an accident or you’re diagnosed with a serious illness and you don’t have health insurance, it could wipe out your savings, according to Revolution Health. Even worse, medical expenses could put you near bankruptcy. More than 60% of bankruptcies in the U.S. are prompted by out-of-control medical expenses, according to CNN.
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Spelling Out the AcronymsTo sift through your health plan literature and paperwork, it’s important to make sense of the variety of acronyms you’ll encounter, identify what they are and know when they’re right for you. Here are some vital definitions:
HMO: Health Maintenance Organization in which a primary doctor has to OK referrals to specialists, prescriptions have to be approved and only in-network doctors are covered. One good point: there are no deductibles.PPO: A preferred provider organization that allows visits to out-of-network doctors, but charges more than for a visit to an in-network doctor. A primary doctor will have to write referrals to specialists, however. EPO: Exclusive provider organization in which members generally aren’t reimbursed if they go to health care providers outside of the organization. POS: Point of Service health plan in which you choose a primary care doctor, but you have the flexibility to see other doctors out of your insurance provider’s network. In some cases you’ll have to go through your primary for referrals, but many plans don’t require that. If you do see specialists or plan to, be sure to check your health plan literature to see what kind of flexibility you have.
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Decisions: More Pricey PlansWhat they offer: More expensive health insurance plans may offer lower copayments for visits to the doctor’s office and for prescriptions than the cheaper plans. You might also have a lower deductible, which means you’ll pay less out of pocket before your benefits kick in.
When you might want one: If you tend to see doctors often, you’re on maintenance medication for a chronic condition or you want to see specialists without getting a referral, you might consider a plan with better benefits even if it’s more expensive. That way you won’t have to pay as much in prescription drug and office visit copayments. Since you have regular health care expenses, the extra you pay in premiums may be worth it. Plus, premiums are taken out before taxes, which means you’ll pay less in taxes than you would if you chose a cheaper plan or opted out entirely.
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High Deductible Health PlansWhat it is: It costs you less in upfront monthly premiums to get a high deductible health plan, so this type of health insurance may be especially helpful for those who don’t have much money to allocate to insurance.
Routine doctors visits are generally covered, but where it will cost you, however, is when you need surgery or a treatment beyond what you can get in a doctor’s office. Next year, deductibles for HDHPs will start at about $1,200 for singles and $2,400 for families, according to The New York Times. That’s the amount you’ll have to pay out of pocket before your coverage kicks in.
When you might want one: If you want small monthly payments and you’re fairly healthy, but you want more that what you might get if only emergencies are covered. Even if you don’t opt for an HDHP, your deductible may still increase, however. In a survey of 2,000 companies, 36% expect to increase deductibles, according to a Kaiser Family Foundation survey.
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Know Your DoctorYour primary care doctor is your source and gateway to good health care, so trusting and being comfortable with your doctor is vital. If you don’t have one, referrals from friends can work, but you may want to follow up with some research. If you have specific medical conditions, it would be helpful to get a doctor that has a special interest or expertise in the field that might help you most.
You can search your insurer’s Web site, or if there’s a specific hospital that you trust, you can go to that institution’s Web site and look up doctors there. You can generally select a doctor as your primary care physician by contacting your health insurance provider or selecting one on your insurer’s Web site.
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Premiums and Unhealthy HabitsSome employers charge different insurance premiums depending on whether you smoke and whether you’re obese. Currently, companies that run their own insurance plans are allowed to reduce non-smokers’ health care premiums by as much as 20% or reward them with bonuses, Time magazine reports. Beyond those companies, the state of North Carolina recently approved increasing health insurance premiums for morbidly obese people who won’t try to lose weight and smokers who won’t attempt to quit, according to Time. While these measures might encourage workers to lead healthier lifestyles, some organizations, including the American Heart Association, consider the practice discriminatory and potentially harmful to those who need coverage most.
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Flexible Spending AccountWhat it is: A flexible spending account, or FSA, allows you to put pre-tax dollars into an account to cover your out-of-pocket health care costs. By using pre-tax money, the amount you pay in income taxes will be lower, which could save you a considerable amount of money.
When you might want one: If you go to the doctor at all, buy prescription and non-prescription drugs, need to restock your first aid kit or get a new pair of glasses, an FSA will save you money. The trick is socking away the right amount of money so that you won’t have any left over at the end of the year, because you’ll have to forfeit it unless your plan allows a grace period.
If you see doctors or specialists frequently or you or a family member covered by your plan is on prescription drugs for a chronic condition like asthma, having an FSA can really save you money, but in some cases it may be better to underestimate how much you’ll need
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HSAWhat it is: A health savings account is different from an FSA in that it’s only available to those with a high deductible health plan who aren’t covered by another insurance plan or Medicare, according to the U.S. Treasury Department. Account holders can contribute a maximum of $3,050 for singles or $6,150 for families in 2010, according to labor and employment law firm Ford & Harrison. Like FSAs, HSA funds can be used only for specific medical costs. But unlike FSAs, HSA funds aren’t forfeited at the end of the year.
When you might need it: If you have an HDHP and want to save on income taxes, you can contribute to an HSA to cover expenses like health care costs, dental work, vision care and even braces, according to the Health Savings Account Resource Center. Unlike an FSA, when you leave your current employer, you can take your HSA with you.
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MedicareWhat it is: It’s open enrollment season for Americans on Medicare, which covers regular medical care as well as hospital care. Prescription drug coverage is also available, but may require a monthly premium.
When you might need it: This government-funded health insurance plan is available to citizens 65 years of age or older, some disabled people under 65 and those with permanent kidney failure, according to the Centers for Medicare and Medicaid Services. Medicare also partially covers hospice care and home health care through Medicare Part A, which doesn’t require a premium if you or your spouse paid Medicare taxes while working. Medicare Part B, which covers doctors visits, costs about $100 a month.
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