insurance

4 tips for health insurance open enrollment

Open enrollment card
Highlights
  • Compare costs under each plan to see whether you'd pay more to switch.
  • Consider your health care needs and expenses over the next year.
  • Ask your employer about wellness programs, which can save you money.

It's open enrollment season, meaning your employer is dropping a bunch of health insurance options in your lap to pick from before year's end. If you're like most people, you'll just stick with the status quo. A fall 2011 eHealthInsurance survey found that 53 percent of respondents with employer-based coverage say they're likely to keep their current plan. Only 36 percent review their health insurance costs on an annual basis.

But inertia could cost you. Many plans are shifting costs and benefits around, so you could pay more in your current plan -- or significantly less if you choose another. Because your open enrollment decision will stick with you for all of 2012, it's wise to scrutinize all of your choices.

Here are four tips to consider as you compare health insurance options for next year.

1. Find out what's changing this year.

The good news is you probably won't see significant increases in copayments and deductibles as in past years.

"But 2012 looks like a year when we will start to see costs go up, primarily via increased premium contributions," says Julie Stone, senior consultant at the employee-benefits consulting firm Towers Watson. "Employers are becoming increasingly focused on raising the cost for dependents and to encourage working spouses to shift to their own employer's plan."

2. Determine where your costs will increase.

To do a cost comparison, Carrie McLean, consumer specialist at eHealthInsurance, recommends going through each plan's paperwork and checking numbers associated with the following.

  • Your deductible.
  • Your co-insurance, which is the portion you're responsible for after the deductible is covered.
  • Your out-of-pocket maximum, which is the maximum amount you pay each year before insurance kicks in and covers everything afterward. "If some catastrophe happens, you know how much you're financially responsible for," says McLean.

The cost of health insurance also includes out-of-pocket expenses. You should know how much your copay is for doctor visits and trips to the emergency room.

"If you have frequent appointments, those can add up," McLean says. "If you don't, you may want a plan that has higher copays but lower premiums."

You should also evaluate the drug benefits part of your plan, and consider whether it's worth paying more for brand-name drugs or switching to generics.

"We expect to see continued changes in the prescription drug arena, with employers encouraging even greater use of generics and implementing more rules around prior authorization of certain drugs," says Stone. "Employees may also find increased copayment differences between generics and brand-name drugs."

Health savings accounts and flexible spending accounts are also worth a look during open enrollment, but consider whether they meet your health care and financial needs.

Some employers contribute money to HSAs, which lower monthly premiums, but these plans are best for those in good health who can afford to put money into (them) and have time to manage the account, says Nancy Metcalf, senior program editor for Consumer Reports Health. "It's not good for those with expensive chronic conditions -- you'll be spending a lot in copays while being stuck in a high-deductible plan."

FSAs lower your taxable income, but you must be careful to keep medical receipts and know how to best use your insurance. "Don't put too much money in because if you don't use it by year's end, you'll lose it," says McLean. "FSAs don't cover over-the-counter medication anymore so check first to see what expenses qualify for reimbursement."

Check HealthCare.gov for the list of FSA expenses that qualify for reimbursement.

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