At open enrollment and every
time you switch jobs, your employer offers you a choice
of health plans, with varying premium requirements,
co-payment levels and benefits. How do you choose
the best option for you and your family?
Is cost what counts in the decision-making process
or should workers scrutinize benefits?
"They should look at both," said Ed Kaplan, national
health practice leader with Segal Co., a health benefits
consulting firm based in New York City.
As medical costs continue to outpace annual growth
in general inflation, many businesses are scaling
back their financial commitments to workers. As a
result, employees are facing steeper out-of-pocket
costs and sometimes reductions in benefits. To know
what they're really getting, workers must closely
examine the available health insurance options.
"There's much more at stake today," Kaplan said.
"You could end up picking a plan that costs you $1,000
more each year out of your pocket," compared with
a plan that you might think was more costly, he said.
On the cost side, Kaplan advises people to compare
the amount that the company will deduct from their
paycheck every month under each health plan option.
But don't stop there. Workers also need to look for
co-payments and benefit limitations or exclusions,
which could end up costing them a lot more, he said.
For example, say you've narrowed your choice to two
plans, one requiring a $60 monthly premium contribution
and another that will cost you $100 a month. You might
be leaning toward the $60 plan based on the lower
payroll deduction. But if that plan requires a lot
of co-payments and excludes a service or prescription
drug option you know you may need, opting for the
plan with the lower premium contribution could be
a shortsighted decision.
Workers typically share the cost of physician office
visits, prescription drugs and even hospital admissions
with their employer through a fixed-dollar co-payment.
In 2004, more than a quarter of covered workers were
in a health plan with a co-payment of $20 to see a
doctor, according to a survey by the Kaiser Family
Foundation and the Health Research and Educational
Some employer health plans have switched to "coinsurance,"
in which employees share a percentage of their medical
care expenses after meeting the deductible. For example,
if the health plan picks up 80 percent of the cost
of services, the worker must pay the remaining 20
As for benefits, consultants urge employees to learn
about any exclusions or limits ahead of time.
In 2004, for example, just over a quarter of all
employers and roughly half of large employers covered
gastric bypass surgery, a popular treatment for severe
obesity, a survey by Mercer Human Resource Consulting
found. But large employers that cover the surgery
increasingly are limiting eligibility to individuals
who have met certain prerequisites, such as participating
in a behavior modification program, the survey showed.
Employees also should assess whether a health plan's
network of doctors will accommodate their needs, Kaplan
added. If the plan has a limited number of health-care
providers, find out what it's going to cost you to
see an out-of-network physician.
Traditionally, he explained, employers offered a
70 percent to 80 percent out-of-network benefit and
capped the employee's total out-of-pocket expense
at some dollar amount; at that point, the plan would
resume 100 percent coverage. Now, it's more common
to see a 50 percent out-of-network benefit with no
cap on how much employees can spend, he said.
"If there's a network that's got deep discounts and
lower prices, but it's such a limited choice of providers
that you end up using out-of-network providers, what
good is it?" Kaplan asked rhetorically.
Whatever you decide, consultants say it pays to do
your homework. Many large employers now offer consulting
services or online tools to help their workers make
more informed health decisions.
Reference Source 101