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Take Time to Pick the Right Health Plan


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 Trust (HRET).

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 percent.

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.


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