If your paycheck shrinks in 2012, the culprit may be rising health insurance costs. But you can save money by making the right choices this fall.
The cost of health care coverage is expected to increase 5.9 percent in 2012, according to consultant Towers Watson.
That makes it more important than ever to know how to save during open enrollment, the time period each year when employees sign up for benefits.
In 2012, workers will be faced with higher premium costs, more coverage restrictions, higher deductibles, and, for some, more restricted coverage. Employers are nudging workers toward high-deductible health plans, in which employees pay some health costs upfront. That encourages employees to be more aware of what they’re spending, which saves the company money.
Workers and employers often split the cost of insurance. According to Towers Watson, about two-thirds of employers plan to raise the employees’ part of the premium for single coverage; for those with dependant coverage, the figure is 73 percent.
“Employers are going to continue to cost shift to employees,” said Bill Grossman, senior vice president of Fort Lauderdale, Fla.-based insurer Seitlin Benefits.
Here are seven ways you can save on your health insurance for 2012:
MAKE A MOVE. Without fail, choose a plan during open enrollment. At some companies, employees who don’t elect a plan during the enrollment period could be left without health insurance, or kept in a plan that costs them more.
“You could have to wait a whole another year to get benefits again,” said Carrie McLean, a consumer specialist with eHealthInsurance, an online insurance company. Set a reminder so that you don’t forget the closing date for your enrollment period.
DO THE MATH. Compare costs of each plan offered. Look at: the premium, the basic cost of a policy; the annual deductible, the amount that you’re required to pay before insurance will pay, and co-pays, a set dollar amount for a doctor’s visit or prescription.
Also compare the co-insurance, which is the percentage you pay after the deductible is satisfied, McLean said.
Employers offer group coverage, but in some cases individual plans available on eHealthInsurance.com or through a local insurance broker, might be a better deal.
KNOW WHAT HAS CHANGED. Check coverage this year versus last. What your plan covers may have changed, or there may be better coverage for your needs in another health plan being offered. If you don’t have records of what you paid for insurance, ask your employer to provide them.
More employers are reducing costs by making maternity coverage optional, so make sure you choose a plan that offers that coverage if your family may expand, McLean said. Also check prescription drug costs on each plan: one may require you to pay more out of pocket, she said.
Compare your spouse’s or domestic partner’s plan. The employee’s share of the premium could be more or less than your own plan, eHealthInsurance says. Check the cost for family coverage and dependents in each plan.
If someone has a pre-existing medical condition and needs a brand-name drug — generally more expensive than a generic, compare plans to see which is going to cover more of that cost, McLean said.
ADJUST YOUR COSTS. Consider a high-deductible plan with a health savings account. If you’re fairly healthy, this option can save in monthly payroll deductions. Unused money each year rolls over for retirement savings. Employers may contribute to the employee’s account to help workers fund the higher deductible.
Nearly 60 percent of large employers expect to offer a savings-account insurance plan by 2014, Towers Watson says.
A health savings account plan can save money in the long run, experts say. But there’s a trade-off: More costs are upfront, with employees’ paying for doctors’ visits and other health expenses out of pocket, before the deductible is met. Know your maximum out-of-pocket cost, McLean said.
Joanna Stiegler, 27, likes the savings that comes with depositing pre-tax dollars in the health savings account offered by her employer, Signature Consultants, a technology staffing firm in Fort Lauderdale. But she doesn’t have many health care costs. “It was the most cost-effective for me because I don’t spend my time at the doctor,” said Stiegler, an account manager.
Under the plan Stiegler chose, about $780 is deducted from annual payroll. She has to meet a $3,000 deductible before insurance pays. But the employee who has a “very healthy year” could roll over as much as $3,050 in pre-tax dollars into a health saving account, said Signature benefits manager Nancy Tarchis.
SELECT THE RIGHT LEVEL OF COVERAGE. You might find it less expensive to insure healthy, young members of your family through an individual plan. Compare costs to how much an employer charges for a dependent.
LEAVE ENOUGH TIME TO RECONSIDER. More than three-quarters of 2,200 workers surveyed regret their benefit decisions, according to an Aflac survey by Harris Interactive. Forty-seven percent of those surveyed said they make mistakes every year, such as putting too little into their flexible spending account, which allow pre-tax wages to be set aside for qualified expenses. Or they passed on coverage such as vision or dental benefits, which they later wished they had.
Most importantly, know the amount your employer pays — and what you pay — toward your premium. Remember that if you get laid off next year and enroll in COBRA coverage, you’ll likely be required to pay the total premium now being paid by yourself and your employer, eHealthInsurance says.
Source: MCT Information Services