The Big Decision of Open Enrollment: What Health Insurance Plan is Best for Me?

by RJ

in Insurance

This post covers a lot of ground on a variety of health insurance related topics.

The first half discusses how to maximize your benefits during your enrollment period. I have been in the health insurance industry, working for the family insurance business, since coming out of college. Going to enrollment meetings, it never surprises me how many people want to pick a plan and get back to work. Little do they know that by taking a few minutes to look over their options, and learn a thing or two, they could save themselves hundreds of dollars a month.

The second half talks about changes in recent legislation that benefit you. Plus, 5 tips to stay ahead of the game going forward.

Disclaimer: Insurance is regulated by the states. One thing might be true in one state and false in another. I tried hard to make this as broad as possible, but the best thing you can do is research the regulations in your own state.

Difference Types of Plan Designs

At enrollment meetings; I find that around 50% of people don’t know the difference between a HMO and PPO. Even worse, I find that around 10% of people know what HRAs and HSAs are. Often, there is substantial savings (upwards of thousands of dollars a year) between plans.

Knowing this, I find no better place to start than by discussing the different plan types.

What is a PPO?

PPO stands for Preferred Provider Organization.

PPOs are generally the most expensive plan because they offer the most flexible network. As a member of a PPO, you get a substantial discount if you visit a doctor inside of the plan’s network. Plus, uou don’t need a referral to visit a specialist. For example, if your back was hurt, you can go straight to an orthopedic.

What is a HMO?

HMO stands for Health Maintenance Organization.

HMOs are typically cheaper than PPOs. The reason being, the network of doctors you can visit is restricted to those in the organization.

If you’re a member of a HMO, you have to visit a general doctor before visiting a specialist. For example, if your back was hurt, you would visit a general doctor first. The general doctor will then refer you out to an orthopedic, if they decide it’s necessary.

What is a HRA?

HRA stands for Health Reimbursement Account.

Many employers are shifting towards HRAa for the savings. They then pass on the savings to employees by reimbursing employees for health care expenses up to a pre-determined amount.

Once you reach the reimbursement limit, it then functions as a typical high deductible health plan.

What is a HSA?

HSA stands for Health Savings Accounts

HSAs are very similar to HRAs. The major difference is that instead of your employer deciding how much you’re reimbursed, you’re allowed to contribute pre-tax money towards an individual savings account designated for health care expenses. You than use this pre-tax savings, to reimburse yourself.

Unlike HRAs, this is your money to keep. Even if you change employers, this money is yours.

What is a FSA?

A FSA stands for flexible savings account.

A FSA isn’t a health care plan. It’s a place where you can contribute pre-tax money to pay for qualified expenses.

What’s Important to Review during Enrollment Period?

  1. Plan Design Changes – Compare last year’s plan to this year plan. If you’re sticking with the same health insurance company, look for differences in plan design. If you’re switching health care companies, not only should you look for differences in the plan’s design, also check to see what else changed. For example, networks, prescription coverage, co-insurance, emergency care options, etc…
  2. Cost of Alternative Options - Now is the time to switch plan types. If you find that you rarely visit a doctor, maybe the cheaper plans, such as HSA or HRA, are a better option.
  3. FSA Expenses - First, you need to see how much of your FSA is still available. If money is still available, have a plan to spend it by the end of the year. Second, decide on how much you want to contribute to your FSA for next  year. Do you have any major medical expenses coming up? Did you contribute too much last year? These are the questions you need to ask yourself.
  4. Maternity Coverage - As a young adult, it’s important that you know how or even if maternity is covered. Also, check to see if there are any waiting periods before maternity is covered.
  5. Don’t Forget About Dental – If you go to the dentist twice a year, dental insurance generally pays for itself. Plus, this gives you extra insurance for the larger dental expenses such as removing your wisdom teeth.
  6. Incentives - Employers are now offering incentives for employees who are proactive towards their health. For example, companies are starting to offer a discount for those who don’t smoke. See if your employer has any incentives for maintaining a healthy lifestyle.

Part # 2 | Important Changes to Health Care that you need to Know

Here are the recent changes that have the most impact on young adults.

Dependent coverage until 26

If you’re under the age of 26, in all states, you can now add yourself to your parent’s plan. In some states, like New Jersey, the age limit for dependent coverage is even higher. This includes those who are married. The only exclusion is for those who are eligible on another group plan.

For those under 26 with younger siblings, this law is even more beneficial. Since your parents might already be paying for family coverage, it costs nothing to add you.

Changes made to FSA

Between 2003 and 2010, eligible FSA expenses included Over the Counter or OTC medications. For example, if you wanted to buy Claritin, a popular OTC allergy medicine, you could do so on your FSA without a prescription and get reimbursed through your FSA.

Starting in 2011, that law has changed. OTC drugs are only FSA eligible if they are prescribed by a doctor. Therefore, if you take an OTC drug regularly, ask for a prescription from your doctor.

Another change that is coming down the road that might affect how much you contribute the next two years,  is that they are lowering limits to $2,500 in 2013. Right now, there are no limits as to how much you can contribute. Although, either the employer or plan administrator caps it off around $5,000.

If you’re planning on having a large FSA eligible expense in the future, like lasik eye surgery, it’s better to get it done before 2013, so the whole procedure can be covered under your FSA.

Full coverage for preventative care

To encourage more people to visit a doctor for preventative measures, preventative care is now covered at no cost. Therefore, services such as blood pressure, cholesterol tests, vaccinations and even counseling is available for free.

The wording on this is still a bit confusing. Before assuming that your next visit to the doctor is free of charge, call up the doctor’s office beforehand.

Last, this doesn’t necessarily go into effect right away. Full coverage for preventative care starts when your plan renews.

No pre-existing conditions for children under 19

Health insurance companies can no longer deny children under the age of 19 coverage for pre-existing conditions.

5 Final Tips on Health Insurance

  1. Familiarize yourself with your provider’s website. Health insurance companies’ websites are getting better. Typically, you can search for in-network doctors, get a list of covered prescriptions, and check to see if you have hit your deductible. Some websites offer incentives, such as iPods, to those who login to track their workouts.
  2. Don’t be afraid to ask questions. If you have a question about your plan, don’t be afraid to ask for help. The first place to go is to human resources. If they don’t know the answer, call the health insurance company. If you still don’t get a clear answer, find out who your companies broker is and call them. Good brokers represent you and not the health insurance companies.
  3. Stay up to date as to what nearby hospitals are in network. It’s good practice to check in every few months to see if there are any changes. If you have to run to an emergency room, the last thing you want to do before you go is to check what’s in and out of network.
  4. If your plan is expensive, go out and get health insurance on your own. As a young adult on a group plan, you’re typically paying for more than your share of the premium.  If health insurance costs are out of control at your company, go and get it on your own. A catastrophic only plan can be had for around $100 a month.
  5. Check out HealthCare.Gov. This is a Government run site that explains all the upcoming changes in detail. Compared to the IRS’s site, it’s very easy to read and  navigate.


Photo by: Jesslee Cuizon

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