With Out-of-Pocket Medical Expenses Rising, It Might Be Time for Insurance Change

By Nancy Trejos
Sunday, December 7, 2008

Eric Melton's 10-year-old daughter has asthma and requires regular doctor visits and medication. Occasionally, he has to take her to the emergency room.

As a manager for Caribou Coffee, he has health insurance through Blue Cross/Blue Shield. But he still pays a lot out of pocket. For instance, he recently paid off a $558 bill from Children's Hospital.

With three other children to support, he's having a difficult time getting by.

"I'm spending half of my check on health insurance," the 39-year-old District resident said. "I'm about to get a part-time job to make sure we have good health care and a nice roof over our heads."

He thinks the situation is only going to get worse, what with a recession well underway. "Companies are going to want us to bear more of the cost," he said.

So he's wondering: Should he strike out on his own and find another health insurance plan outside of the company's? "So many employees go with their company's health care and think it's a good deal, but maybe it's not," he said.

Melton is not the only employee noticing that health-care costs are taking a bigger chunk of disposable income. Hewitt Associates, a human resources consulting firm, has projected that employees' out-of-pocket medical expenses for 2009 will increase 10.1 percent to an average of $1,880.

Greg Fernandez, managing member of National Capital Wealth Management in McLean, notes that many companies are now holding open enrollment periods for health insurance. He suggested that Melton first find out when his open enrollment is and review the options available to him.

Jennifer Owen, a certified financial planner at West Financial Services in McLean, said Melton should look at his 2008 expenses and measure them against plan offerings to determine a good fit. "It can be very helpful to ask questions of his human resources or benefits director," she said. "Let them help him identify the best plan according to his needs."

He should then compare not only the premium cost, but also deductibles, co-payment amounts, prescription coverage, the annual out-of-pocket maximum, the total lifetime benefit amount and whether his family's current health-care providers participate in the network, said Susan E. Hamilton, a senior financial planner with West Financial Services.

He might also have to determine whether he has a choice between a health maintenance organization (HMO) or a preferred-provider organization (PPO). They are both managed-care systems, but if you're in an HMO, you generally pick a primary-care physician who has to be consulted before you see a specialist. If you're in a PPO, you can usually see a specialist without a referral. While Melton might lose the ability to choose his family's doctors and have to deal with required referrals, he might have a lower co-payment for services, said Bruce K. Sneed, president of BK Sneed Financial Planning in Woodbridge.

One important thing to find out, the advisers said, is whether any of the plans have clauses for pre-existing conditions. Melton doesn't want to switch plans only to find that his daughter's asthma is not covered.

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