Get Smart About Your Plan
Confused by your insurance options this year, especially now that Congress is getting in on the act? Staff Writer David S. Hilzenrath offers answers for some of the most pressing questions.

Tuesday, October 13, 2009

Q. If my employer offers multiple options, how should I assess them?

First, take the time to study your choices. Even if you like your current plan, don't assume it will stay the same next year, says Nancy Metcalf, an editor at Consumer Reports.

Look beyond the premium at features that affect both the value of the coverage and its affordability. Are the doctors and hospitals you favor in the insurer's network? How much would you pay out of pocket for office visits, hospital stays and drugs? Find out how each plan would handle any medications you take regularly.

Note the difference between co-payments, which are fixed amounts you pay out of pocket for certain items, and coinsurance, which requires you to pay a percentage of the bill. (There's a potentially huge difference between a $20 co-payment and a 20 percent coinsurance charge.)

What services, if any, require advance approval by the health plan?

Are there annual or lifetime limits on what the health plans would pay? Are there limits on what you could be required to pay? Are any expenses excluded from such limits? For example, do co-payments and deductibles count toward your out-of-pocket limits?

Figure out how the competing plans would cover any predictable medical needs, but don't stop there. Game out what would happen if you suffered a catastrophic illness or injury and suddenly required hundreds of thousands of dollars of coverage.

Q. If premiums are rising and I'm healthy, does it make sense to try buying insurance in the private market instead of through my job?

Almost never, experts say.

If you take the coverage your employer offers, there's a good chance your employer will pay most of the premium. This year, on average, employees are responsible for only 17 percent of the premium for single coverage and 27 percent of the premium for family coverage, according to a survey by the Kaiser Family Foundation and the Health Research & Educational Trust. That means that for average family coverage, employers are contributing $9,860 of the $13,375 annual premium, and for average single coverage, employers foot $4,045 of the $4,824 tab. If you buy your own coverage, you'd be forfeiting that benefit.

Before you pass up the chance to enroll in employer-sponsored coverage for the coming year, make sure you actually qualify for individual coverage. Even if you think you're in good health, insurers may find grounds to reject you.

Q. If I buy insurance on my own, what should I watch out for?

If you find less expensive coverage in the individual market, beware: The coverage could be thinner. Study the fine print; otherwise, if you become seriously ill, you may be shocked to discover that your insurance doesn't provide as much of a safety net as you assumed.

If you get in a dispute with your insurer over payment of claims, it might help to have an employer in your corner, though insurance brokers might serve as advocates, too.

Q. Is employer-sponsored coverage always a good deal?

Some employers with low-wage workforces, including fast-food and retail firms, provide minimal benefits that "are barely worthy of being called health plans," says Nancy Metcalf, an editor at Consumer Reports.

They come with annual coverage limits as low as $2,000. That means a $20,000 hospitalization could leave the worker with a bill for $18,000, she says.

Q. Which trends should I take into account when deciding which health insurance plan to sign up for this fall?

Employers are increasingly promoting high-deductible plans tied to health savings accounts. Those arrangements come with potential advantages and pitfalls.

High-deductible plans offer relatively low premiums while requiring workers to pay relatively large amounts out of pocket if they seek medical services. The objective is to make employees more cost-conscious in their approach to medical care. The insurance industry calls them "consumer-driven" or "consumer-directed" health plans.

Part of the trouble is that consumers are generally ill-equipped to make discerning medical choices. Do you really need the blood test or MRI your doctor recommends? Does your sick baby really need to see the doctor or go to the emergency room? If the answers were obvious, the government and the medical establishment wouldn't be having such a difficult time eliminating wasteful spending.

The plans come with ceilings on how much employees could be required to pay. For 2010, the annual limits on out-of-pocket spending are $5,950 for individuals and $11,900 for family coverage, while the minimum deductibles are $1,200 for individuals and $2,400 for families.

Health savings accounts allow employees to set aside pre-tax dollars to cover their out-of-pocket expenses. The money appreciates tax-free and can be tapped on a tax-free basis, and any unused sums can accumulate from year to year. Some employers contribute to the accounts.

The low premiums may appeal to people with low incomes. The savings accounts are most likely to benefit people who can afford to set money aside and whose incomes position them to take advantage of the tax-sheltering feature.

Q. What happens if I get laid off?

If you worked for a company with at least 20 employees, you can stay in your employer-sponsored plan temporarily via so-called COBRA coverage, but it will cost you. You would have to pay both the employer and employee portions of the premium, which could make COBRA unaffordable.

For a limited time, the economic stimulus legislation that Congress passed this year provides subsidies that cover 65 percent of the COBRA premium.

If you worked for a company with fewer than 20 employees, your state may give you the option of purchasing coverage similar to COBRA.

If your spouse has access to employer-sponsored coverage, you can join your spouse's plan. Depending on your coverage history, your spouse's employer might temporarily refrain from covering preexisting conditions.

If you have been covered for 18 months, most recently in a group plan, and you've used up any COBRA coverage available to you, the federal Health Insurance Portability and Accountability Act assures you access to some individual coverage. Depending on the state, that could be limited to special high-risk pools. In any event, the coverage could be prohibitively expensive. Also, remember that coverage obtained through the individual market may be less comprehensive.

If you have kids, contact state authorities to find out if they qualify for CHIP, the government's Children's Health Insurance Program.

It's also possible you could qualify for Medicaid.

Q. What's so good about the insurance that government employees get and that President Obama has repeatedly referred to? Why can't we all have the same range of plans to choose from?

Federal employees get to choose from a long menu of health plans in a regulated marketplace -- far more options than private employers offer. They get the advantage of group rates, and neither their age nor their health status makes a difference. The huge size of the federal workforce helps make this all possible.

President Obama is essentially trying to replicate that model in the individual market by creating exchanges where eligible individuals could shop for coverage. Ironically, the exchanges might be off-limits to people who work for big corporations, so that workers who have some of the best options today could end up with some of the most limited options in a reformed system.