FAQ: What you need to know about health insurance 'open enrollment'

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'Tis the season for "open enrollment,"  the annual ritual when workers with employer-sponsored health insurance and those covered by Medicare are allowed to make changes to next year's health insurance coverage.  

And while scouring all the documents necessary to make the right decision is about as appetizing as sitting down to a pile of income tax forms, experts say it's a worthwhile investment in time that can save you money and improve your health coverage.

"It is a little bit like tax season and it's a little bit like voting, too where it takes some work to make a good choice, says David Sayen, regional administrator of the Centers for Medicare and Medicaid Services (CMS) Region IX in San Francisco.  "There's a potential to have better health care and save precious money by going through this process." 

Sayen says more than 2 million Medicare beneficiaries in Los Angeles, Orange, Riverside, San Bernardino and Ventura counties will have the opportunity to choose between Original Medicare and  a variety of Medicare Advantage Plans and from an assortment of drug prescription plans  during the Medicare enrollment period that started Oct. 15 and lasts through Dec. 7.

Nationwide, more than 150 million U.S. residents covered by an employer-subsidized health plan will also be making similar choices, according to National Association of Insurance Commissioners.

Taking the time to review your health plan thoroughly, even one that you're happy with now,  is key to making sure you're not caught off guard by changes that no longer cover the treatments you need or the prescription drugs you take.

Getting the most out of open enrollment requires that you have some understanding of the health insurance alphabet soup (think HMO, PPO, PSO, HAS) and a few other basics.

We've compiled a list of Frequently Asked Questions with resource links to help you better navigate through your choices.

1. What is open enrollment? It's the annual period that most companies offer when their employees can make changes to employer-sponsored health plans without being subject to underwriting or evidence of insurability.

2. When does it take place? It usually takes place at the end of the calendar year and typically lasts from one week to more than a month, depending on the company. Check with your employer's human resources department to find out when your company offers open enrollment.

3. What's the first thing I should do when evaluating plans? Health plans come in multiple flavors. Choosing which works best for your health needs is step one. The major medical plans offered by most employers usually include:

  • HMOs — Health Maintenance Organization plans. These managed care plans offer the best pricing but the least flexibility. They do so by limiting your care to the doctors, clinics and hospitals within the HMO's network. HMOs also require you to choose a primary care physician (PCP) who coordinates your health care and provides you referrals before you are able to visit other network doctors. Go outside the network and your services aren't covered. For information about HMO plans, which are regulated by the California Department of Managed Care, go to www.dmhc.ca.gov.
  • PPO — Preferred Provider Organization plans. Like HMOs, these plans offer networks of doctors, hospitals and clinics that are preferred providers. Go to them and you get lower rates negotiated by the insurance company. PPOs provide more flexibility than HMOs because they allow you to seek care outside the network, which will likely cost you more in deductibles and co-pays. Unlike HMOs, PPOs don't require you get a doctor referral before you see a specialist. Many of the plans, however, do require prior approval for certain expensive services. The California Department of Insurance regulates the state's PPOs. 
  • Point of Service (POS) plans. Think of these as hybrids between HMOs and PPOs. Like an HMO, you're required to choose a primary care doctor to oversee your medical needs. But like a PPO, you're allowed to seek care out of the network if you're willing to pay a bit more. These plans also pay for treatment outside the network when your primary care physician refers you for such care.

National Association of Insurance Commissioners website offers basic information on each plan.

4. My existing coverage works well for me. Can't I just ignore all that gnarly paper work? Not a good idea. Plans change —  especially this year, with health reform provisions taking effect alongside rising health care costs. So even if your existing coverage works for you, at the very least you'll want to review whether:

  • Your doctor and hospital will remain in your network next year.
  • Your prescription medicines are included in your plan's list of approved drugs.
  • The plan allows you to add dependents (spouse/children).
  • How much you'll pay to add your dependents.
  • Other treatments you may rely upon, such as chiropractic care and counseling, are covered.

5. What changes created by federal health reform could affect my health insurance coverage? Health reform is changing the way insurance companies do business. Some highlights: children under the age of 19 can no longer be denied coverage because of a preexisting condition (beginning in 2014, that ban will extend to every person, no matter their age or health); adult children can now be covered by their parents' health insurance policy until age 26, as long as that policy provides dependent coverage. Many preventive health services are now free, including mammograms, vaccines, well-child care and many other health screenings. For more detail on mandatory coverage in California go to http://www.chbrp.org, click on FAQs. 

6. How do I best compare the plans my employer offers? Health reform is making that chore easier by requiring you be provided with two consumer-friendly forms.

  • The Summary of Benefits and Coverage provides — in plain language — the cost-sharing requirements, coverage limits and exceptions under each health plan offered by your employer. It also includes coverage examples that illustrate common benefit scenarios as a way to clarify for you how the plan might work for you in a real-life.
  • The Uniform Glossary provides standardized definitions of common health insurance terms, such as "co-payment" and "deductible."
  • The Centers for Medicare & Medicaid Services offers more detail about the forms

7. What is a Flexible Spending Account (FSA) and should I start one? FSAs allow you to set aside pre-tax dollars to pay for deductibles, prescription co-pays and other treatments not covered by your insurance. Starting in 2013, the maximum you'll be able to deposit is $2,500 (with annual adjustments for inflation), and there will be stricter rules on how you can use the money. A big down side for many: Whatever you don't use by the end of your company's benefits year, you'll be forced to forfeit. Go to this link for more information.

8. Should I consider switching from conventional coverage to a Health Savings Account (HSA)? HSAs are tax-advantaged savings accounts available to those enrolled in high-deductible or "catastrophic" medical insurance plans. HSAs allow you to set aside tax-free dollars to pay for routine, out-of-pocket health expenses. You also get an Internal Revenue deduction for the amount you contribute to the account each year, and you pay no federal taxes on interest earned by your HSA as long as you use the money to pay for eligible medical expenses, as defined by the IRS (dental and vision are included). Another plus: unlike an FSA, HSA funds roll over annually and accumulate. Still, federal health reform has imposed stricter rules and guideline on the spending of HSA dollars. To learn more, you can go here or here. 

9. Does Medicare offer open Enrollment? Yes. It started Oct. 15 and runs through Dec. 7.

10. What are my choices for Medicare coverage? Open enrollment allows you to switch between the two categories of Medicare health plans: Original Medicare, managed by the federal government, and Medicare Advantage plans, run by private companies. During open enrollment, you can also change your prescription drug plan. Check out this 5-minute CMS video explainer.

11. What is Original Medicare? Original Medicare combines hospital insurance ("Medicare Part A") and medical insurance ("Medicare Part B"). But it doesn't include a drug plan, so enrollees must choose from a Prescription Drug Coverage plan ("Medicare Part D"), which is provided by private companies.

12. Do I need to do anything in order to stay in my Original Medicare? Nope. If you're content with your Original Medicare coverage, you can sit tight as there are no changes for 2013 to consider, says CMS's David Sayen. However, because Original Medicare doesn't include a drug plan, it's wise to review your Part D drug plans as the medicines they cover, the pharmacies they work with, and their premiums do change.

13. What are Medicare Advantage Plans? Also known as Medicare Part C, this category includes HMOs, PPOs and other plan options provided by private companies. Most Medicare Advantage Plans include drug coverage. If you're considering this option, you'll have plenty of plans from which to choose. In Los Angeles County, for instance, there are 29 different Medicare Advantage health plans - only three of which do not include drug coverage. Los Angeles County residents in those plans (and those enrolled in Original Medicare, which also doesn't include a prescription medication plan) have 32 Medicare drug plans from which to choose.

14. Do I need to do anything in order to stay in my existing Medicare Advantage Plan? If it's working for you, make sure to confirm that any changes in the plan aren't deal breakers for you. If your plan is among the few that doesn't include prescription drug coverage, it's important to review any changes to your drug plan and, if necessary, choose another.

15. Is there help if I can't afford my drug prescription premiums? Yes. It's called the "Extra Help" program. To qualify, you must be receiving Medicare, meet certain income and asset tests. "People who qualify for this help save about $4,000 a year," Sayen says. "So it's really a significant amount of money." To learn more, call 1-800-MEDICARE.

16. Help! Can someone guide me through all these Medicare choices? Yes. Computer savvy beneficiaries can find their answers at Medicare.gov, scroll down to the button that reads "Find health and drug plans." This takes you to the Medicare Plan Finder that allows you to compare the premiums, deductibles and co-pays of each plan, as well as how many stars the plan received in under Medicare's Five-Star Ranking System.

Prefer a more personal touch? Call Medicare at 1-800-MEDICARE (1-800-633-4227) for a counselor in your area who will help you evaluate your medical and drug plan needs. Or you can speak with customer service representative by phone, seven days a week, 24 hours a day.

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