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File: Booklets outlining health insurance options for Californians is seen at a Senior Information & Resource Fair in South Gate, California September 10, 2013 .
“Open enrollment” season in the workplace is here – that time of year when people with job-based health insurance are allowed to make changes to their coverage for the following year.
To make the right choice for you and your family, take the time to sort through the health plan options provided by your employer. While that’s certainly a task few look forward to tackling, doing so may save you money and provide you with coverage that works better for you, experts say.
“This is an opportunity to review,” said Karen Pollitz, a health policy analyst with the Kaiser Family Foundation, “to see if other plans offered by your employer might provide additional coverage that you need, or be more economical for you.”
If you’re worried about wading into the hullabaloo still swirling around the first-ever open enrollment period offered under the Affordable Care Act (ACA), also known as “Obamacare,” you can relax, Pollitz says. That highly-publicized open enrollment period that’s still grabbing headlines has virtually nothing to do with the one workers are now entering. (And the same is true for the Medicare open enrollment that’s also happening now).
Overall, Pollitz says, the federal health care law will have little, if any, impact on the insurance choices you and 150 million other American workers face this fall.
“For large employer plans, there aren’t really any new changes,” Pollitz said, adding that most of the significant consumer protections required under the law have already taken effect.
“This year has been pretty routine,” agreed Mike Brewer, president of Lockton Benefit Group, the world’s largest, privately-owned insurance agency.
Among the major consumer protections now included in all group plans: insurance companies may no longer deny coverage because of a preexisting condition; adult children can now be covered by their parents' health insurance policy until their 26th birthday, as long as that policy provides dependent coverage; and insurers are prohibited from applying lifetime caps on what they’ll pay.
But the Obama administration has delayed, until 2015, a provision that requires large employers to cap all of your out-of-pocket medical and prescription drug costs into one consolidated limit of $6,350 for individuals and $12,700 for families.
Until that provision takes effect, you could pay double that amount and even more, depending upon whether your company drug plan is administered separately from its medical plan and depending upon whether the drug plan now offered to you has any out-of-pocket limits.
Brewer says the amount you’ll pay for company-provided health insurance next year is likely to bring some good news in the form of smaller-than-usual rate increases.
“On average, what we’re seeing passed on to the employees is about an 8 percent increase,” he said, adding that’s “pretty good” compared with larger increases experienced during the past decade.
So where to begin? To help you get started, here are answers to eight questions about open enrollment, along with some links to resources.
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?
Usually at the end of the calendar year. Open enrollment 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 are my options?
That will depend on your employer’s offerings. But basically, you’ll need to know that health plans come in a variety of flavors and letters (think HMO, PPO, PSO). Those typically offered by employers include:
- HMO — Health Maintenance Organization plans. These managed care plans offer the best pricing and the least flexibility. They serve up lower prices 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 won’t be covered. The California Department of Managed Care regulates the state’s HMOs.
- PPO — Preferred Provider Organization plans. Like HMOs, these plans offer networks of doctors, hospitals and clinics that are deemed “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.
- POS — Point of Service 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.
- FSA — Flexible Spending Account. FSAs allow you to set aside pre-tax dollars for certain health and dependent-care needs. For example, the money can be used to pay for deductibles, prescription co-pays and other treatments not covered by your insurance. A big downside for many: Whatever you don't use by the end of your company's benefits year, you'll be forced to forfeit.
- HSA: Health Savings Account: HSAs are tax-preferred savings accounts available to those enrolled in high-deductible health plans. Employers and employees are allowed to contribute to them. HSAs allow you to set aside tax-free dollars to pay for routine, out-of-pocket health expenses. You also get an IRS 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, even if an employee changes jobs.
4. What other basic insurance terms should I know before I start comparing plans?
- Deductible: The annual amount a consumer must pay before the insurance company will pay any expenses. Deductibles vary by plan. Typically, the lower-premium plans have higher deductibles you must meet before your insurance carrier is obligated to pay.
- Premium: The monthly, fixed payment charged by the insurance company for your plan, whether or not you use any health care. If you fail to pay your premium, your insurance company may cancel your plan.
- Copayment: This is the fixed dollar amount you’ll pay under your plan for a particular medical service and for drug prescriptions. The insurer is responsible for the balance. The amount varies by plan. Copayments are most often used in HMOs and for services you receive from a network provider in a PPO.
- Coinsurance: This is the percent of charges you’re required to pay for a covered service after you’ve paid your full deductible. Your insurance pays the rest. The amount varies by plan.
Kaiser Health News provides a comprehensive glossary of health terms.
5. My existing coverage works well for me. Can't I just ignore all that gnarly paperwork?
Not a good idea. Plans change. So even if you’re happy with your existing plan, you’ll want to at least consider:
- Whether your doctor and/or hospital will remain in your network next year;
- Whether your prescription medicines are included in your plan's list of approved drugs;
- Whether your plan allows you to add dependents (spouse/children);
- How much you'll pay to add your dependents;
- Whether your plan covers treatments you may rely upon, such as chiropractic care or counseling.
6. What’s the most efficient way to compare the plans my employer offers?
The ACA makes the effort easier by requiring your company to provide you with two consumer-friendly forms:
- The Summary of Benefits and Coverage form 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 how the plan might work for you. Your company is required to provide you with the summary of your plan and is also required to provide you access to summaries of its other plans, upon request.
- The Uniform Glossary provides standardized definitions of common health insurance terms, such as "copayment" and "deductible."
The Centers for Medicare & Medicaid Services (CMS) offers more detail about the forms.
7. What is a “grandfathered” plan and what does it mean for me?
These are plans set up before the Affordable Care Act was enacted on March 23, 2010. If your company plan is grandfathered, it doesn't have to comply with some of the consumer protections required under the ACA — such as covering your adult children up to age 26. But those plans are fast disappearing, as they lose "grandfathered" status once they are materially changed.
8. Am I eligible for subsidized health care provided on Covered California, the state-run health care marketplace?
Probably not. While there’s nothing to stop you from buying a plan through Covered California and paying full price for it, those with qualified job-based health coverage aren’t eligible for the subsidies and cost sharing reserved for those who earn less than four times the federal poverty level.