The more than 150 million Americans with job-based health insurance should have an eye out for their workplace "open enrollment" period – that annual opportunity to review their policy and to make changes to their coverage for the following year.
"Employees should not let their insurance go on autopilot," says Larry Levitt, senior vice president with the Kaiser Family Foundation, a non-profit health policy organization that is not affiliated with Kaiser Permanente health plans. "They should look at options and review whether they're in the right plan."
And that's true, he says, even if this year your plan has worked well. Why? Because the one health insurance certainty you can count on is that plans change every year.
First off, premiums go up and this year is no exception, says Caroline Pearson, a vice president at the Washington, D.C.-based research and consulting firm, Avalere Health.
"We're projecting an increase of about 5 percent (for 2015)," Pearson says. "Costs were expected to go up about 6.5 percent but employers have made changes to benefit designs to keep premium increases down to 5 percent."
And one way employers are doing that is by increasing deductibles, which is the annual amount you owe for covered health care services before your plan begins to pay.
These days it's not uncommon to find low-premium plans with deductibles of up to $2,000 or more, per person. Pearson says about 40 percent of employers now offer policies with deductibles in excess of $1,000.
But these aren't necessarily bad plans. In fact, Levitt says, they may make great sense for you if you're healthy and don't use your insurance much and if you have the cash to cover the high deductible in the event you do get ill. And often, they're paired with a health savings account that allows you to pay-out-of-pocket costs with pre-tax dollars.
"You may end up saving money with a plan like that - but you want to go in with your eyes open," Levitt says.
The best way to do that is to closely review the policy's "Summary of Coverage and Benefits." Under the Affordable Care Act, health insurers and group health plans are required to provide consumers with this form, which describes in easy-to-understand language the benefits of the policy offered by the employer. It includes cost-sharing requirements, coverage limits and exceptions under the plan.
The federal health law also requires that, upon request, your employer provide you with access to summaries of all of its plan offerings, which makes comparison of plan choices easier.
Finally, 2015 marks the first year that larger employers with more than 100 workers must provide those who work more than 30 hours a week with health insurance, or pay a penalty to the federal government.
"So more workers may find themselves eligible for benefits," Levitt says, "and they'll be learning that in the coming weeks during open enrollment."
To help you get started, here are answers to six 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 acronyms (think HMO, PPO, HSA). Those your employer is most likely to offer 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.
- 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 many of 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 usually paired with 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: The percentage of the cost of medical services you’re required to pay beyond your annual deductible.
Kaiser Health News provides a comprehensive glossary of health terms.
5. My existing coverage works well for me. Can't I just ignore open enrollment?
Not a good idea - 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. I don't like my employer health plan. 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.