Navigating insurance choices

It used to be there were two things certain in life _ death and taxes. But soaring medical costs have added a third, at least for people with health insurance: higher premiums.

That will be painfully apparent to workers in the coming weeks, as companies present employees with the lineup of next year's health insurance options. Between now and the end of November, most companies that offer coverage will have their employees sign up for health insurance and other benefits during an annual ritual known as open enrollment. It's workers' opportunity to make changes to their benefits.

This year, you'll likely find fewer choices, leaner benefits and premiums that take a larger bite out of your paycheck.

Many workers look forward to benefits decisions about as much as they do to having their teeth drilled. But it's important to review the options and choose wisely.

"This impacts your disposable income," said John McDonnell, a principal with Progressive Benefit Solutions in Raleigh, N.C. "Good decisions are going to put more money in your pocket."

As you navigate open-enrollment season, here are 10 things to consider:

Your tab will be higher: The cost of employer-sponsored health insurance has surged 73 percent since 2000, according to the Kaiser Family Foundation and Health Research and Educational Trust, which last week released its annual health benefits survey.

In response, most employers continue to raise premiums, co-payments, deductibles and limits on out-of-pocket payments.

Premiums rose an average of 9.2 percent during 2005, pushing the average annual cost of family coverage to $10,880, Kaiser reports. On average, employees paid $2,712 of that.

This year will be no different _ industry analysts are predicting rate increases of 10 percent or more.

A year's commitment: In most cases, the coverage you pick during open enrollment is what you'll have for the coming year.

Fewer options: More employers, even large ones that once offered plans from several different insurers, are starting to give all their business to a single carrier that may provide multiple types of coverage. Even if your company offers only one insurer, you may have a choice of plans A, B and C, which offer different levels of coverage. Going with one carrier helps employers get better deals, said Scott Riley, a senior health-care consultant with Aon Consulting in Raleigh.

Smaller groups are inherently riskier to insure because there's a greater chance a few large claims will eat up the insurer's profits, Riley said. If carriers have to divvy up an account with competitors, they'll charge more to ensure they make enough.

Determining your tolerance for risk: With some companies, there's just one heath plan option: whatever your employer chooses. But most larger companies offer a range of health plan designs. Some provide rich coverage but take a big bite out of your paycheck. Others require a lower premium contribution but expect you to pay more when you get care. If you're shelling out for top-shelf coverage but only see your doctor a couple of times a year, it's like buying season tickets and showing up for one or two games.

If you don't mind prepaying for health care that you're probably not going to use and want the security of knowing you won't face large bills, stick with the most generous plan you can afford (it'll be more costly for both you and your employer). But if you want to save on premiums and can accept paying more when you do need care, take a leaner plan.

Higher out-of-pocket costs still have limits: Many people, even those who see a doctor only once or twice a year, are sure that choosing leaner coverage will bankrupt them. But in most cases, the insurer places an annual cap (usually a few thousand dollars) on what the member can be asked to pay out of pocket.

Find out what your cap (known as an annual out-of-pocket maximum or co-insurance limit) is by looking on the plan's summary of benefits or asking your human resources department. Add your annual deductible to whatever the limit is. That's the most you'll pay in a year, even if you ring up six-figure bills.

Some give bonuses for healthful habits: Healthy people are less costly to cover than people who are overweight, inactive or chronically ill. More employers are emphasizing wellness as a long-term strategy for managing their health-care costs. Some companies offer a discount off the employee share of the premium if workers sign up for programs that help them learn to eat well and get more exercise. A few give cash incentives to encourage healthful lifestyles. IBM, for example, has given cash bonuses to employees who complete an exercise challenge.

Are your providers in the network? This is especially important if your employer is changing health plans. Make sure the doctors, urgent-care clinics or hospitals you can't live without are available to you before signing up for something new.

It doesn't hurt to ask your company to lobby the carrier to add specific providers, though there are no guarantees. However, health benefits consultants say the major carriers' provider networks are remarkably similar nowadays, which means changing plans should create fewer disruptions.

Not bothering with forms: If you make no changes, most companies will automatically enroll you in whatever you chose last year. If the plans this year are different than the ones last year, you'll probably be enrolled in the option that most closely matches what you had before. Double-check with your human resources department to see how it handles your situation if you sit out open enrollment.

Dental, disability ... : Open enrollment isn't just about health coverage. It's also the time to sign up for voluntary benefits such as insurance for dental, vision, short-term disability, supplemental life.

Consider your personal situation. Has anything changed? You may want to bump up your life insurance. Check with an insurance agent to see that you're getting the best price.

You're not alone: Many people feel overwhelmed and unqualified to make smart decisions about benefits. Some companies and major health insurers offer online tools to help you pick coverage that best meets your needs. And, experts say, read any written materials your employer distributes.

(Distributed by Scripps Howard News Service, http://www.shns.com.)

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