Most Americans renew with the same employer-based health insurance plan year after year, but if you’re not checking the fine print before you sign-up for your health insurance plan this year, you could be whomped by a ton of new charges and exclusions that you’re not aware of. Employers squeezed by the economic downturn are turning to lower-cost health insurance plans, and while you may be aware of some of the more obvious changes in your employer’s health insurance plan like higher health insurance premiums and deductibles, here are 5 details in the fine print which can screw you if you’re not careful:
Co-Insurance Instead of Co-Pays: Some people use the terms “co-pays” and “co-insurance” interchangeably but they are not the same thing at all.
A copay is a flat fee that a person pays for healthcare services, in addition to what the insurance covers, usually $10 or $20. For example, HMOs often require a $10 “co-payment” for each doctor’s visit, regardless of the type or level of services provided during the visit.
Co-insurance refers to the amount that a person is responsible to pay for healthcare services, after a deductible has been paid. Co-insurance is often specified by a percentage. For example, if a policy has a 20% co-insurance, and you undergo a procedure which costs $100, the policy will cover $80, and you will be responsible for $20.
Okay, so why does this matter? As many employers are feeling the squeeze from rising health insurance costs for employees, more and more are switching to lower-cost plans which feature co-insurance instead of copays.
The difference isn’t immediately apparent to employees, but whoa! If you have a major medical bill, it makes a big difference. If you have a doctor’s visit which costs $100, the difference between a $20 copay and 20% coinsurance may be nonexistent, but if you have to have a major medical procedure, hospital stays, etc., the difference can be huge. Remember, 20% doesn’t sound like much, until it’s 20% of a big number like $100,000, and that’s still after deductibles.
Getting Rid of Health Savings Account (HSA) Contributions: If your employer’s health insurance insurance is a high-deductible plan, your employer may offer a health savings account (HSA) to go along with it to help pay for deductibles and other out-of-pocket healthcare expenses. In the past, employers have often made contributions to employee HSAs to help them pay for their healthcare, but many employers are now eliminating those contributions.
If you’ve never touched your HSA in the past, this may not seem like a big deal, but if you’ve ever had a major medical expense such as a pregnancy and delivery, major surgery or other hospitalization, you know how much it can cost you to meet the deductible of a high-deductible health insurance plan. If your employer is eliminating HSA contributions or matching, better start saving for that health insurance deductible now!
Charges For Dependents: Yep, you may be used to paying a set premium for your family’s health insurance plan, but many employers are now instituting separate charges for each dependent on your plan. If you have been covering your spouse, children, step-children, etc. under your employer’s health insurance plan, you may need to step back and start counting heads now to figure out exactly how much you’ll be paying in monthly premiums to cover everyone.
In particular, if you are a parent who will be adding an adult child under the age of 26 to your health insurance plan (which is now allowed under healthcare reform), it’s likely that you will be paying for that privilege. It may be worth it, especially if you have an adult child with a pre-existing condition who can’t get affordable health insurance anywhere else, but be aware that it will cost you.
Spouses No Longer An Automatic Addition to Health Insurance: If your spouse’s employer offers a heath insurance plan as well, your employer may now be charing for you to add your spouse to their health insurance plan and in some cases, may not allow you to add your spouse to your plan at all. Like with dependents, employers are trying anything they can to shed as many folks (and their medical expenses) as possible from their health insurance plans. If your spouse’s employer offers health insurance, we strongly suggest that you sit down and review the differences in medical coverage offered and take a look at whether more comprehensive coverage offered by one employer outweighs any charges they may require. More importantly, if your employer is no longer allowing spouses who may have other health insurance coverage options, you and your spouse don’t want to miss the possibility of signing up for the coverage they are eligible for.
Changes To Prescription Drug Formularies: If you have a chronic condition which requires regular prescription drug treatment, we strongly suggest that you check your health insurance plans formulary for any changes that may affect you. Formularies are the lists of presciption drugs covered by a health insurance plan, and also include the copayments required in connection with a particular prescription drug. Formularies can change year to year, so if you take a particular prescription drug with any regularity, make sure that it hasn’t been dropped from your health insurance plan’s formulary or been upped to a drug tier with a higher co-pay. If it has, it would be a good idea to increase your contribution to your Flexible Spending Account (FSA) so you can use tax-free money to help pay for your prescription drug(s).
Have you taken a look at your open enrollment package yet? Tell us about it!
- Open Enrollment Season Is Coming! Can You Move To a More Affordable Health Insurance Plan?
- Health Insurance: Do You Know the Difference Between Copays and Co-insurance? The Difference Can Screw You.
- Open Enrollment Season: Have You Started Reviewing Your Medicare Part D Options?
- Medicare Advantage: Are You Prepared For A Shortened Open Enrollment Season This Year?
- Open Enrollment Season: Should You Join Your Spouse’s Health Insurance Plan? Maybe Not…