Rethink your health insurance options to trim costs

In Southern California, it's sometimes hard to tell that the seasons have changed, but here's a tip that it's fall: Many employers are beginning to send out the information you'll need to re-up for 2010 health insurance if you get your coverage through your job.

Time frames vary, but if your firm does its re-enrollment in the fall, you'll probably get the information on next year's costs and options by the beginning of November.

Now pay attention:

"History tells us that most workers . . . default to their previous year's benefits," says Sara Taylor, health and welfare strategy leader at benefits consulting firm Hewitt Associates in Lincolnshire, Ill. "In doing so, they may be losing out on a huge opportunity to save money and fully maximize the benefits available to them."

Hewitt estimates that the employee share of healthcare costs will rise 10% next year, from an average of $3,656 to $4,023, when higher premiums and co-pays are taken into account.

Those numbers will be news to many: According to a recent survey by the online health insurance site, close to 30% of consumers who get their health insurance through their employer are unaware of how much they spend each month.

"Knowing what you're paying can help you think through ways to keep those costs down," says Thomas Billet, a healthcare specialist in the Stamford, Conn., office of the benefits consulting firm Watson Wyatt.

Billet and Taylor recommend you print out this list of action items to think through before signing up for 2010 coverage. We'll present the information in two parts (the second will be published next week).

Spouses: Check the rates. Even if you've covered your spouse for years, you may find that employers are raising the rates to save themselves money, particularly if your spouse has coverage through his or her own workplace. You won't necessarily cut your husband or wife loose, but it might be time to look for a cheaper plan, if one is offered.

Certainly check whether a high-deductible plan you buy on your own for a family member could be cheaper than spousal or family coverage offered by the firm.

Dependents: Are you sure the child you're claiming as a dependent is still eligible? Many companies are now conducting audits to check on this. Consult your health insurance handbook to find out your company's rules, which are sometimes determined by the state. (California, for example, allows coverage for offspring age 18 to 24 only if they are full-time students.) Skirt the rules and you could find yourself paying the firm for back claims they covered -- or even, in the extreme, being dismissed for deceiving the company.

If employers have raised the cost of covering your eligible kids, it may be worth checking what you can find on your own, though typically the firm's costs will be lowest.

Pending layoffs? If layoffs seem like a real possibility, choosing the least expensive plan that meets your health needs is a good idea. If you lose your job, you'd have an easier time affording a lower-cost plan under the law known as COBRA. This lets you keep your health insurance, usually for 18 months after you're laid off, by paying 102% of the full cost -- your share and your employer's share, plus 2% to cover administrative costs. (Through Dec. 31, the government is paying 65% of the COBRA costs for many laid off employees, but there is no word yet on whether that will be extended into 2010.)

Doctors: Has your company made changes that will affect which doctors you can see? Check to see if your doctor is still in network and if your cost for visits has changed.

One big change, Billet says, is that many more employers have changed their coverage so that instead of a co-pay (say, $20 for an office visit) one now has to pay a percentage of the cost (a "coinsurance model"). At 20% coinsurance -- a typical rate -- a patient's share of a $150 doctor's office visit would go up to $30 from $20. But costs could quickly climb for more expensive visits and procedures.

Prescription drugs: A move by insurers and employers aimed at making sure patients take their medicines means your share of the cost may now be nothing for some drugs, such as ones to maintain blood pressure or lower cholesterol, especially if the drug is a generic. Skip a month, though, and the fee could be restored.

Other firms, according to Taylor, are taking away the set-fee co-pay and putting in a coinsurance rate of 20% to 30% per drug. This can sometimes result in a higher out-of-pocket share than some consumers paid previously.

Check to see whether the coverage level for the drugs you take has changed. If your share of the cost has gone up, ask your doctor about alternatives, such as generics or cheaper brand-name drugs.

And note: There are some new drugs on the market that your doctor may be prescribing, and those are likely to carry the highest co-pay. Ask if an older drug is an appropriate option.

Health assessments: Some firms give small bonuses, such as gift cards, to employees who fill out health questionnaires. Occasionally, the bonuses can be pretty big, including lower health insurance premiums available only to eligible employees who fill out those questionnaires.

Here's another piece of good news: Most health insurance experts expect firms that have offered wellness programs such as gyms to continue them. These perks can include incentives, such as gift cards to bookstores or coffee shops, for meeting certain goals such as losing weight or quitting smoking. You might not want to pass up that free cup of joe, given the higher price you'll likely be paying for healthcare.

Next week we'll examine several other options that are often overlooked: high deductible plans, health savings accounts and flexible spending accounts.