SOUTHERN CALIFORNIA JOB MARKET : PART THREE: EXTRAS THAT COUNT : Weighing the Benefits : Look for Health, Life Insurance Plans That Suit Your Needs

Rose and Paul Hughes of Petaluma could find new jobs if they wanted to, but they won’t under the conditions they would have to accept. The problem: No employer’s medical insurance would cover treatment of their 8-year-old son’s leukemia because clauses in the policies exclude “pre-existing conditions.”

“When we started asking questions, we realized no one would insure my son,” Rose Hughes said. Her husband has remained self-employed while she has started a nonprofit foundation for the parents of children with cancer.

Their situation illustrates that changing jobs isn’t always a simple matter when it comes to medical coverage and life insurance. A new employer’s policy may not fit your family’s needs, life style or budget--and any one of those is reason enough to reconsider whether to take a new job.

As medical insurance costs rise, many companies are requiring employees to pay higher deductibles or premiums. Others may have payment plans that could mean considerable financial risk to you.

These and other insurance concerns have become important labor-management issues. In recent strikes, nurses in San Francisco and employees of Pacific Bell and other regional phone companies were resisting demands that they bear a greater share of health insurance costs.

Nonetheless, many workers still take their health and life insurance plans for granted, never checking into what is covered and what it will cost.

“A lot of people don’t look at their choices carefully enough,” said Lois Salisbury of Health Access, a statewide coalition of labor, consumer and other groups working to promote affordable health care.

Here are some key questions you should ask about medical coverage and life insurance provided by a prospective employer, or the one you already have:

Health Insurance

* How much will the plan cost? How much financial risk must you bear?

Fewer and fewer companies are willing to pay all of an employee’s medical insurance bill, according to Hewitt Associates, an employee benefits consulting firm. More and more, workers are required to chip in, usually through one of four financial arrangements: 1) You pick up part of the premium costs; 2) you pay a deductible; 3) co-payments, which usually means you pay a set amount each time you see a doctor, or 4) coinsurance, by which you pay a fixed percentage of each bill.

Each option carries vastly different financial ramifications. Coinsurance, by far, is potentially the most risky. If you are liable for, say, 20% of all expenses, a $200,000 or $300,000 medical bill for heart bypass surgery could sock you with a $40,000 debt, said Jim Shultz, a policy analyst at Consumers Union, publisher of Consumer Reports magazine. Under such a plan, find out if there is a limit to your financial risk, he suggests.

High co-payments also could be a problem because cost might deter you from seeking medical attention when you really need it, Shultz added. “You may not bring your kid in for a fever when you really ought to. So look for low co-payments,” he suggested.

Also, find out whether the employer is seeking to reduce its contributions to the medical plan, Shultz adds.

* Does the employer offer a choice of a preferred-provider network or a health maintenance organization?

Historically, medical coverage has been provided under an “indemnity” plan by which you choose your doctors, hospitals and other services. Because of rising costs, more and more employers are contracting with networks of preferred doctors and hospitals--called preferred provider organizations, or PPOs--which give those firms’ employees lower rates in exchange for the promise of volume business. Such an arrangement can mean lower deductibles or co-payments or other savings for you.

For the same reason, many employers offer membership in a health maintenance organization, or HMO, which can provide similar savings. The drawback to an HMO, however, is a limited selection of providers. If you already have a favorite doctor or hospital, find out if they are in the employer’s PPO network or HMO.

* Does the employer offer flexibility in the type of plan you can have?

Most employers don’t allow room for individual negotiation on a health plan, but a growing number of firms are setting up flexible benefit plans--also known as cafeteria plans--that generally allow you to choose the types and amounts of benefits and coverages you want, often based on costs and other factors. For example, if you are already covered by your spouse’s medical policy, you may opt for less medical coverage and more dental coverage or life insurance.

You also may have choices in deductibles and premiums--for example, you may be able to opt for a higher deductible in exchange for a lower premium. If you are young, single and healthy, you probably will be better off with higher deductibles because you won’t need to see a doctor very often, said Duane C. Bollert, manager of the Los Angeles office of Hewitt Associates.

But be wary of flexible plans because some might exclude or reduce certain types of coverage, such as pediatric care, that you might find important, Consumers Union’s Shultz says.

Some employers offer policies with tiered costs. If you are single, the cost is lower than if you are married and have children. In some rare cases, companies might also offer discounts to nonsmokers, nondrinkers and others perceived as better-than-average risks.

Some companies also offer employees incentives for keeping costs down. An Akron, Ohio, manufacturer, for example, rebates two-thirds of a worker’s premiums if he or she doesn’t submit a claim after a year.

* Does the policy impose pre-existing conditions or waiting periods?

To weed out those perceived to be high risks, many plans do not cover pre-existing conditions such as cancer or heart ailments. “It’s a very big problem,” Shultz of Consumers Union said. “A lot of workers who have pre-existing conditions will not leave a job because they can’t get coverage through a new employer.”

Other plans may impose a waiting period, usually six months, for joining the medical plan. If you forget to sign up after the waiting period, some companies may exclude you from the plan until the next enrollment period, according to Hewitt Associates.

Find out about such limitations and explore alternatives to waiting periods. You might be able to get reduced coverage in the interim. You may be able to continue coverage from your old employer, although that could be expensive, since many companies no longer subsidize medical coverage for former employees, Bollert said.

* What supplemental coverages are offered?

Most companies offer dental coverage as well as standard medical, and a few also offer coverage of prescription drugs, vision, hearing, psychiatric and preventive care, and alternative treatments such as acupuncture. Long-term care insurance, which covers nursing home expenses, is rarely offered. Some plans also may not cover basic checkups and physical examinations.

If one or more of these types of coverages are important to you, find out if your employer offers them and how much extra they will cost.

* Does the employer offer retiree coverage?

Fortunately, most large companies continue medical coverage for their retirees. Such policies generally are worthwhile because most have “catastrophic” coverage to supplement Medicare, Hewitt Associates explained.

“For an older person--say, 50 and up--retiree benefits might make or break a decision to switch jobs,” Hewitt advises.

With costs of providing insurance on the rise, however, many companies are trying to reduce retirees’ medical coverage. Some are requiring that retired workers pay the same deductibles and co-payments as active employees. Others are maintaining coverage for those nearing retirement but reducing it for the future.

Life Insurance

* How does the plan fit your family needs? How much will it cost?

Life insurance is as common an employee benefit as health coverage among major employers, Hewitt Associates says. Most basic plans provide term insurance, which provides a death benefit but no savings component. Most consumer advocates consider term insurance to be the best value.

Generally, life insurance is either company-paid or employee-paid. Usually, the death benefit in either case will be one or two times the annual pay of a salaried worker, or between $10,000 and $20,000 for an hourly employee, Bollert said. Most companies also allow employees the option of buying extra coverage.

If you have no dependents, or you are older and all your children are working and fending for themselves, you probably don’t need any life insurance. So if coverage is voluntary--perhaps offered through a flexible-benefits plan--see if you can decline life insurance and save money.

On the other hand, if you have many dependents, see if the company will allow you to increase your coverage.

For those with large families, some companies are offering new products, such as so-called group universal life, that provide a savings component in addition to death benefits. Some companies also allow you to buy insurance for your dependents.

If you are older, in many cases the premiums will be higher. For example, in a typical plan, the premium may be 10 cents or less for each $1,000 of coverage if you are age 35, but $1 if you are age 60, Bollert says. If you are older and the charges are higher, it may be worthwhile to double-check with a personal carrier to see if you can’t get cheaper insurance, he says.

* Does the employer offer long-term disability coverage?

Most major industrial employers sponsor this coverage for salaried employees but impose certain restrictions, such as longer waiting periods for hourly employees, presumably because of higher turnover, Hewitt Associates says. Generally, this type of coverage is worthwhile, although few employees ever make use of it.