At Work

How to select your health benefits plan for next year

For many people selecting a health plan is a scary and daunting task. What if I get it wrong, what if I can’t afford my health care bills? The tendency is to over-estimate the risk and to over insure. Here are some tips you may want to consider.

  1. First get a good estimate of your actual past spending (total cost) on health care. Look at the last several years. Also consider if any insured person has a chronic or serious health condition.
  2. DO NOT BASE YOUR CHOICE ON PREMIUM ALONE This means choosing too high or too low. The name of the game is to minimize your total risk, not just the premiums you pay or your out-of-pocket costs. Remember, premiums are a guaranteed expense; most health care is not.
  3. After you estimate you actually health care use, compare your estimated out-of-pocket costs with premiums among plan options. Your worst case scenario will probably be the lowest cost plan with the highest OOP, but remember your total OOP costs are limited by law. For 2017 a family is limited to about $14,000. Decide how much financial risk you can absorb in a year. 
  4. Determine in advance how important it is to have a free choice of providers and not be limited to in-network physicians and hospitals, etc. Also, find out whether you can use OON providers at all and what the lower reimbursement percentage may be. Keep in mind that if you use a OON provider, that expense will not count toward your OOP maximum.
  5. Check in advance directly with your doctors to see if he or she participates in the specific health plan you are selecting, not just with the insurance company; there is a big difference!
  6. Maximize any tax advantage options you may have such as a flexible spending account (FSA) or health savings account (HSA).
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