Take some time to choose your health plan | The Honolulu Advertiser

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Take some time to choose your health plan | The Honolulu Advertiser | Hawaii's Newspaper

Posted on: Thursday, October 12, 2006

Take some time to choose your health plan

By Sandra Block
USA Today

FLEX ACCOUNTS

With health savings accounts still slow to catch on, healthcare flexible spending accounts remain the most effective way to pay for expenses your insurance doesn't cover. Flex accounts let you use pretax dollars to pay deductibles, co-payments and other unreimbursed medical expenses.

In past years, the biggest drawback to flex accounts was a "use it or lose it" provision. It required workers to spend all the money in their accounts by Dec. 31 or forfeit the balance. To avoid forfeiting money, workers who sign up for these accounts tend to low-ball their estimates.

In May 2005, though, the Treasury Department offered some relief. It said employers could give workers until March 15 to spend money left over from the previous year.

You eat lots of whole grains, run triathlons and look terrific in a tank top. The guy in the cubicle next to you eats doughnuts for breakfast and works up a sweat walking to the elevator. Clearly, your health insurance needs are not the same.

Unfortunately, though, when it's time to enroll in their company's health insurance, many workers don't take the time to select a plan that suits their lifestyle, says Tom Billet, senior benefits consultant at Watson Wyatt. Some automatically stick with the plan they've always used, without considering whether their personal circumstances, or the terms of their coverage, have changed.

Others do nothing and are automatically enrolled in their employer's default option. When that happens, employers often enroll the worker in a plan with a high deductible. Some companies won't cover employees who fail to choose a plan.

"The wrong decision can cost people several hundred, or perhaps thousands, of dollars," Billet says.

It's worth spending an hour or two reviewing the details of your employer's health insurance options. With enrollment season approaching, here's what you can expect to see:

Higher costs. Health insurance costs rose 7.7 percent this year, according to the Kaiser Family Foundation. That's slower than in past years but still twice the rate of inflation. Companies are likely to continue to pass on some or all of the increases in the form of higher premiums, deductibles and co-payments, says Sara Taylor, national annual enrollment leader for Hewitt Associates, a benefits consulting firm.

You can usually reduce your premiums by accepting a higher deductible. But before you opt for that, make sure you have the discipline to put money aside for your out-of-pocket costs, says Martha Priddy Patterson, director of employee benefits policy at Deloitte Consulting. Even healthy people can have accidents or serious illnesses.

High-deductible plans, but not necessarily health savings accounts. Health savings accounts allow workers in high-deductible plans to use pretax dollars to pay their deductibles and other medical costs. Money that isn't spent can be rolled over for future years.

But employers have been slow to offer these plans. Only 7 percent of employers offered the accounts this year, unchanged from 2005, according to Kaiser.

One drawback for employers is the mandatory deductible for a plan with a savings account, Billet says. In 2006, plans had to have a deductible of at least $1,050 for singles and $2,100 for families.

Some companies believe their workers won't sign up for a plan with such a large deductible, Billet says.

Dependent audits. Companies are increasingly checking to make sure workers' dependents qualify for health insurance coverage. You may be asked to provide marriage, birth or adoption certificates to prove that your dependents are eligible.

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