I pitched the story airing tonight at 10 because I realize choosing a health insurance plan can be so complicated and frustrating, many consumers just opt to not many any changes. You may stick with a plan that isn’t the best option, either financially or physically, for you and your family, simply because you don’t understand all of your options.
This year, you should shop around because there are a lot of changes. The average Houstonian will pay $537 more in out-of-pocket expenses next year.
Here are 5 terms you should familiarize yourself with before you go over the paperwork your employer gave you describing the plans being offered:
Premiums: I discovered pretty quickly when I polled some of you on Facebook that a lot of people don’t know the difference between deductibles, premiums and co-pays. Your premium is the amount your employer will take out of your paycheck each pay period to cover the cost of your health insurance.
Deductibles: the amount you pay out of your own pocket before your insurance begins picking up any of the costs of health care. For example, if you need to have gall bladder surgery, if the surgery costs $1200, you may have to pay 20% or $24o. The insurance company would pick up the remaining $960.
Co-Pays: the amount you pay for health-care services such as doctor visits and prescriptions drugs at the time the service is rendered, with the insurer paying the remaining costs. Co-pay plans require you to pay a specified dollar amount, usually somewhere around $20-$30 for each doctor visit and $10 for prescriptions.
Co-insurance: This is gaining popularity among employers and plans… so look for this word closely. Co-insurance means you are required to pay a certain percentage of a doctor’s visit or prescription. This means what you pay could be different each time you go to the doctor. If the physician charges $300 for your visit and the plan says your part is 30%, you would owe $90. The insurance company would pick up the remaining $210.
Look out for prescription co-insurance as well. For some drugs, you might be required to pay 30% of the actual cost, while others will cost you 50%- a far less attractive option than a flat co-pay regardless of how much the drug costs.
Flexible Spending Account: This is an account you can set up where your employer stashes pre-tax dollars that you can use for healthcare expenses. There are some changes to flexible spending accounts next year. In the past, you could use the money to buy over-the-counter drugs like Tylenol and cough syrup. Beginning in 2011, you need a precription for most over-the-counter items if you want to get reimbursed. This makes the account a little less useful; but the idea is that you don’t have to pay taxes on income you plan to use for healthcare-related expenses. Warning: If you don’t use all of the money in your account by the end of the year, you lose that money. It won’t carry over to the next year.
Here are some links to several articles with more good advice about choosing your healthcare plan for next year:
How to Maximize Savings During Open Enrollment
What to Expect this Open-enrollment Season
What Changes you Will See & When Due to Healthcare Reform