The open enrollment period for your health insurance plan comes
once every year, usually during the fall. The corresponding
paperwork typically generates as much enthusiasm as yearly tax
forms. But don't be tempted to just put a checkmark next to your
current plan. With so many insurers and employers raising health
insurance premiums and scaling back benefits, you need to know how
your health plan stacks up against any others offered to you at
After all, you're stuck with your decision for another year. For
example, if you don't know that your plan is reducing coverage for
your brand-name prescription allergy drug, you'll be in for a bad
surprise when the pharmacist asks you to hand over $180 for 100
tablets rather than your usual $25 co-payment. You won't be able to
go back to your benefits administrator and ask to switch to a plan
that will pay for your prescription.
Keep in mind that the Patient Protection and Affordable Care Act
includes these rules affecting health plans:include:
• You can keep your adult children on your health
plan until they are age 26.
• Plans cannot exclude coverage for pre-existing
conditions for children under age 19.
• Lifetime limits on health insurance coverage are
• Caps on annual coverage are being phased out.
• A wide range of preventive care for men, women and
children is fully covered, which means you pay nothing out of
pocket - no co-pay or deductible - when you receive those services.
For more details, see
6 health insurance freebies for pregnant women and
The following information will help you make the best decision
during the open enrollment process.
What types of changes can I make to my health insurance
plan during open enrollment?
If you're not currently enrolled in a health insurance plan, you
may enroll at this time. If you are enrolled, you may switch plans
(if this an option), correct inaccurate information, or add
eligible dependents, such as a spouse and children not previously
Which is more important when choosing a plan: cheaper
premiums or less expensive co-payments?
It depends on your situation. If you're young and healthy, you
can opt for lower premiums and higher co-pays and gamble that you
won't visit the doctor much. But if you're older, have a chronic
health condition, or have young children who make frequent visits
to the doctor, you're probably better off with higher premiums and
lower co-pays. You also have to weigh the value of your health
insurance plan versus price. If you go with a cheap health plan but
it doesn't pay for the benefits you need, you are not getting good
value for your health insurance dollars.
How to buy the worst health insurance plan ever: 7
scenarios to avoid
I'm paying for what?!
The cost of group health insurance is often fueled by
state-imposed health insurance mandates
. These are benefits that must be offered in group health plans,
whether workers want them or not (except for "self-insured"
employers). Mandated benefits can include coverage for maternity,
drug dependency, autism and many other conditions. Some mandates
require coverage for certain types of providers, such as
chiropractors or dieticians.
Can I switch health insurance plans without exclusions
for pre-existing conditions?
Yes. Employer-sponsored group health plans cannot exclude
coverage for pre-existing conditions if you maintained health
insurance coverage for the 12 months, with no coverage lapses of 63
days or more. And health plans that cover maternity care cannot
exclude coverage for pregnancy, regardless of whether you
maintained health insurance coverage in the last year. Read about
the HIPAA law: Your rights to health insurance
What's better, an HMO, POS or PPO? And what are
Health plans come in several varieties, including traditional
indemnity fee-for-service (FFS) plans, health maintenance
organizations (HMOs), point- of-service (POS) plans, and preferred
provider organizations (PPOs). Consider each plan's features before
HMOs are generally the least expensive, but also the least
flexible of all the health insurance plans. They require that you
select a primary care physician and obtain pre-authorizations
before seeing a specialist, going to the hospital (except in
emergencies) or having certain medical procedures. POS plans are
more flexible than HMOs, but they also require you to select a
primary care physician.
PPOs give policyholders a financial incentive - in the form of
reasonable co-payments - to stay within the group's network of
practitioners, but the plans usually allow visits to out-of-network
specialists without pre-approval.
What is a drug formulary and what are pharmacy benefit
A formulary is the list of medications for which a health
insurance plan pays. Most health plans that pay for prescription
drug benefits have pharmacy benefit tiers that group certain
medications together for pricing purposes. Brand-name drugs that
are usually in the top tier are the most expensive, while generic
medications are in the lower tiers and are the least expensive.
Your prescription drug co-pay for a medication in the lowest tier
may range from $5 to $10, while your co-pay for drugs in the
highest tier may range from $25 to $50. Most health plans have
three or four pharmacy benefit tiers, but some have several
What are FSAs, HSAs and HRAs?
These are tax-advantaged financial accounts you can use for
out-of-pocket medical expenses, such as deductibles, co-payments or
medical services that aren't covered by your plan.
A flexible spending account, or FSA, lets you set aside pre-tax
dollars for out-of-pocket health and dependent care costs. You
decide each year how much money to put in the account through
pre-tax payroll deductions. Any money you don't use by the end of
the year is returned to your employer.
A health savings account (HSA) is paired with a high deductible
health plan. Each year you elect how much to save from pre-tax
dollars up to a certain limit, established by the IRS. In 2012 you
can save up to $3,100 for yourself or $6,250 for a family in an
HSA. Any money you don't use one year rolls over to the next and
earns interest. The account is portable - you keep the money, even
if you change jobs or health plans. Before age 65, you can spend
the money only on medical expenses, or you pay income taxes, plus a
10 percent penalty, on withdrawals.
A health reimbursement arrangement (HRA) reimburses you for
qualified medical expenses up to a certain limit. The employer
contributes to and owns the account, and unused money can roll over
to the next year.
How can I judge the quality of competing health insurance
The most important factors are usually price and whether the
family's doctors participate in the plan's network (if there is a
network). However, there are other criteria to use.
Accreditation groups, such as the National Committee for Quality
Assurance, measure plans using a variety of quality standards.
Ratings companies, such as Standard and Poor's, A.M. Best and
Moody's, give you a picture of a health insurer's financial
strength. "Report cards" published by consumer groups, independent
websites, and your state insurance department are good sources of
consumer-satisfaction ratings. Here's how to judge the quality of a
Who can help me if I have questions?
Your employer's human resources director or benefits
administrator as well as insurance company customer service
departments can answer most of your questions.
What about life insurance through work?
The open enrollment period is also your opportunity to add group
life insurance to your benefits. Group life is the cheapest way to
secure life insurance, but a group policy typically provides only a
small death benefit, and the coverage disappears if you leave or
lose your job. That's why it's best to view group life insurance as
supplement coverage to life insurance that you buy on your own.