A couple of weeks ago, the health insurance industry "predicted" (i.e. threatened) big increases in health insurance premiums if the health care reform proposal currently before Congress becomes law. Apparently insurers aren't waiting—they're going ahead with steep price hikes no matter what the government does. The New York Times revealed that health insurance premiums for small businesses will rise an average of 15% in January—twice as much as last year. Some businesses are seeing much bigger price increases. One small business in Pennsylvania was hit with a rate increase of 160%. 160%! Bigger businesses have more bargaining power, but they will certainly see larger increases than last year as well.
Why It Matters to You
Open enrollment is coming. If you receive health insurance from your employer, expect to be faced with some unpleasant choices. With profits down, employers will have no choice but to pass along these higher costs to employees, by making you pay more toward your premiums, cutting back on the coverage you get, or both.
You might be asked the following questions and, if so, please learn from our fun times gaining the experience on how best to deal with them:
Am I Better Off With a Higher Deductible and/or Higher Co-Pay?
Co-payments, the out-of-pocket amount you pay to a doctor or hospital each time you go, are often flat amounts such as $25 per visit. A deductible is the amount you need to pay before your insurance kicks in. If you rarely get sick, either might be a good option.
Should I Take Advantage of a Health Savings Account or a Flexible Spending Account?
In a health savings account, the money contributed by you or your employer stays yours forever. The only money available is what has been contributed to the account, minus any that has been withdrawn (just like a normal savings account, except that the money can only be used for medical expenses).
In a flexible spending account, you contribute a set amount from every paycheck and the total of the entire year's contributions are available right from the start. On the other hand, you lose any unused money at the end of the year. Although this plan is more limiting, some people choose it because health savings accounts are only available to those with high deductible insurance, which in 2010 is defined as a deductible of at least $1,200 for a single person. It's likely that someone with insurance from an employer may not have a deductible as high as that. Additionally, flexible spending accounts provide pre-funding. That means that if you have arranged to deduct $100 per week from your paycheck and contribute it to your account, then you would have contributed $5,200 by the end of the year. Your employer, however, makes $5,200 available to you in January. So if you need, say, a $2,000 wisdom tooth operation in early February, the FSA can pay for it even though you haven't yet contributed the full amount to the fund. If you then quit your job in March, your employer is out of luck.
Keep in mind that employers don't necessarily offer both options, so you might not be given a choice between the two. Either way, both are good hedges against rising medical costs.
Can I Get Anything for Answering a Survey for "Wellness Incentives"?
Yes. You may get a discount this year for merely answering questions about your health and lifestyle habits, but expect your answers to be used to raise or lower your payments based on lifestyle choices (such as smoking or obesity) down the line.
What are Some Bad Options?
One thing to watch out for are low-cost plans that don't pay enough if you get sick. We've actually seen one that tops out at $1,500! That's enough to cover a sprained ankle...maybe. A plan like that should properly be called "indemnity insurance," incidentally. Some plans exclude pregnancy, which we've always thought made no sense. Even plans with a good level of overall coverage sometimes put unrealistically low limits on things like how much they will pay for hospital stays. This is why it's very important to actually read every word of your policy so you know precisely what your rights are. Insurance companies profit from not paying claims, so they will look for ways to avoid paying out.
The details of an insurance plan may seem deliberately designed to confuse you or put you to sleep. In fact, they probably are. But get yourself a strong cup of coffee and take the time to really understand your choices, because this year, the wrong decision could cost you.
A website we love, http://healthinsuranceinfo.net, can help you make sure you're getting the protection you're entitled to under the law. It was created by Georgetown University and has up-to-date info on insurance in all 50 states and the District of Columbia.