Reprinted from Fidelity Viewpoints – 09/25/2017
The world of health care has dramatically changed over the past decade. It’s now a “consumer-driven” system where much of the responsibility for figuring out how to use it efficiently is squarely on your shoulders.
“Many employers are now offering new choices that you may not have heard about,” says Lee Belniak, vice president of benefits consulting at Fidelity Investments. “So, it’s important to use the resources from your employer to compare your options.”
If you’re a full-time employee, you likely receive health and other insurance options as well as retirement benefits from your employer. According to the Bureau of Labor Statistics, benefits increase workers’ overall compensation by 30% to 37% on average.1
1. Build your health care budget
With the cost of health care and health insurance skyrocketing, it has become increasingly challenging for employers to maintain their benefits offerings. In 2017 employees paid some 43% of their total health care tab (employers paid the remaining amounts). That figure includes health insurance premiums for a family of over $7,000 and about $4,500 in a variety of out-of-pocket costs for the average American family.2
Taking a look at your entire household’s spending may help you get your arms around your health care budget. Knowing your facts can help you make better decisions during annual enrollment. To start your budget, find your actual out-of-pocket costs:
How much did you pay in premiums last year and this year?
Start by looking at the YTD (year-to-date) section of your final 2015 pay stub and your current paycheck.
How many trips to the doctor, hospital, or emergency room did you or family members make?
Find the bills that you had to pay and tally up those costs.
What else did you spend out of pocket for health care last year?
Many health plans have websites where you can log in to see your health care activity and how much you may have spent out of pocket.
Add up all of your health care dollars from this year, then estimate if you will spend more or less in 2018. That should help you decide which plan can work best for you and your family.
Take time to review your entire benefits package
2. Find creative ways to save
Not only is the traditional health system changing rapidly, but new locations for you to receive health services seem to be popping up every day.
Look for new and creative choices in your local area or online. When you look at how and where you’ve been spending your health dollars, you may be surprised to find that there are new choices becoming available. Consider these options:
- Using walk-in clinics or urgent care offices on main streets or shopping malls
- Getting flu shots at your employer, local pharmacy, or town hall
- Buying store-brand versions of over-the-counter drugs such as aspirin or vitamins
- Asking your doctor to replace brand-name prescriptions with generics
- Comparing the price of your spouse or partner’s health plan with the cost of your plan
Use employer tools to help choose the best plan option for you and your family based on your needs. Owning your health and wellness decisions can indeed be complicated. The good news is that your employer may provide tools and resources to help make the selection process easier. Among them:
- Online comparison tools and calculators. You’ll likely be able to compare plan options, features, and pricing. With some calculators, you can enter your personal information to get a list of choices and prices that best fit your situation. If you like to compare things visually, look for at-a-glance charts and tables that summarize your plan options.
- Paper or online statements with your benefits summary. These documents can help you see where you spent your health dollars. Use them to set up your budget and find areas to save.
Your HR or benefits resources. Search your HR intranet to get answers to your questions during annual enrollment. You may also have access to a benefits fair or various “lunch and learn” gatherings, team meetings, or webinars to discuss choosing your benefits. Take advantage of everything offered.
3. Compare different plans
Your employer may have several different types of plans to choose from, and the features and prices can vary significantly. “You really have to look at the differences in insurance premiums and deductible levels. Compare your PPO monthly premium cost to other options like an HDHP with a health savings account and see what makes sense for your situation,” recommends Terri Sharp, an HR Consultant based in Oklahoma City. “To help your decision-making process, conduct ‘what if’ scenarios with cost estimators and other online health transparency tools designed to help you determine how to come out ahead. After all, it’s your money.”
Compare the features, benefits, rules, restrictions, and costs from plans such as:
- A high deductible health plan (HDHP) with a health savings account (HSA). As you might guess from the name, this plan carries high out-of-pocket deductible costs to you, but the monthly premiums are typically lower. Many HDHPs are offered along with an individual HSA for health-related expenses. You can choose to set one up and fund it through your payroll on a pretax basis.
- A health maintenance organization (HMO) plan. This type of health care plan may offer lower out-of-pocket costs, but it comes with some specific restrictions. Most HMOs generally require the use of network providers, and typically require a primary care physician to coordinate your health care services, including providing referrals to see other doctors or specialists.
- A preferred provider organization (PPO) plan. In this plan, you’ll usually pay more than an HMO, but you can choose your own doctors and specialists. It is more cost effective to choose doctors in your network and you should expect to pay directly when you go out of network.
There are lots of choices in health plans, and your choices can change from year to year. When choosing your plan, consider your personal situation—your finances, family health status, and proximity to frequently used medical services. Annual enrollment is the time to reassess which plan best meets your family’s current needs.
4. Consider new options at various stages of your life
Just like in the board game “The Game of Life®,” your path will probably take some interesting and unexpected turns. As you move through various stages, take note of where you are and choose your plan for today. Don’t forget to look at all the other valuable benefits from your employer. For example, it might be a good time to consider buying more life or disability insurance. Take time to review your options and take advantage of additional health and wellness benefits.
Where are you on your life’s path? Weigh all your options before you choose.
Single? Consider looking for a low-cost plan with a good network; or, if you are in good health, try using an HDHP with an HSA to get a head start saving for future health care expenses.
Adding a spouse or partner? Take a fresh look at all choices. You may see a big jump in costs going from single health care coverage to a “plus 1.” Coordinate access to your spouse’s doctors and other health services that work for both of you.
Having your first baby? You’ll need “family coverage.” Make sure your pediatrician accepts the plan you’re looking at. Weigh an HDHP with an HSA against HMO or PPO options. If you anticipate having to pay a lot for day care next year, consider contributing to a Dependent Care Flexible Spending Account (FSA), if your employer makes it available.
Have young children? With frequent visits to the pediatrician and other family health care needs, choose the plan that your doctors take and that offers you flexibility at an affordable cost. For added protection for your family, ask your employer about supplemental life and disability insurance options.
Kids in college (and under age 26)? Do the math! Is it less expensive to keep older children on your family plan or to access a student health plan at their college?
Newly divorced? If you are now on your own due to divorce or death of your spouse or partner, you’ll want to look at the best options for you to enroll in single coverage. You may find an HDHP with an HSA an effective way to pay for health care plus save for future health care expenses.
About to retire? Talk to your employer about any health plans for Medicare-age workers or retirees. There may be options for you to consider.
Beyond health plans: Review your retirement savings too
Annual enrollment is generally focused on selecting the best health plan for you and your family. But while you’re making important decisions about your health, take a few extra minutes to give your retirement savings plan an annual checkup too.
- Are you saving enough for the lifestyle you want in retirement?
- Can you increase your contributions by 1% in 2018?
- Can you save enough to get the full match from your employer?
- Are your beneficiary designations up to date?
It’s important to remember that your health decisions and retirement savings plans are closely related. If you can find savings in your health dollars, you may be able to direct a little more to retirement.
5. Make decisions before the deadline
This fall your employer will give you some time to review your current benefits, compare any new options and benefits, and figure out how much they’ll cost you next year. These few weeks are often referred to as annual enrollment since it’s the one time during the year you can make changes to your benefits (unless you experience a qualifying life event such as having a child, divorce, or death of a spouse ).
It’s critical that you don’t miss your annual enrollment deadline. Your benefits are too important to your financial wellness. You may see significant changes year over year. One thing you can usually count on is prices going up every year for many goods and services that you use on a regular basis. Health care is no different. You can expect costs to be higher—either from premium increases or your out-of-pocket spending. And, you may find new and different options to help you save some money.
Tip: To help make it easier to choose the health plan coverage that’s right for you, Belniak advises, “Boil it down to 5 major areas of consideration: premiums, potential out of pocket costs, type of care that is covered, the network of doctors, and potential tax savings. If you are able to check off all of those categories as right for you, you may have a good fit.”
2018 Benefit Enrollment Tips
- Build your health care budget, starting with last year’s out-of-pocket costs.
- Find creative ways to save and look for new locations for you to receive health services.
- Compare different plans and know the differences in insurance premiums and deductible levels.
- Consider adding new benefits at various stages of your life.
- Make your health and financial decisions before the enrollment deadline.