Financial Tips

Life and Credit : Picking a Heathcare Plan

It's Open Enrollment Season: Check Your Health Care Coverage and Your Budget

The folder of info is really thick. The health care options are really confusing. Do I really want to spend time evaluating each plan?

Yes, you do! If you dread "Open Enrollment" Season at your job, it is time to adopt a positive mindset. You are one of the lucky ones. An estimated 45 million Americans do not have any health coverage at all. You can participate in an employer-sponsored health plan, one of the cheapest available health care options.

Furthermore, an Open Enrollment period provides you with the perfect opportunity to evaluate your coverage and review your costs. Don't automatically choose the same plan you picked last year. Your employer may well have changed the benefits package.

There is no need to be intimidated! The plan selection process will go smoothly if you approach it step-by-step. The goal is to choose health coverage that will keep you, your family members and your budget in good shape. If you are having issues keeping your household budget in check, consult our financial specialists at Credit Counselors for a no-cost consultation to determine how best to meet your debt management needs.

Step One: Consider what you need. Think about your family members and their medical needs. It might help to review this list, and check those items that are important to you.

__ Chronic Conditions. Does a family member have diabetes, asthma, heart disease or       other disease or disability requiring long-term treatment?
__ Prescription Drugs. Review the family's medications and monthly costs.
__ Specialists. Does a family member require the care of a specialist?
__ Location. Do you prefer to use a doctor or medical facility close to your home or office?
__ Prompt Access. Do you want to be able to secure immediate appointments? Do you       want a 24/7 helpline to consult in a medical emergency?
__ Doctors. Would you want to keep your current doctor(s)?
__ Vision. Do you need new eyeglasses or contact lenses?
__ Dental Services. Do you anticipate needing non-routine dental services, like crowns       or bridges, wisdom teeth removal, or braces?
__ Mental Health. Is mental health care or counseling a priority?
__ Life Changes. Planning to have a baby, retire or send a teen to college?
__ Specialized Services. Do you require physical therapy or another specialized       service, like fertility treatment?
__ Alternative Health Care. Do you want to be able to use a chiropractor or acupuncturist?
__ Pre-existing Conditions. Any pre-existing condition (like pregnancy or cancer) that       will require uninterrupted treatment?
__ Preventive Care/Health Screenings. These would include your annual flu shot,       children's vaccines, mammograms and Pap smears.
__ Nicotine, Drug or Alcohol Abuse. Do you plan to quit smoking? Does a family member       abuse drugsor alcohol?
__ Paperwork. How willing are you to keep receipts, file claims and track reimbursements?

Step Two: Consider what is available. Typically, employers offer a choice of plans. The following are common options.

Fee-for-Service or Point-of-Service Plan: This plan permits you to go to any doctor you choose, when you decide to do so. Such plans offer great flexibility and do not require prior approvals or referrals. In exchange, you pay a higher monthly premium. Be aware that there can be extensive paperwork if you must submit claims for reimbursement.

HMO or Health Maintenance Organization: An HMO is an association of healthcare professionals (and medical facilities) that offer a package of specific health care services. You select a primary care physician, who determines whether your care requires a specialist, and if so, provides the referral. There are no claim forms to file and preventive care is encouraged. The monthly premium will be less than other plans. Some medical services may be limited in scope, and you will have to pay out-of-pocket to use the services of a doctor outside the HMO.

PPO or Preferred Provider Organization: PPOs offer more flexibility than HMOs. They are managed care organizations, but they permit you to go outside their network of physicians and facilities to one of your choosing. When you do, you will pay more out-of-pocket and your benefits will be less than if you stayed in-network. It can therefore be difficult to project your out-of-pocket costs.

As you look at your various options, consider the items on your list of needs (Step 1). Then, determine which plan most closely matches your needs. Take into account your deductible; co-payments for doctor visits or prescription drugs; out-of-pocket expenses (what's the yearly maximum?); which medical services are covered; physicians who participate in the plan; and, how hospitalization and emergency care is handled and funded.

Finally, if your spouse also has an employer-sponsored health care plan, compare its costs and services with your plan's. Does your spouse's plan better meet your needs? How much does your spouse's employer contribute to the monthly premium? Is it necessary and cost-efficient for both of you to be insured under separate plans? If so, how are benefit payments coordinated?

Step Three: Consider what you can afford. Employers pay the majority of health insurance costs. However, covered workers do contribute. On average, employees contribute nearly a third of the cost of a family plan and 16% for individual coverage.

In determining what you can afford, ask yourself these questions:

• How much do I currently spend on my monthly premium?
• What kind of monthly premium am I considering for 2008? Can I afford that?
• What out-of-pocket expenses (for co-pays on doctor visits, prescription drugs, etc.) do I incur each month? Will that amount change under a new plan?
• What is my current deductible? Will choosing a higher deductible lower the cost of my monthly premium?
• Am I willing to pay extra fees to see physicians who are not part of the plan? Can my budget handle that?
• Is my spouse eligible for group medical insurance through his or her employer? Would that plan be cheaper?
• If the new plan does not cover specific services my family needs, how much will I have to pay out-of-pocket and can I afford it?
• What is the yearly limit the plan will pay for my family's medical care? Is that amount sufficient if I anticipate frequent hospitalizations for a chronic or serious condition?

Final Step: Pick a plan that suits your needs and your budget. There is no crystal ball to predict what medical services your family will require next year. The best anyone can do is estimate future health care needs based on prior experience.

No health care plan will cover everything. You need to decide which trade-offs you can live with and still have peace of mind.

The goal is to avoid financial disaster because of medical expenses. When you suffer a sudden health crisis, you want a plan that is there for you. The same thing is true in the case of a long-term chronic condition requiring extensive medical treatment.

Whether your medical needs are short-term or long-term, the right health insurance plan can protect your family's physical and financial health. For more educational financial information, or if you are having difficulty with debt management as a result of medical expenses, consult the professionals at Credit Counselors.

Did You Know?

In 2005 (the latest year data are available), total national health expenditures rose 6.9 percent -- two times the rate of inflation U.S. health care spending is expected to increase at similar levels for the next decade reaching $4 TRILLION in 2015, or 20 percent of GDP.