A cure for rising health insurance costs
Whether you get your health insurance through your employer, Medicare or one of the Affordable Care Act (ACA) exchanges, there’s a good chance you’re paying more than you need to. According to a study last year by the National Bureau of Economic Research, 63 percent of the 50,000 employees at a Fortune 100 company selected a health plan that was not the most cost-effective option.
Picking an insurance plan is downright confusing. So Consumer Reports looked at some common mistakes people make when choosing insurance plans.
• The big mistake: Automatically re-enrolling in the same plan year after year. Given people’s distaste for researching health-insurance plans, it’s not surprising that a 2015 study commissioned by the insurance company Aflac found that nine out of 10 workers stick with the same benefits year after year. Other research shows that only 13 percent of Medicare users switch drug plans each year, despite the fact that they could save money by doing so.
The remedy: Review all the offerings each year; plan benefits change frequently. Participating doctors are added and deleted, and drug formularies – the lists of prescription medications a plan covers – are revised. Other plan benefits, reimbursement rates and premiums may also change from year to year. Insurance companies provide much of this information online, but Consumer Reports says that talking with an informed source can be more efficient than sifting through all that information on your own.
• The big mistake: Miscalculating – or having no idea – how much you spend on health
care. You can’t choose the most cost-effective coverage without knowing how much you’re likely to spend on health care in the coming year. But few people take the time to calculate their medical spending, or even know how to do it.
The remedy: No one has a crystal ball to see into the future, but the amount you and other family members spent on health care this year is a good indicator of about how much you’ll spend next year, says Kim Buckey, vice president of client services at DirectPath, a benefit and compliance management firm. After you’ve determined how much you paid last year, “think about what could be different next year,” Buckey says.
-- The big mistake: Picking the plan with the lowest premiums. “If you shop by premiums
alone, you could spend a lot more in outof-pocket costs than if you had gone with a higher-premium plan,” says Kev Coleman, head of research and data at HealthPocket, a technology company that compares and ranks health insurance plans.
The remedy: In addition to premiums, consider the amount of the deductible – how much you have to spend before the insurance company begins covering expenses. Deductibles can range from about $500 to $5,000 or more, but among low-premium plans, the average today is closer to the high end of that range. Consumer Reports recommends also looking at co-pays (the flat charge you pay every time you go to a doctor, hospital or other health care provider) and co-insurance (the percentage of the bill that you have to pay for treatments).