2012 > August

Monthly Archives: August 2012

How to Choose the Cheapest Health Plan that Still Meets your Needs

This post appeared earlier on Mint.com. 

Maybe it’s Open Enrollment time or maybe you’re starting a new job that offers health benefits.  What’s the key behind all the terms – HMO, PPO, HDHP—and what can they tell you about how much that plan will really cost you?

The two most common terms, HMO and PPO, have to do with physician choice. And a HDHP is about the deductibles. As a general rule? HMOs will offer greater savings than PPOs, but at the cost of less choice and control. And HDHPs can save you even more money if you are healthy and don’t get frequent medical care.

So which plan fits you?

People with an HMO

  • Pay lower monthly premiums
  • Have to go through a primary care physician for everything
  • Have to get a referral for specialty care

People with a PPO

  • Pay higher monthly premiums
  • Can generally go directly to specialists
  • Will usually pay more for specialty care when they do get it

People with a HDHP (High deductible health plan)

  • Pay lower monthly premiums
  • Have a high deductible—you’ll be responsible for at least $1,200 out-of-pocket before your plan pays anything
  • Can open an HSA (health savings account) to save money specifically for health care costs with big tax advantages
  • Are usually younger and healthier

Some things are consistent across HMOs and PPOs – both have to cover preventive care at no cost to you (and that’s even if it’s an HDHP, and you haven’t met the deductible yet!), emergency care at out-of-network hospitals at the same level of coverage as in-network hospitals, and both have the same annual and lifetime out-of-pocket maximums.

Prescription coverage will vary by the plan.

If you’re overwhelmed about choosing the best plan for you, try focusing on two things: Physician choice and how often you need health care. Are willing to pay more to get easier access to specialty care when you want it? And are you willing to chance having to pay a higher deductible to have lower monthly premiums?

For many people, simplifying it to these two preferences will help lead you to the right plan.


Do you Need Supplemental Health Coverage?

With more and more people signing up for high deductible health plans, supplemental health policies have also become more popular. According to America’s Health Insurance Plans, high deductible health plan enrollment has grown by over 18% since 2011. Since these plans have deductibles of anywhere from $1,200 to $8,000, a supplemental policy to pad your plan can look very tempting.

Supplemental plans can either help pay your deductible and out-of-pocket costs, or they can pay out a lump sum of money either at one time or each day that you qualify for benefits.

The plans can be pretty inexpensive—as low as $12 a month for an individual and $20 to $30 a month for a family. But the benefits can vary drastically so make sure you know what you’re buying.

Considering supplemental health coverage? Ask these questions.

How much would an emergency would cost you?

Add up your deductible and the out-of-pocket you would owe for a few days in the hospital. Of course, you can’t be sure without knowing the actual costs, unless your plan has only fixed co-pays. But you can estimate: assume any major event would cost well over $10,000—how much would your co-insurance be?

Getting a rough idea will help you understand how useful a supplement might be.

Would you have other (non-medical) costs?

In an emergency, you might find yourself with other financial hardships such as lost wages, living expenses, or transportation costs. A supplemental policy can cover these expenses. Usually, the plan pays you a cash sum and you can decide how to spend it. One advantage of this type of policy is that it can help cover expenses that are not HSA-eligible.

What are the plan’s benefits?

Will the benefits cover enough of your likely costs to be worth it? A typical accident or injury plan may pay out $250 for each day you’re in the hospital, while a critical illness policy will pay a lump sum if you are diagnosed with cancer or have a stroke. If your day to day costs would far exceed the daily benefit, the policy is not worth the money.

How do you qualify for benefits?

It’s important to read the fine print here. A policy may only start paying benefits if an illness or injury reaches a certain degree of severity or may limit the days of benefits it pays. It may also pay much lower benefits for more common diseases—the times your most likely to need it. For example, one consumer was told his policy would pay $5,000 for cancer, but in reality, the $5,000 was only for internal cancer (breast or lung) and skin cancer was paid at $100.

The bottom line is, weigh the costs and benefits of supplemental health insurance carefully. If you have a typical health plan, you probably do not need an additional policy. But if you have a very skimpy or high deductible plan, you’re more likely to find a supplement to be helpful.

And most importantly, remember that these plans are meant to be what the name suggests—a supplement—and not a replacement for full health insurance.


How Does Your HSA Compare?

Wondering how your HSA stacks up compared to others?

Are you saving enough or spending too much?

We decided to look at Simplee users as a group to see. As of the end of June 2012, the average Simplee member had $1654 in their HSA. This was up from $1385 at the beginning of the year, but not quite as high as the average of $2235 the previous fall. That seems to suggest many people are saving up as the year goes on and then paying out their deductible by the end of the year.

The good news? Most consumers seem to be saving more than they’re spending. For the first half of 2012, Simplee users contributed an average of $2289 each quarter to their HSA and only distributed $1903 per quarter.

So how much should you have in your HSA? Well, just like any savings account, the more the better—but of course, within reason. You obviously don’t want to tuck away so much money that you can’t afford your other bills. But at the very least, you want to have enough to cover your deductible.

The average American has $1490 in their HSA (as of 2011, according to the Employee Benefits Research Institute), so it looks like Simplee users are doing a bit better than average. Way to go!

To track your HSA transactions and manage your expenses easily, log in to Simplee.


Six HSA Tips for Beginners

This post originally appeared on Mint.com. 

High Deductible Health Plans paired with Health Savings Accounts (HSAs) are one of the fastest growing types of plans.

Just opening an HSA or still trying to figure out how yours works? Many people find the idea of managing not just a health plan, but now a health plan with a linked savings account a little more daunting. How much should you save? What can you spend the money on?

An HSA doesn’t have to complicate life. If you can get behind a few simple tips, you could be on your way to big savings.

WHEN: Open your HSA right away.

Don’t wait until you have medical expenses. Any expenses that you incurred before you opened the account won’t qualify for reimbursement.

HOW MUCH: Max it out first.

In general, you can take advantage of the full tax benefits of and HSA by contributing the maximum allowed—within reason of your budget of course. HSAs have the best tax benefits compared to IRAs or 401ks. You never pay taxes for contributions, interest, or distributions, so put the maximum contribution in your HSA first. The exception is if your employer matches 401k contributions—then, it’s best to put your money in the 401k up to the matched amount.

WHO: Spend on you, your spouse, your dependents.

If you have family health insurance, you can pay for your spouse’s medical expenses with your HSA even if your spouse doesn’t share the HSA.

WHAT: Get your medical supplies.

Check out what purchases you already make that qualify as HSA expenses. You can use your HSA on items such as bandages, crutches, contacts and contact solution, or breast pumps and lactation supplies.

WHAT: Pay for premiums.

In general, you can’t use HSA funds on health insurance premiums but there are some exceptions:

  • COBRA benefits
  • Medicare premiums
  • Insurance premiums after age 65
  • Long-term care insurance.

WHAT: Finally, don’t spend it at all.

Instead, pay your medical bills with non-HSA money. Sounds counter-intuitive, right? Didn’t you save that money just so you could use it on health care? While this is the purpose of an HSA, you also have the option to just let the money grow. HSA funds grow tax-deferred, so you won’t pay any tax ever unless you use the funds to pay for non-medical expenses (at least until age 65).


Health Care gets Cheaper for Women

Beginning August 1st 2012, women can expect to pay a lot less for preventive care, thanks to the Affordable Care Act, the health reform law. Plans were already required to cover a list of fourteen preventive services under the Act, such as mammograms and cervical cancer screenings. But now eight additional services will be covered at no out-of-pocket.

That means women will no longer pay deductibles or co-pays on:

  • Annual women’s exams
  • Contraception and sterilization
  • STD screening and counseling
  • HIV screening and counseling
  • Testing for HPV
  • Breastfeeding support and supplies
  • Diabetes screenings while pregnant (gestational diabetes)
  • Domestic violence screening and counseling

About 47 million women are expected to be eligible for these additional benefits—great news because right now, one out of three insured women have such high out-of-pocket costs, they avoid getting needed medical care.

When will I see the benefits?

The benefits don’t exactly kick in immediately: They’ll go into effect when your health plan renews. For most people, this means the first of the new year or the start of an academic year.

Does this include all health plans?

There are a few exceptions: Some health plans that were created before March 23, 2010 are exempt as “grandfathered” plans. And some religious organizations (such as churches or schools) do not have to offer their employees the same benefits.

How do I find out if my health plan is included?

Call your health plan and ask if you have a grandfathered plan.

The Women’s Law Center has a nice script on what to say if you like having all the details. If you work for a religious organization, ask your employer.

Keep in mind there are a few limitations—some services are only covered annually (HIV, STD, and domestic violence screenings) or have other restrictions (HPV screening is covered after age 30). For a full list of all the benefits click here.