Keeping Your Health Plan Right for You

While the fall season means changes in leaves and temperature, it can also mean a change in your health care coverage. Many companies offering health benefits hold an annual open enrollment period, giving employees an opportunity to change their health coverage for the upcoming year.

"Early Show" financial contributor Ray Martin shared some information on the broadcast Thursday on why you might want to take a few extra minutes this year to go over your health plan.

The past year in terms of the economy and talks of changes to the health care system may have you a bit nervous for the year to come and your health benefits.

But according to Martin, employee's health benefits are not likely to be much affected by the current recession. Most companies are keep their existing benefits policies in place, Martin explained, and some are even planning to expand certain voluntary benefits.

If you are receiving health benefits from your employer, Martin said, you should do your homework. When you receive a packet of information in the mail, don't toss it aside, open it up, read through it, and research which benefits are right for you based on you and your family's health.

If you find yourself now dealing with pre-existing conditions, like diabetes or heart disease, Martin said, you have to make sure your plan will cover that, because perhaps it's not covered in your current plan.

He said you should familiarize yourself with the medical services, such as testing, surgical procedures, outpatient care, mental health coverage, which may or may not be included in your plan.

Martin used the example of a pregnant woman. If you're pregnant, he explained, and you want an epidural when you give birth, make sure you choose a plan that will cover the epidural. In addition, you should factor in the health of your family, including your spouse and children.

Martin recommended asking yourself: What does my plan cost? He said you should research your premiums and co-payments, as well as explore the difference in cost between using doctors in the network and those outside of the network. Also, find out if there is a limit to the maximum amount you would be expected to pay out of pocket.

In addition, health care shoppers should plan to make some changes, Martin said.

"Very few people have the same benefits needs year after year, but most of us still default to their previous choice," Martin said.

A recent survey, he said, found that nearly 70 percent of its participants defaulted to last year's plan.

However, according to Martin, there are both financial and health factors to consider.

"I advise against defaulting," Martin said.

If you do not re-enroll in your employer provided benefits during the election period, he explained, most employers will typically "default" your coverage to your existing benefit elections. Some employer's plans will default to the lowest cost medical plan offered. Also, many companies will not continue flexible spending account elections, which will terminate your participation in these tax-saving accounts altogether.

"Be sure to consider next year's needs now," Martin said.

Factor into your benefits decisions your plans for the birth of a child, eye surgery, dental work or any other health care needs that you may need next year. Martin recommended looking for the benefit plans that best match your planned care and service needs for next year. Also, he advised caution when choosing a provider.

"Be careful to call the providers to find out if they are participating under your benefits plans and get their estimated costs for the planned services," he said.

Martin also suggests looking into pre-tax account options. But what are they and how do they work?

Two popular pre-tax account options here: flexible spending accounts and health savings accounts. Martin explained both are savings accounts into which you and your employer can contribute money pretax, kind of like a 401K for health care. He said they can save you money by paying for your out-of-pocket health care costs with pre-tax dollars. They pair a savings account with a high-deductible insurance policy. You contribute your own pre-tax dollars to the health account. The money can be invested in stocks, bonds, and mutual funds and the account grows tax-free, but funds can only be taken out for health care costs.

The tax benefits of both plans are quite similar, but there are a few big differences.

With flexible spending accounts, the money in your flex plan must be spent by the end of the plan year or you lose it. That may sound like a big negative, but flex plans can save you a lot of money, even if you don't spend every nickel. Also, you can open a flexible-spending account only if the plan is offered by your employer, and you don't need to have a high-deductible health insurance policy.

The money in a health savings account can roll over from year to year and continue to grow tax-deferred, like a 401K. Also, Martin explained, you can open a health savings account on your own, as opposed to through your employer. And you can find a list of health insurance companies offering HSA-eligible plans in your state at HSAInsider.com. These accounts, like the flex plans, must include a high deductible policy.

Martin said, "These plans are designed to help employers save money. So they may say, 'Hey, you know, if you do this, we're going to save $4,000, so we'll contribute the $4,000 into your HSA for you, and let that grow every year if you don't use it.'"