Picking Through The Benefits MazeEdward Baig
Election day may have passed, but millions of Americans still have important votes to cast. This is the time when employees must make their benefits designations for the new year. As the stampede toward managed care accelerates, many workers will be seeing new and unfamiliar options on their benefits menus, be they point-of-service plans, which allow people to use physicians not affiliated with a network, or health maintenance organizations, which restrict the choice of doctors. "Generally, employees face a choice of two to eight health-plan options during every open enrollment period," says Emmett Seaborn, a principal in the Stamford (Conn.) office of benefits consultant Towers Perrin, based in New York.
Given the bevy of alternatives, extra planning is in order. The core of any decision on benefits comes down to a series of personal questions. How healthy are you and members of your family? How much coverage can you afford? Is major surgery on the horizon, or a new baby? Do you have a satisfactory relationship with a doctor? If so, is the physician part of one of the networks on your company's list?
It may not be simple to match your wish list with one of the offered plans. In a recent Towers Perrin survey of 1,081 Americans, two-thirds said they needed to become better informed about the quality of doctors, access to specialists, and other elements in their health plans. And 66% said it would be "very valuable" if they could see hospital customer-satisfaction ratings.
QUALITY CHECK. Fortunately, some companies such as GTE, Xerox, Motorola, and PepsiCo are providing "scorecards" that can help. For example, they rate plans against regional and national norms on such things as the percentage of women of certain ages who received mammogram screenings or the percentage of children under age 2 who were given recommended immunizations. Ratings may be based on standards determined by the National Committee for Quality Assurance (NCQA), a private nonprofit organization that reports on the quality of managed-care plans, and the Healthplan Employer Data Information Set (HEDIS), a list of performance measures coordinated by NCQA.
GTE, for instance, uses a three-diamond scoring system--the lowest score indicates needs improvement, followed by average quality and superior quality--to rate plans on participant satisfaction, preventive care, surgical care, and other factors. Based on HEDIS data, GTE has also given 15 HMOs out of the 125 it offers its "Exceptional Quality Designation" and has eliminated 37 HMOs from its roster during the past three years because they didn't pass muster.
Employees who move into managed care from an indemnity plan should rethink the amount they put into flexible spending accounts. Money set aside in an FSA to pay medical bills is sheltered from all taxes, but unused amounts will be forfeited. Since patients generally spend less out-of-pocket under managed care plans, you might reduce your FSA contributions.
SUPPLEMENTAL. For most active employees, there are many other benefit choices to make this time of year. Companies typically provide some life insurance and short-term disability coverage for free. But chances are these gratis plans won't cover you in the event of a major long-term catastrophe. As such, it's often a good idea to take on the supplemental coverage that many employers make available for a fee. "Typically a company can get supplemental life insurance at group rates, which are less expensive than if [an employee] had to buy it on an individual basis," says Don Gasparro, managing director at Apex Management Group, a Princeton (N.J.) health-care consulting firm. Many of these packages allow workers to take the insurance with them when they leave their present employer.
More companies are also starting to offer long-term-care protection, which can help pay for home health care or a nursing home when you retire. But such coverage can be expensive and is probably not a great bet for active workers under age 40. "Looking at long-term-care insurance 40 years down the road when you don't even know what health care is going to be doing two years down the road makes it a gamble," says Gasparro. Those who opt for the insurance, however, should make sure that reasonable inflation assumptions (5% to 10% a year) are built in. Indeed, when designing your benefits portfolio, you need to weigh many issues before casting your votes.
What to Ask When Redesigning Your Package
If you're considering a managed-care option over a traditional indemnity plan, does it offer a large selection of primary-care doctors and specialists in your area--or can you use doctors not affiliated with the network? Does it cover preventive screenings for conditions such as high cholesterol and breast cancer?
SUPPLEMENTAL LIFE INSURANCE
Does your employer offer supplemental group life rates that are better than what you can get as an individual? Has your marital status changed, or do you anticipate the birth of a child, necessitating additional coverage?
SUPPLEMENTAL DISABILITY INSURANCE
In the event of a calamity, how long could you live off the short-term disability coverage the company provides for free?
LONG-TERM CARE INSURANCE
If you're under 40, are you willing to gamble that the coverage you buy today will be adequate 40 years from now? Does the plan contain reasonable long-term inflation assumptions? Is there coverage for your elderly parents?