Health-Care Options: 10 Tips

Here's what you should be thinking about as you study -- and then complete -- your annual benefit enrollment forms

By Amey Stone

It's that time: the annual season for enrolling in employee benefits. Have you opened the envelope from your human resources department yet?

Many people wait until the last minute to fill out the paperwork. "The unfortunate thing about that is when employees make benefit selections, they're making some of the most important decisions that can impact not just the next year but also their quality of life for years to come," says Renee Schaaf, vice-president for retirement and investor services at benefits provider Principal Financial Group.

This year you may need to go through the process, even if you don't plan to make any changes to your benefit options. In an effort to make sure employees are aware of how health-care plans are changing -- mainly by becoming more expensive, with higher premiums and co-pays for doctor visits -- more companies are requiring "active" enrollment. That means if you don't respond, you could be stuck in a default health plan or even lose coverage, according to benefits consulting firm Hewitt Associates (HEW ).

Another change this year: More companies than ever are moving to online enrollment, which eases the administrative burden for you, your company, and the benefit providers. But you still need to complete the process weeks ahead of the New Year. Most companies want you to sign up by November to make sure you're officially enrolled by Jan. 1.

Put a little time and thought into the process, and you'll be rewarded with the feeling that you and your family are more secure against financial or medical hardship, and that you aren't overpaying for health care. Here are 10 tips for getting the most out of your benefits:

1. Act now. It's easy to procrastinate, since signing up for annual benefits is about as much fun as preparing tax returns. But if you wait until the last possible day or don't devote enough time between other work obligations to get through the process, you could regret it later. Inevitably, questions come up that you'll wish you had anticipated. You could even run into a computer glitch that keeps your online enrollment process incomplete. Don't put yourself in a bind. Finish the process early.

2. Stumped by a question? Pick up the phone and call your HR department, even with the smallest queries. Remember, in early November you beat the rush, so you're more likely to get an expert on the phone who can answer your specific questions. According to Hewitt, given the increasing complexities of health-care options, companies have added more staff to help employees choose the right coverage.

3. Fill out the forms with your spouse around. If both of you are employed, one of you may have much more generous benefits in some areas. Which person should enroll for the family health insurance plan? You may want to choose the one with the most job stability, not just the cheapest monthly contribution.

Here's another way to do it: Fill out the forms during the day while you're at work and compare notes with your spouse via phone. You don't want to go through the process when the kids are underfoot or while Monday Night Football is on the tube.

4. Study the plans more carefully than you might have in the past. According to Hewitt, companies are offering more health-care choices, including an opportunity for some to customize their plans. Caution: As with many things in life, if the cost seems too good to be true, it probably is. If you're young, healthy, and single, a plan with a low monthly payment may be fine. But if you or someone in your family gets sick, you may end up wishing you had a more expensive plan that gave you access to the best doctors. This is an important choice.

5. Anticipate any big-ticket items you might have next year. Expecting a baby? Need knee surgery? Make sure the doctor you want is on the plan you choose. Different plans may treat medical events very differently in terms of out-of-pocket costs. Recommends Schaaf: "Try to get a nice balance" between the amount you would have to pay out of pocket and the amount you pay each month in premiums.

6. Study the prescription-drug coverage. If you're taking regular medications, make sure they're covered. If you don't want to take a generic version, you may have to pay much more.

7. Sign up for the flexible spending account (FSA). The conventional wisdom is to estimate your out-of-pocket costs for health care and dependent care and set aside that amount in these pretax savings accounts. Hewitt finds that more companies have added online tools and calculators to help employees with this work. You may even able to get a debit card that taps into your FSA to pay for prescriptions or doctor visits, reducing paperwork.

The problem with FSAs comes if you overestimate -- or don't save your receipts. Then you won't get your money back at the end of the year. So underestimate if you aren't diligent about tracking eligible expenses.

8. You might want to skip the vision thing. Unless you wear contact lenses or want a new pair of glasses each year, the monthly payroll contributions for many of these plans don't justify the low cost of an eye exam and glasses at many retail outlets. Consider signing up for coverage on alternating years.

9. Get some supplemental life and disability insurance. You won't hear this from your insurance broker, but your corporate policies may be the easiest and cheapest way to purchase supplemental term life insurance or extra disability insurance. Many companies don't limit you to purchasing such extra coverage only during enrollment time, but it's a good time to think about it.

10. Review your 401(k) plan while you're studying your other benefits. An October survey by the Employee Benefit Research Institute found that nearly a quarter of all Americans had reduced their retirement savings contributions to help cover growing health-care costs. That's an ominous sign. Make sure your retirement goals are on track, even as you confront higher costs for health care and other benefits this enrollment season.

Stone is a senior writer at BusinessWeek Online in New York

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