Sunday, November 1, 2009

Get Ready For Open Season - Part 1

Saving Money Tip #203 - Get Ready For Open Season – Part 1. For those people who work at a decent-sized company, open season is coming upon us. Open season is the one time per year that you are allowed to make changes to your health insurance, your 401(k) contributions, any life insurance or disability insurance that is offered, and any changes to your FLEX plan. You may be given several choices in each of these areas. And the decisions that you make in the next month regarding open season will affect your next year's budget and expenses. So choose them wisely. Look over all of your options and make informed, educated decisions. Not everyone has all of the choices mentioned above, but many companies offer at least some of these.

Let’s start by talking about health insurance. If you have health insurance choices at your company, take the time to study each one. The most popular plans you often can choose between are an HMO (Health Maintenance Organization) and a Preferred Provider Organization (PPO). The plan you choose can make a big impact on which doctors you can visit and how much you spend.

First let’s discuss HMOs. Usually the HMO involves smaller out-of-pocket costs than a PPO. These lower costs come in the form of the monthly fee that you pay to your company to be part of this insurance plan. In addition, co-pays at the doctors’ offices are usually cheaper. However, the disadvantage of the HMO plan is that you are locked in to a smaller number of doctors who are part of your HMO plan. Also, you must select a primary care physician to act as a gatekeeper for any specialists you may need to see. For example, if you have a bad rash on your face and want to go to see a dermatologist, you first need to see your primary care physician who needs to provide a referral to you for you to see the dermatologist. If you don’t see your primary care physician first, you may find yourself responsible for all of the dermatologist’s fees – not just the co-pay. There are variations to each HMO, though, so make sure you understand exactly how yours works.

The PPO is usually more expensive than an HMO. The monthly fee deducted from your paycheck is usually higher. In addition, co-pays at the doctors’ offices are sometimes higher. The advantage is that you usually have a wider variety of doctors to choose from than in an HMO plan. A second advantage is that you do not need to see your primary care physician first in order to see a specialist. However, the PPO plan does consider only certain doctors and practices to be “in network.” And while you may see doctors that are “out of network,” you will pay higher co-pays and a certain percentage of their fees to see them. Overall, the advantage of the PPO is that you generally have more doctors to choose from and you don’t need approval from your primary care physician. The overall disadvantage is that it's more expensive than an HMO.

Overall, PPOs often have a better reputation than HMOs, but it doesn’t mean that it would be the better choice for you. If you are relatively healthy and visit the doctor once per year for a physical, then an HMO might be appropriate. On the other hand, if you have several children – some of whom might have special medical needs – then a PPO will give you more flexibility and possibly better doctor choices. And in this case, the extra expense will often be worth it.

When you get your information about your health insurance plans this month, study them carefully. Ask questions of the benefits manager. She might have good insight on the various plans offered. Then talk to some of your co-workers who were in the different plans in the previous years. You will probably get the best information from people who have already been in the plans. Gauge their satisfaction, and use that, along with your family’s needs, to help make a wise, informed decision about your health care.

In Real Life (IRL) – My husband just got his information for the Open Enrollment Season at his company. We are going to go over each of our options and choose what we think will work best for our family. In addition to health care options, we are going to be making decisions about his 401(k), extra life and disability insurance, and the company’s FLEX plan. Because his company got taken over part-way through the year last year, we need to make changes, based on looking at the whole year ahead of us rather than the part-year we did this past year.

Regarding health care options, I am of the mindset that healthcare is not an area that I want to save money on. I will look to other parts of my budget for that. I have always found the extra expense of a PPO to be worth it. But then again, I have never belonged to an HMO. I do have a friend who belonged to one and was satisfied with her level of care there. Although, she did have to travel far to see some of the doctors in her plan. Either way, it can be a difficult decision to make, because none of us knows what is in store for us in the upcoming year, health-wise. Also, what worked well in the past might not work well in the future. We can only give our best, informed guess based on what we think our needs are. With three young children, I like the option of having more doctors to choose from, making the extra expense of a PPO worth it. However, in my husband's plans, they actually have a regular PPO and an expanded PPO which makes the decision even more challenging.

Fortunately, we are only locked in to our decisions for one year, and can always make changes during the next open enrollment season. Another event that may trigger a change open enrollment options is marriage, or birth or adoption of a child. Although, your choices may be limited at that time. So again, make your decisions wisely regarding your choices; they will be with you for the whole year.

In the next post, we will discuss 401(k) options in this open enrollment season.

1 comment:

Jerry said...

I lived in Maine for a while and had insurance there and it was one of the worst experiences ever. The premium was outrageous (one of the highest in the country) and there was almost no competition. Looking at your state's policies may lead people to reconsider moving to a certain area because of the legislation in that state.