Time to Change Your Health Insurance?

It's open-enrollment season — the yearly window from November through December when employees can make changes to their health coverage for the new year. Kim Langford, Kiplinger's personal finance guru, clues you in.

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ALISON STEWART, host:

All right, it's that time year again, chestnuts roasting on open fire, Jack Frost nipping at your nose, evenings by the fireplace reassessing your PPO, EPP, and flexible spending accounts. That's right, people, its open enrollment season; that time of year when those annoying announcements from your HR office encourage you to ponder your health benefits.

I know you deleted that email; it's okay. Well, actually, really, it's not because there've been some changes in next year's employer-sponsored health insurance plans; it could cost you more. One survey estimates that employees will pay about $3,500 for things, like prescription drugs or visits to their doctors.

Okay, so now that you're going to go to the delete folder on your computer today, let's get you a little more info. Insurance guru Kimberly Langford, a contributing editor and personal finance reporter for Kiplinger's is here to help. Hi, Kimberly.

Ms. KIMBERLY LANGFORD (Contributing Editor, Kiplinger's Personal Finance): Hi. Thanks for having me on.

STEWART: So every year around this time, office emails start flooding with open enrollment notices. Why should we fight the urge to send them to the trash bin?

Ms. LANGFORD: Well, it is so tempting just to ignore it. I mean, some people just end up with that giant stock of papers on their desks and just want to toss it. But this year, not only are premiums increasing, but employers are also increasing costs in sneaky ways, things that can really boost your out-of-pocket-costs throughout the year that you won't even realize until the end of the year unless you look carefully now.

STEWART: All right, so you have to give me three sneaky ways - or at least one.

Ms. LANGFORD: Well, one of the biggest things is they've really changed the way they're charging you for prescriptions drugs. In the past, you may have paid just the flat fee, like $5 for generics, $10 for preferred drugs, things like that, but a lot of employers are changing to a percentage of the cost, so they may be charging 10 percent of the cost for generics, 20 percent for preferred drugs, maybe 13 percent for non-preferred drugs. So that means if you take, especially some of those non-preferred drugs, you're paying 30 percent of also a much higher cost, so you could be paying a lot more by the end of the year. So if you do have regular prescription drugs, take a look at that section very carefully.

STEWART: Now, if I want to put money in my flexible spending account, can I spend that on those drugs if they - if the cost is going to go up?

Ms. LANGFORD: Yes, you can, and that's another key thing to do. I mean, what I recommend is if you have several choices from your employer, look, because one of the other choices may have a much better prescription drug benefit for you. But if you're in one of those smaller employers that only has one choice, that's a great idea. You can add money to your flexible spending account, use that to pay for tax advantage payment of those prescription drugs, and that can, at least, stretch your dollar a bit further.

STEWART: What about if you had changes in your life, say, you got married in the last year and you both have health coverage through work, should you be comparing plans this year?

Ms. LANGFORD: You should definitely be comparing plans if you've had life changes and even if you haven't because employers are also really changing the way that they charge dependents for coverage. A lot of them feel an obligation to provide an employee benefit and to, you know, pay for a big chunk of the cost for their own employees but don't feel quite that same feeling for their employees' families, and so they may be paying a much lower subsidy for the families. Also, some of them are actually penalizing some families, adding a surcharge if your spouse is on your plan but could be on another plan, or if you have a large family, they may be starting to charge you extra. So over the last year, they're making big changes in the way they charge dependents. So you could end up paying a lot more if you just stick with what you already have.

STEWART: All right. This is something that's always a little bit uncomfortable or creepy to talk about, and they have that, like, long term disability option? So what if you're the average healthy 30-something, should I be even reading that part of my program?

Ms. LANGFORD: You definitely should. I mean, anybody, no matter what their age, if they were to be able to - if they were to become disabled and not be able to do their job and not get paid for it, they wouldn't be able to pay their bills. And it's interesting, it's very important to look at what that long-term disability covers - a lot of it only covers about 60 percent of your income. So even if you do have that coverage, you may want to add some extra coverage. A lot of employers are now offering an opportunity for you to buy some extra coverage to put on top of that. That's a great idea, so just calculate what you'd be getting per month if you were on disability and see if you need to add some in addition to that.

STEWART: Should I be looking at this open enrollment period with what's coming in my life in the next year - If I'm going to have a baby, if I'm going to get married, if I'm going to switch jobs?

Ms. LANGFORD: That's a great idea. I mean, so many times, health things you can't control, you have no idea what's coming, but there are some instances where you do know what's coming down the line. If you're having a baby, for example there, if you have, you know, prescription drugs you've been taking and you have a feeling that you're going to have to take more - if it's cholesterol drugs, things like that. Keep an eye on what those plans cover for those issues because that's one of the few times that you can actually control some of your health care costs.

STEWART: And I want you to help me read through the lines. I'm not talking about any company's particular health coverage open enrollment benefit, but I did notice on one e-mail something about the company adding something to the plan that seems pretty good - preventative care - but does that automatically mean I'm going to have to pay more?

Ms. LANGFORD: Yeah, you really need to look carefully. But that is a big trend, I mean, employers are really starting to add some wellness benefits. Some of them are adding preventive care, just adding them on to their plans without an extra charge; some may charge extra. It varies so much, so take a look at that. But another key thing is to see what kind of perks you can get yourself. Some employers are giving you cash or putting money in a health savings account for you if you do things like take a health test just to find out, you know, the status of your health, of if you are a smoker and participate in a smoking cessation program - things like that. Wellness issues can get you extra cash, so try to get the - make the most of all of them.

STEWART: All right, so this is the time to do it, and now you're armed with the information to do so by Kimberly Langford, self-proclaimed insurance geek - I heard you say that.

(Soundbite of laughter)

STEWART: And a contributing editor for Kiplinger's. Thanks, Kim.

Ms. LANGFORD: Thank you very much.

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