Choosing the Best Employer Health Plan Takes Time

Even though many employees say their employers offer more than one health plan option, a recent survey by the Employee Benefit Research Institute (EBRI) found that most enrollees spent less than an hour making their selections. The survey was conducted during the 2022 open enrollment season, questioning 2,015 employees, ages 21 to 64.

Other facts about the amount of effort insured employees put into choosing a plan include the following: Roughly 20% of privately insured Americans were automatically re-enrolled, but that number fell to 16% for those employees with high-deductible health plans (HDHPs). Overall, HDHP enrollees not only spent more time than employees with traditional plans, but they were also more likely to use employer-provided tools to select their health plans.

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Given the importance of finding a plan that meets your needs and your budget, this is a decision that can feel overwhelming, and shouldn't be rushed. Below is some guidance that may help you make the best choice.

5 Tips for Selecting a Health Plan

Numerous factors go into this important choice, including your overall health, age and how many members of your family are being covered. But what elements of a health plan besides overall cost should you look at? Paul Fronstin, director of Health Benefits Research for EBRI, advises employees to "consider the trade-offs between premiums and cost-sharing when making health plan decisions." Here are five variables in a health plan that you should evaluate:

  1. Plan type and provider network. Are the health care providers, health care institutions and pharmacies you want within the plan's network? Usually, in-network services and medications are covered under a plan, but out-of-network services and medications may require more out-of-pocket costs or may not be covered at all. In some cases, out-of-pocket costs for out-of-network services may not count toward a plan's out-of-pocket maximum.
  2. Premiums. The premium is how much you pay per month for the insurance, regardless of whether you use it. Premiums aren't the only expenses related to your insurance coverage. There are often deductibles, and — in the case of cost-sharing — there may also be co-pays and coinsurance.
  3. Deductibles. The deductible is the amount you pay out of your own pocket before your coverage begins. Usually specific preventive services, such as some cancer screenings and vaccines, are covered with no cost-sharing before you reach your deductible. Typically, HDHPs have a lower monthly premium. Determine if your health plan has combined the deductible for medical and pharmacy or has a separate deductible for prescriptions.
  4. Co-pays vs. coinsurance. A co-pay is a flat fee you pay for prescriptions or covered services. Coinsurance is a percentage of costs you pay for a drug or service.
  5. Coverage of medicines. Every insurance plan has a formulary, or list of medicine that the plan covers. If a drug isn't included on the formulary, it may not be covered, and you'll likely have to jump through hoops to obtain coverage. The formulary is also divided into tiers, which decide how much of a co-pay or coinsurance must be paid. Consider the medications you currently take and compare them with the plan's formulary.

What's Right for You?

An employer-sponsored health plan can be a significant perk, but not everybody pays enough attention or does enough research when choosing a plan from several possibilities. Take some time to make the best choice for your situation.

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