Which Benefit Plan is Right for Me?

Companies generally identify a period of time each year for Benefits Open Enrollment for their employees.  Open Enrollment is a specified window of time for employees to make benefit elections for the coming year.  If the Company uses a calendar year for benefits, and most do, the identified time for Open Enrollment is likely to be in the third quarter of the year.  This allows the Company sufficient time to process benefit elections and communicate with benefit vendors for the coming year. 

Employers usually do not allow changes to benefit elections outside of the Open Enrollment period with some specific exceptions.  These exceptions generally include the birth of a child, the loss of other benefit coverage elsewhere, divorce, and d--th of the covered employee.  Generally, if the company hires you after Open Enrollment, or transfers you to a new geographical area where benefit options are different, you would have the opportunity to elect new benefits.

Many large companies offer 3 or 4 different medical benefit plan options to their employees.  When the information is available to you about how the plans work, set aside some time to educate yourself on what each plan provides and how your needs fit with those plan provisions.  The days when each company had a resident benefits person on staff are gone.  Many companies outsource benefit administration altogether.  Others have centralized benefit administration, perhaps at a headquarters location.  These facts of life make it imperative that you, the employee, are well-educated about your benefit options.  This does not mean that each employee has to become a benefits expert.  It does mean, however, that it is foolish for you to make these important decisions without doing your homework.

Open Enrollment is often announced by mailings to employees’ homes.  Your first step is to carefully read the material you receive.  And don’t wait till the last minute to do so!  Open Enrollment deadlines are quite inflexible.  Make sure you are well-informed in plenty of time to meet the deadline.  Being on vacation, being on a work-related trip, or even being on leave are usually not acceptable excuses for missing Open Enrollment deadlines.  Fortunately, most companies default employees to one of the basic plan offerings if they miss Open Enrollment.  But this plan is probably not the one you would have preferred to be in.  Unfortunately, you will be stuck with it until next Open Enrollment rolls around unless you have a qualifying event in your life before that time.

There are a number of personal considerations each employee should think about in choosing the right benefit plan.  If you are a single person who is generally healthy and has no dependents, you will likely pick a different plan than the employee who has three children and another one on the way.  Think about what special needs your family may have.  Is there a particular physician or group of physicians you feel strongly about having access to?  Do you anticipate the need for a particular medical procedure in the coming year?  Don’t forget maintenance medication and preventative health care, such as well-baby visits.

Some companies offer a traditional Blue-Cross/Blue-Shield type plan with a deductible amount for covered expenses and set co-pays for office visits.  The deductible is the amount you pay out of pocket before any benefits are payable.  The co-pay is the amount you pay out of pocket for each doctor’s office visit.  Different plans have different schedules of co-pays and deductibles.  Be sure you understand what your plan covers and does not cover.

Another choice available to you may be an HMO or PPO network of providers.  Your company (or the benefit provider they use) has negotiated with medical care providers to offer a variety of services at discounted rates.  Those providers are said to be “in network.”  Often, employees have the option of going to providers out of network, but at a higher out of pocket cost than they would have paid to see an in-network provider.  Again, your homework is critical here.  Even if your favorite doctor is listed as an in-network provider in the literature you receive, call that physician’s office yourself and confirm they are still in network.  Many companies don’t even print provider lists any more because providers join and leave the network all year.  If your carrier has an on-line resource to look up providers, that’s slightly better than a printed list.  But you should still call the provider directly to confirm that he is still part of the network.

Another issue to be aware of regarding networks of providers has to do with medical services providers other than the physicians you choose to see.  Some labs are in network and some are not.  Some hospitals may not be in your network, although your in-network physician may have privileges at that hospital, or may use that lab!  Again, do your homework and request in-network providers for any medical service you receive.

Fairly new entries into the medical plan world are plans in which the consumer, or employee, is far more responsible for how the health care dollar is spent, and this savings is often shared with participating employees.  In these plans, employees are allowed a lump sum amount to spend on health care.  This amount may vary with the size of the family.  Once the base amount is spent, the employee becomes responsible for a much larger portion of his care until a certain spending level is reached.  When that level is reached, most of these plans revert back to a cost splitting strategy, somewhat like traditional plans where the employee pays 20% of the cost and the company 80%, or some such arrangement.  There may or may not be negotiated co-pays.  Employees who visit their physicians are assessed the cost of the visit until that basic health care account is exhausted, and they become responsible for a much larger portion of the cost than they would on a PPO or HMO plan. 

Why then, would anyone choose such a plan?  The advantage to these plans has to do with the employees’ stewardship of the available benefit.  For example, suppose your  family is allowed $1000 for the year in your plan for physician visits and medication.  Fortunately, you don’t spend the whole $1000 in that year, and need to use only $400 of the $1000.  The remaining $600 rolls over to the next calendar year to offset your expenses in that year----in addition to the $1000 provided for that year.   Of course, you are betting that your family will stay well!

Many plans today, whether traditional or not, provide a separate dollar amount for preventative care.  If this amount truly is separate, that is, does not impact your deductible, be sure you are aware of this provision and that you take advantage of whatever screenings or tests are available to you for preventative care.  Generally, this money is in a “use it or lose it” status.  So be sure you use it!

The bottom line is really pretty simple.  Each consumer of medical services has slightly different needs.  Be sure you know what your family’s needs are.  Then be sure you understand the provisions of each plan available to you so you can make the best decision for spending your health care dollars.

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