The following post is by MPFJ staff writer, Melissa Batai. Melissa is a freelance writer who covers topics ranging from personal finance to business to organics to food. She blogs at Mom’s Plans where she shares her family’s journey to healthier living and paying down debt.
My husband recently took a new job in Arizona. We’re from Illinois, so the move itself was a big deal. After the headache of packing up and moving halfway across the country, I discovered we had several other obstacles.
Namely, I couldn’t believe how complicated picking a new health insurance plan was. We were faced with three choices–a health savings account (HSA), an EPO (similar to an HMO), and a PPO. After we made that decision, we then had to choose between four insurance companies to meet our needs. Geesh! I don’t remember it being this complicated when I started my full-time job 14 years ago.
If you, too, are faced with choosing a health insurance policy from a new employee, consider using some of these strategies that made our decision making process a little bit easier:
What Providers Are Included?
If you’re new job doesn’t involve moving from your current location, you may want to give preference to the plan that lets you keep your current provider, assuming you like your doctor and are comfortable with the services offered.
We had to get a new doctor anyway since we’re new to the area, so this had very little weight in our decision.
What Are Your Own Biases?
My husband and I were trying to decide between the EPO and PPO plan. Initially I was drawn to the PPO plan because I had heard bad things over the years about HMOs. I had concerns because the EPO wouldn’t cover providers who were out of network, and I had heard that HMOs can sometimes not be a wise choice if critical injuries or illnesses occur. Sometimes it can be difficult to get the treatment needed.
I entered the decision making process with a strong bias while my husband entered it with an open mind. In retrospect, the decision making process would have been easier if I’d been a bit more open-minded.
Talk to Others Who’ve Used the Insurance
I called Human Resources for more information about the insurance plans. The woman I talked to had been using the EPO for the past 10 years and had had no problems. She highly recommended it.
When I called an independent insurance agent for homeowner’s insurance, she mentioned that her husband also worked where my husband’s got his new job. I took the time to ask her what insurance plan she and her husband had chosen. They’ve used the EPO for the past 12 years and have had no problems. The insurance agent had even had a serious heart problem and a pacemaker installed, and the EPO covered her entire expense. She paid nothing out of pocket.
Talking to others to get their opinion about the insurance coverage can help you choose which plan you’d like and make you feel more comfortable with the decision you make.
How Much Does the Plan Cost?
Although it can be tedious, take the time to do a side-by-side comparison on the policies you’re deciding between. When I did this exercise, I was shocked!
The PPO would cost us over $6,500 per year in premiums alone! Then, there was a $1,000 in-network and $2,500 out-of-network deductible to meet per year.
The EPO, on the other hand, would only cost us $2,200 per year in premiums. There were no yearly deductibles to meet.
Both plans had the same co-pays for doctor’s appointments, prescriptions, and other expenses.
Do You Have any Special Needs?
You’ll want to consider your own unique issues. For instance, if you and your spouse want to start a family, you may want to consider a plan that has the best maternity coverage. If you are having trouble conceiving, you may want to choose the plan that has the most generous plan for fertility specialists.
Consider your own unique medical issues and look for the plan that best suits your needs.
In our case, my oldest son and I are dealing with food intolerances and see a specialist to treat the issues. The EPO plan wouldn’t cover these expenses at all. The PPO plan would cover them at 50%. Still, even though the EPO wouldn’t cover the expenses, choosing an EPO and paying out of pocket for these expenses would still cost less than going with the PPO due to the high premium expense of the PPO.
Are There Any Tax Implications?
The plan you choose may have tax implications. For instance, if you choose a health savings account (HSA), you reap several tax advantages. The money to fund your account is taken out of pre-tax dollars. The interest on the account accumulates tax deferred. Finally, you don’t have to pay taxes when you withdraw the money for qualified health expenses.
However, when you withdraw the money for qualified health expenses, you need to put the withdrawal amount as “other income” on your tax return. Before choosing a HSA, check the tax implications with your accountant.
Look Into More Ways to Save
Regardless of what plan you choose, you can always opt for a flexible spending account (FSA) or a health savings account (HSA) to help you pay qualifying out-of-pocket expenses. (To qualify for a HSA you must have a yearly deductible of $1,200 or more.) There are benefits and drawbacks to both.
The FSA works with any insurance plan, and the money is taken out from pre-tax dollars. However, whatever money that you do not use by the end of the year is taken by the government.
The HSA, like the FSA, is funded through pre-tax dollars. On the other hand, unlike the FSA, the balance continues to roll over year after year. However, if you don’t have a high enough deductible, you will not be able to use an HSA.
Consider Other Alternatives
Unfortunately, not all employer based health insurance plans are created equal. A friend of mine chose not to go with his employer’s insurance because the premiums are $10,000 a year, and the deductible is $5,000 per year! He and his family simply could not afford to pay up to $15,000 a year out of pocket for health care.
In this situation, some people have looked at Christian-based health savings plans. These plans are not health insurance per se. Instead, members pay a standard amount every month (usually $350 to $500 depending on your family’s size and health), which goes to pay other members’ health care needs. When you have health care needs, other members send their monthly payment to you for your expenses. Those who join this kind of plan are exempted from the Obamacare penalty.
You Can Always Switch
While choosing a health insurance plan is a big decision, keep in mind you can always switch plans during the open enrollment period. If you have one plan that you don’t care for, you can try out another one for a year.
Our Decision
Ultimately, we couldn’t ignore the high price difference between the two plans. We decided to go with the EPO to save nearly $5,000 a year on premiums and deductibles.
The decision was much easier after I talked to two people who had no complaints about the plan, including one who had faced serious health issues.
How about you all? What other factors go into your decision when choosing a health insurance plan with a new employer?
Share your experiences by commenting below!
***Photo courtesy of https://www.flickr.com/photos/68751915@N05/6793821977/
