Most people get their health insurance through their employer, and even though the options are usually better and the premiums more stable than for people who buy their own coverage, their premiums and deductibles have been rising steadily. But if you follow a few simple strategies, you may be able to increase your coverage and decrease your costs.
It's likely that a high-deductible plan paired with a health savings account will be on your employer's menu in 2019, although fewer companies will offer a high-deductible plan as the only option. You may also be able to choose a lower-deductible preferred-provider organization (PPO) plan -- which charges higher co-payments if you use out-of-network providers -- or a health maintenance organization (HMO) plan, which may have lower premiums but usually only covers out-of-network care in emergencies.
Compare your options. If you don't anticipate having many medical expenses, you may come out ahead with the lower-premium, high-deductible plan. But do the math as you compare your options. When calculating your costs, find out exactly what is subject to the deductible -- some plans have one deductible for the whole family, and others have a separate deductible for each insured person.
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"The conventional wisdom is that if you're young and healthy, a high-deductible plan is a good fit, and if you have chronic health care needs, you'll want a higher-premium, low-deductible plan. But that is not always the case," says Ryan McCostlin, head of individual health care planning for Bernard Health, a benefits advisory firm. With a high-deductible policy, he says, you can sometimes pay for out-of-pocket costs with premium savings.
After changing jobs earlier this year, Cameron Phillips (pictured above), 34, discovered that his health insurance options were fewer than in years past. Still, the plan he chose through his job as a sales director for a clothing retailer is hundreds of dollars less each month than the coverage available to his wife, Emilie, through her job as a teacher at a small school for children with autism. Under the new plan, Cameron pays about $500 a month in premiums for a policy that covers him, Emilie and their 1-year-old son, Thomas. The monthly premiums match what the family paid in the past -- but the plan's $6,000 deductible is nearly double that of their policy at his former job.
So far, the coverage has worked for the Phillipses, who live in Raleigh, N.C. Still, Cameron and Emilie will be reviewing their options this fall -- and hoping for a wider variety of plans. "I would rather pay a little less in premiums each month, even if we'll pay a little more out of pocket when we use the coverage," he says.
An added benefit of choosing a high-deductible plan is that it usually makes you eligible to contribute to a health savings account. An HSA provides a triple tax benefit, and you can use HSA money to pay medical expenses at any time -- you can even build up a tax-free stash of savings in the account to cover health care costs in retirement. To qualify for an HSA, your health plan must have a deductible of at least $1,350 for single coverage or $2,700 for family coverage in 2019.
Most employers pay you to choose the high-deductible plan; 85% of the employers in the NBGH survey expect to contribute to employees' HSAs in 2019, with an average contribution of $500 for employee-only coverage and $1,000 for family coverage. Some employers offer matching contributions, but most give a fixed amount to everyone who signs up for the high-deductible health plan. Those lump-sum contributions tend to happen early in the year because "employers are looking to help people overcome the fear that they won’t have money in the account if something happens," says Eric Dowley, senior vice president of HSAs for Fidelity Investments.
Check the policy limits. Also compare the most you could pay out of pocket under each type of plan if you have major medical expenses. The maximum out-of-pocket spending limit (which includes co-payments and deductibles but not premiums) averaged $3,500 for employee-only PPOs ($7,000 for family plans) and $3,600 for employee-only high-deductible plans ($7,200 for family plans), according to the NBGH study. Find out what is included in this calculation for your plan choices. For example, those limits usually only cover in-network care; they may be double those levels if you use out-of-network providers.
Are the doctors and hospitals you'd like to use included in the plan's network? What happens if you go out of network? (Some plans charge higher co-payments and deductibles for out-of-network providers, but others don't cover out-of-network care at all except for emergencies.)
Also check whether the plan has "centers of excellence," where you can pay in-network rates at major out-of-state hospitals that specialize in certain treatments. Your plan may even pay your travel expenses to use one of these nationally recognized hospitals, such as the Cleveland Clinic or Mayo Clinic. Nearly 80% of the plans in the NBGH study cover a center of excellence for transplants and 46% cover one for orthopedics (for knees, hips and spine). Many plans also offer centers of excellence for cancer treatments, fertility treatments, cardiovascular care and bariatric surgery.
Compare coverage for any drugs you take (see 7 Ways to Save on Prescriptions). Make sure your drugs are on the plan's formulary (the list of drugs the plan covers), and find out what your co-payments will be. Most plans have four or five tiers of drug co-payments—with co-pays as little as $0 to $5 for preferred generics and as much as 40% to 50% of the cost for non-preferred brand-name drugs.
Take advantage of any resources your employer offers to help you manage your health care costs, such as decision-making tools, second-opinion programs and concierge services. "They're offering more resources to help consumers maximize their health care benefits," says Brian Marcotte, president and CEO of the NBGH. "They help people understand their treatment options and where they can go for care."
If both spouses have access to employer health insurance, compare the costs and coverage for all of the options. Each of you could stay on your own plan and add the kids to the plan with the lowest costs, or it might make sense to put the whole family on one plan. However, about one-third of employers in the NBGH survey assess a surcharge if your spouse could get coverage from his or her workplace but chooses to be covered by your plan instead; the average surcharge was $1,200 in 2019, according to the NBGH.