Health-Care Savings Series—Day 1: Know your coverage

Choose or change your plan based on your needs

Open enrollment season begins in fall for health care and other benefits at many employers. If your employer offers multiple health plan choices, this is the time to review your current coverage to make sure it still meets your needs, and to explore your other options if it doesn't.

For example, if you're in your twenties or thirties, and don't have any health problems, you may roll the dice on a plan with lower premiums and higher co-pays and deductibles. But if you have developed a chronic condition or have young children, a higher premium with lower co-pays may be the wiser choice. Older people may also benefit from more comprehensive coverage with higher premiums and lower co-pays.

To make the right choice, you'll need to do some homework. A key first step: a worst-case calculation of the most you might pay in a year on health coverage. Add up the total annual cost of your premium, and your plan's annual out-of-pocket cap. If it's too high for comfort, you might want to trade a higher premium for a lower out-of-pocket limit. If you have the savings to take a health cost hit, your trade-off might go the other way. 

Consider your spouse's options as well; his or her workplace plan may make more sense for your household. And take into account any potential changes that might occur in the coming year. Three of the most important:

• Having a baby. Make sure your plan covers prenatal care, childbirth, and newborn care (not all plans do, especially those you buy individually).

• Retirement. If you plan to retire before 65, find out what your employer's retiree health benefits are. If you are planning to continue your coverage through COBRA, find out what your monthly premium will be when the time comes for you to pay on your own. If it's out of reach, find out if your company offers a cheaper plan you can switch to now, because once you retire, you can't make that change.

• "Aging off" of dependent children. Some plans stop covering dependent children at age 19, while others continue coverage into the early- or mid-20s as long as the children are full-time students. Find out what your plan's provisions are.

You also need to consider the plan's rules and restrictions.

Pre-authorizations: Do you need pre-authorization for a test or a non-emergency inpatient or outpatient procedure? If so, make sure you have it so that you'll be covered. Even medically necessary treatments may not be paid for without proper authorization.

Referrals: Do you need to get a referral from your primary care physician to see a specialist? If so, make sure you get one to ensure coverage.

Drug formularies: Many plans now have lists of "preferred" drugs in different treatment classes. If you are on a medication long-term, find out whether it's on the plan's list.

Coverage limitations: Know what they are. You may be allowed 10 physical therapy sessions a year, for example, or 20 mental health counseling sessions. Anything more is on your tab.

Deadlines: Know how long you have to dispute a denial of your claim or the amount of an insurance payment. It's typically six months, but know for sure, or you can end up losing an appeal. See our most recent guide to handling insurance disputes for more.

For more help, see our full coverage on choosing insurance.

—Kevin McCarthy, associate editor

Tomorrow: Talk to Your Doctor to Save on Prescription Drugs