Health benefits – coverage vs. cost…

One of my current professional projects is coordinating an open enrollment for health benefits for a medium-sized public school division.  It’s essentially project management, which I enjoy, however there are side effects (hehe – medical pun intended).  I am dreaming of spreadsheets, enrollment forms, deductibles, copays, and the Real Housewives of New Jersey.  I suppose that last item is unrelated.  I digress…

Something that I’ve experienced in working with educators in the past, particularly new teachers, is that they tend to give deer-in-headlights looks when you talk about work-related benefits afforded them through their employer.  Before I go any further and sound judgmental, I could absolutely be included in that group in my younger days.  Thinking about which plans make the best financial and health sense can be a bit overwhelming, especially if this is the first time decisions are being made on one’s own.

Given that, I’d like to offer a few pieces of advice with regards to basic health and dental benefits:

  1. Read the literature – specifically the comparisons between plans highlighting similarities and differences.  Highlighting the differences will help you understand offerings and assist you in narrowing your deliberations down to critical questions.
  2. Attend meetings with vendors and ask questions.  I know you have much more pressing things to do with your time, but it’s critical that you get your questions answered.  Be a critical consumer and keep in mind that these vendors represent for-profit companies and – in some cases – are paid on a commission basis.  That said, they tend to be incredibly knowledgeable about the products – what they cover and what they don’t.  Your human resources representative may also be well-versed, but I personally like to get answers from the source – the folks who will theoretically be providing me coverage.  Empower yourself to get the answers you need from the best source, but run it by an objective, impartial person – perhaps this is where your HR representative fits in – or a friend, a parent, a colleague.
  3. Compare the costs between levels of plans offered.  Typically a base plan and a buy-up plan translates to a difference of about $40 per month.  If that doesn’t break the bank, buying up might be a no brainer.  If your budget is tighter, refer to #4.
  4. Assess your comfort level with financial risk in light of your budget and health situation.  As a young, single educator with a mortgage and car payment, that $40 monthly savings was a significant amount for me.  Are you very healthy?  Do you have a rainy day fund in case you incur some unexpectedly large medical bill?  If so, you might want to save money on the monthly premiums and roll the dice, hoping not to have any big expense.  If risk scares the heck out of you, or if you anticipate a medical event on the horizon (i.e. surgery, getting pregnant), you need to carefully examine the difference in out-of-pocket cost for such events.  The buy-up plans, assuming they cap the amount of expense you may have, may be a better way to go.  The cheaper plans often have a coinsurance, meaning you’ll pay a percentage of the total bill.  Here’s a real life example:  I had a baby last year by emergency C-section and my bills totaled $15,000.  If I had the basic plan, I’d pay 20% coinsurance (or $3,000).  If I had the buy-up plan, I’d pay a $200 flat fee for the hospital visit.  I’m so so so glad that I bought up last year, but I also anticipated the event and planned for it.  Other years, given my good health, I saved money on the basic plan.  Had I been in a car accident, I would have found myself with a big bill.  Perhaps for you that’s where your savings account comes into play.  Or perhaps that risk scares you into paying up more each month to avoid the surprises.
  5. Evaluate your decision throughout the year.  By law, you have the opportunity to change your benefits at least once per year, so you’re not locked in forever.  Keep track of what you spend, both in premiums for coverage and your actual medical expenses (prescriptions, copays at the doctor’s office, etc.).  Experience is often the best teacher.  Did you save money with the basic plan overall?  Did you remain so healthy that the extra premium cost wasn’t worth it?  Did you feel better having the guarantee of capped bills?  Did you incur a big hospitalization bill that made you think twice about rolling the dice next year?

Not every year is identical with regards to your health, but you may observe trends in your behaviors and spending that point to a logical choice.  My crystal ball is out of commission, so the best I can do is make a decision with the information I have.  Evaluate, reflect, and put into practice what you learn.  Hey, that’s what good teachers do, right?

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