We all know more than ever before about ways to improve our health. How to make smart choices between foods high in fat and calories versus foods high in nutrients. But what about making smart decisions about our health care. Here are some definitions of insurance terms and five tips on how to make benefits planning simpler.
Definitions of Five Basic Insurance Terms
Annual limits: A limit on the amount your plan will pay in a year. An example would be a limit placed on prescription drugs or hospital stays. After an insurance company has paid out up to the annual limit, you must pay the rest of those type of costs until the end of that plan year.
Co-payment: A set dollar amount or percentage that you pay for medical services. For example, if your doctor visit co-pay is $15, you will have to pay $15 every time you visit your doctor. Sometimes, co-pays start only after you first pay any deductible your plan has.
Deductible: This is a set amount that you must pay before your insurance will start paying.
Flexible Spending Account: An account tied to an employer-sponsored health plan. It can be used to pay for medical expenses. Contributions to the account are typically made by the employee. The contributions are free of federal, Social Security and most state taxes. You must use the funds before the end of the year or you lose them. Funds do not accrue interest.
Open enrollment: This is the time set by your insurance company and employer when you can make changes to your health benefits plan.
Five Tips on How to Make Benefits Planning Simpler
1. Talk to someone in your Human Relations or Benefits Department at work. Ask questions. Most of us don’t know enough about the options available to us for employment benefits. Treat this like any other major expenditure and seek advice from people who know more about it. When you buy a new refrigerator, don’t you talk to family, friends, and co-workers?
2. Check your insurance and company websites for information. Usually there is a wealth of information available, it’s just a matter of having the patience to find it. When you run across a term you don’t recognize or quite understand, google it. Look for a glossary in the informational materials you have or on your insurance company’s website.
3. Find out and take advantage of Open Enrollment. Open enrollment is the time period when you can make changes to your benefit plans. Ask your employer when it will be and prepare. Usually the time is 30 days, which can go by fast. So start in advance to learn what your options are. For example, you will want to look at what your priorities may be. Different families have different health care needs in the areas of prescription drugs, dental, eye coverage, and preferred providers.
4. Consider a Flexible Spending Account (FSA), Health Savings Account (HSA), or Health Reimbursement Arrangement Account (HRA). With an FSA, money is deducted from your paycheck and placed in an account. You can then use that money for specific, medical expense. The benefit is that the money is not taxed. An HSA is available to any individual covered by a qualified high-deductible health plan. For more information about HSA, read here. An HRA is an account offered to employees or retirees, where you can use the money to pay for deductibles. Like an HSA, leftover dollars generally can be used from year-to-year, as long as you continue to be a member of the plan. Also, the money is contributed by your employer and doesn’t count as income; saving you valuable tax dollars — complete with Uncle Sam’s stamp of approval.
5. Track your medical expenses. Get into the habit of saving receipts and tracking expenses along with your regular monthly bill paying. Make sure your family knows to track these expenses, too. Keep them in a separate box labeled “Health Care Expenses.” At the end of the year, you can estimate how much you and your family spent per month — to give you a head start on next year’s estimate.
If you’re like me, you would rather clean your basement than read your insurance policy. And they are difficult to read. But look for materials that your company can provide that are written in language that is easier to understand. Check the websites, use search engines and surf internet sites to find information and explanations. It’s important and can save you money while improving the quality of your health care and your life.
Resources:
Be Smart About Your Health from Aetna insurance
Navigating Your Health Care Benefits for Dummies (sign up for a free copy!)
US Department of Labor:Â Health Plans and Benefits
Disclosure:Â I wrote this blog post while participating in the TwitterMoms and Aetna blogging program, making me eligible to get a $30 Target gift card. For more information on how you can participate, click here.