As open enrollment looms, make right coverage choices

Choosing your health care plan can be daunting. Confusing choices, funny-sounding acronyms and rising premiums are mind-numbing.

But one thing is clear. If you're fortunate enough to be covered by an employer's health plan, it's time to pay attention. Now through December is annual open enrollment season, when employees choose their health care plans for 2013.

It's not an idle exercise. This year, health care premiums are expected to go up yet again. According to the National Business Group on Health, 60 percent of large U.S. employers say their premiums will be higher for 2013. Most predict increases of less than 5 percent.

When selecting their annual health insurance benefits, 56 percent of employees figure they've wasted up to $750 a year because of mistakes made during open enrollment, according to a July survey by insurance provider Aflac.

Those mistakes? Not realizing their doctors aren't covered; paying for benefits they don't need; selecting the wrong coverage.

To ensure you don't miss out or make costly mistakes, here some tips from experts.

Deadlines count • Show up for your employer's health care meetings or benefit fairs. If you don't sign up on time or rush through the paperwork, it could cost you money. And you can't undo anything for another 12 months, until the next year's open enrollment.

Don't go on autopilot • "It's really important to research all your options. If you just go on autopilot, you may not get the best coverage and you may not be able to afford the costs you incur," said Kristen Stoll, a consumer health specialist with eHealthInsurance.

Don't assume your current plan will stay the same. In addition to monthly premiums, check for price increases in prescriptions, office visits and co-payments.

Consider what you spent last year, to see if you can make adjustments. For example, "If you don't go to the doctor a lot, you'll save more on your monthly premiums, if you switch to a $50 co-pay, instead of $30," said Bill Oliver, a financial adviser and group insurance specialist in Orangevale, Calif.

Mix and match • If you have a family policy, be sure the coverage makes sense for your situation. For instance, if you have college-age children, who can now be included on all health plans up to age 26, are they getting the best coverage under your group policy?

"If you have a son who lives in Arizona for school and your policy in California is with Kaiser, he might not be able to find doctors," said Stoll. In that case, it might be cheaper to get an adult child an individual policy.

Same with spouses. Stoll and her husband have very different health care needs: He rarely sees a doctor, but wants comprehensive coverage in case of illness or accident. She needs more routine office visits and maternity benefits.

"Do some calculating. Look at what you're paying in premiums for additional family members on your plan," said Stoll.

In her case, it "absolutely saved us money monthly" to get individual coverage under their respective employers' policies, rather than stay together under a group plan. (Note: Some companies require spouses to stay under separate plans, if employer coverage is available.)

Peruse the paperwork • Under a new federal mandate, all insurers nationwide must for 2013 provide a clear, easy-to-read "Summary of Benefits and Coverage."

Akin to a food nutritional label, the SBC is intended to clearly spell out what's included in your plan and what you'll pay for deductibles, prescriptions, office visits. It also has to show basic costs for at least two major medical events, having a baby and managing Type 2 diabetes.

If you don't receive an SBC, ask your employer. Some carriers make them available online or by paper copy upon request.

Worried about layoffs? • If you think your company might be cutting jobs next year, consider going with the least costly plan, says eHealthInsurance. That'll make it easier if you have to pay your entire premium under COBRA, the federal law that lets laid-off workers temporarily keep their health care coverage.

Use the tools • Most carriers, as well as state and federal websites, offer online tools for comparing health plans and medical procedures.

UnitedHealthcare, for instance, has an online cost estimator for about 300 medical procedures. "If I know I need arthroscopic knee surgery, I can do a search and compare and contrast different providers in my area for a sense of how different costs can be. Many times there is quite a variation in price for the same procedure," said Steve Scheneman, a regional vice president for UnitedHealthcare.

Shopping around can lead to a more informed decision, as well as save on out-of-pocket expenses and deductibles.

Changes to FSAs • A flexible spending account lets you set aside pretax dollars with your employer that can be used for medical expenses during the year, anything from bandages to contact lenses to dental care. For 2013, the maximum contribution drops to $2,500, down by half from the current $5,000 limit.

As always, the catch is that it's a use-it-or-lose-it account. If your kids are getting braces or you're planning laser eye surgery next year, do a rough calculation of the costs and set aside that amount.

In the Aflac survey, only 16 percent of consumers said they chose the right FSA amount.

Also, if you have an FSA, don't forget to submit reimbursement claims or use your FSA debit card to spend down the full amount you set aside for 2012. If not, your untaxed dollars stay with your employer. (Note: Some employers allow a grace period, until March 2013, to use up any remaining FSA funds.)

Consider an HSA • These come in two parts, a health savings account paired with a high-deductible health plan. Similar to FSAs, HSA savings can be used to pay for almost any medical expense. But unlike FSAs, your HSA funds are yours to keep and roll over from year to year.

For 2013, HSA contribution limits are $3,250 for individual coverage or $6,450 for family coverage. All HSA contributions, earnings and withdrawals for health care expenses are federal tax-free.

Oliver, who has Kaiser health insurance, said he and his wife have saved an average $1,600 a year since 2007 by switching to a high-deductible plan with an HSA account.

The catch is that the cheaper premiums mean you pay a higher deductible, starting at $1,250 for individuals, plus out-of-pocket costs, before insurance kicks in.

Consider carefully, as savings can vary widely depending on family size, ages and medical needs.

Be a smart consumer • Take advantage of "wellness" savings offered by your company's plan. Many insurers offer cash rebates, gift cards or discounts for healthy lifestyle changes, such as losing weight, lowering cholesterol or quitting smoking. —

2013 health care changes

Next year will the last year before final, major overhauls under the Affordable Care Act take effect in January 2014. New in 2013:

FSA limits •The maximum amount that can be set aside in a flexible spending account is lowered to $2,500. In 2012 it's a maximum of $5,000.

Benefit summaries • Health care providers must provide an easy-to-read Summary of Benefits and Coverages, including costs for two basic life events, having a baby and managing Type 2 diabetes. —

On the Web

Healthcare.gov • Covers all aspects of health insurance under the federal Affordable Care Act.

EHealthInsurance.com • A health insurance comparison site for consumers. Offers a free book, "Individual Health Insurance for Dummies."