Analyzing Employer Provided Health Care Coverage

Health insurance is an important benefit that enables you to manage health care costs. Employer plans can vary widely, so it's best to do your homework. When evaluating a job offer, take the time to research the company health plan. Good insurance can save you substantial money in health care costs.

Types of health care plans
Health care plans come in two basic types: fee-for-service and managed care.

• Fee-for-service plans are also known as indemnity plans. Under these plans, you can see any medical provider you choose. The provider (or you) bills the insurance company, which pays for part of the cost. Usually, the insurance company pays for 80% of the total. You are responsible for the other part of the cost (usually 20%). In addition, you must pay a plan deductible. A deductible is an annual amount that you must cover before your plan kicks in.
• Managed care plans usually require you to see a provider within a certain network. Most employers today provide managed care plans. These plans are more restrictive, but they also cover more preventative care than fee-for-service plans.

Managed-care plans
Managed-care plans come in three types:

1. Health Maintenance Organization (HMO): HMOs require you to stay within the network and to select a primary doctor. Your primary doctor must refer you to any specialists. You make a co-payment for medical visits, but you don't have to pay a deductible. The co-payment is a set fee, such as $20 for a doctor's visit.
2. Preferred Provider Organization (PPO): With PPOs, you can see providers outside of the network, but at a higher cost. You also can see specialists without a referral from a primary doctor. You usually pay an annual deductible plus a co-payment for visits to the doctor or hospital. Fees are kept low, but usually higher than for HMOs.
3. Point of Service (POS) Plan: POS plans combine the features of HMOs and PPOs. You pay lower co-payments and no deductibles if you see in-network providers and receive referrals to specialists from your primary doctor. If you see out-of-network providers, you pay a deductible and higher co-payments.

Payment options
Your health insurance plan may be paid for in one of three ways:

1. Your employer may pay 100% of the cost.
2. Your employer may pay part of the cost, while you contribute part of the cost.
3. You may pay 100% of the cost.

If you are required to contribute to your health costs, you normally make these payments each pay period. Your employer can arrange to have your contribution deducted from your paychecks.

Joining your employer's plan
If you are required to pay the entire cost of your health insurance, research options before joining the policy. Individual policies may be less expensive than employer plans. Unlike employer plans, however, individual policies aren't required to accept you. If you have a significant health condition, your employer plan may be the best option.

Coverage options
Most health care plans cover basic health-care costs. These include doctor's visits, laboratory costs, surgical procedures, and hospital stays. Some employers also may offer additional coverage options.

• Flexible spending accounts (FSAs): FSAs let you save pre-tax money to pay for medical costs not covered by insurance. These medical costs can involve over the counter medicine, contacts, glasses, and prescription costs. Your contributions are usually deducted from your paycheck. FSA funds must be used within a certain time period, or they are forfeited.
• Dental and vision plans: Dental and vision may be included in your health insurance. If not, you may have the option to add them for an extra fee. Like health insurance plans, dental and vision plans are structured as fee-for-service, HMOs, or PPOs. Many plans provide discounts rather than actual insurance coverage.

Vision and dental coverage
Depending on the type of coverage, your vision and dental plans may require deductibles and co-pays. Vision insurance normally covers a yearly eye examination and the cost of glasses or contact lenses. Some plans provide allowances for eye surgery, too. A good dental plan will pay 100% for annual exams, X-rays, and cleanings. Typically, basic procedures such as fillings are covered at 70%, and major procedures are covered at 50%.

For more information about health benefits, comparing rates, and health expenses visit www.consumerreports.com.