By Colleen M. Murphy
This year’s premium increases have federal employees more concerned than ever about the cost of their health insurance. But premiums—the dollar amount taken out of your paycheck for insurance every pay period—can be deceiving.
When choosing a health plan, federal employees should consider the total cost of their health care. By total cost, we mean premiums plus out-of-pocket expenses less any tax savings from participating in the Flexible Spending Account (or, if applicable, Health Savings Account). You may not have any control over health plan premiums, but here’s how to control your out-of-pocket expenses and your tax savings with PlanSmartChoice’s medical cost calculator:
- Estimate the usage of medical services during 2010 for each family member. It’s easier if you start with what happened in 2009. Will everyone get a physical exam? Do you or a dependent require regular specialist visits? Is something extraordinary, such as a hospitalization or surgery, planned? And, how many prescription drugs do you use and how often? Are they generic or brand name? Did you buy retail or mail order? The medical cost calculator will calculate your out-of-pocket expenses, (based on your own estimated usage of medical services) and add annual premiums, so that you can compare the total health care cost of each medical plan available to you.
- In many situations, what happened last year is NOT a good indication of what will happen this year. If you were pregnant in 2009, your medical expenses will be quite different in 2010! Likewise, if you postponed that knee surgery because the timing wasn’t good, you might not be so lucky this year.
- Run multiple scenarios to see how your total health care costs change from plan to plan. What if you postpone outpatient surgery for a year? Or your child goes to the emergency room? Or you switch routine prescriptions from retail to mail order? Many federal employees run two or three scenarios in the medical cost calculator before making a final choice.
- After selecting a health plan, simply put side the amount of your out-of-pocket expenses projected for that health plan into the FSA (or, if applicable, HSA), you can reduce your total health care costs by about 10 percent.
On average, federal employees spend about seven percent of their income on health care, but that amount varies considerably based on your salary, your need for medical care, and your health plan choice. By spending 10 to 15 minutes on PlanSmartChoice, you can learn about the true cost of health insurance and make cost-effective choices.
Federal employees have help when it comes to controlling their health care costs. In addition to the PlanSmartChoice tools, organizations like OPM, Consumers Checkbook, and the health plans all provide comparison tools.
Past open season data indicates that federal employees who used PlanSmartChoice’s medical cost calculator made more cost-effective choices than those who didn’t take advantage of the feature. Those individuals learned that the total cost of health care varied significantly by health plan, and reported that cost concerns drove their decision to switch plans.
For more information, you can visit www.PlanSmartChoice.com or become a fan on Facebook for up-to-date information.
Colleen M. Murphy is the President and CEO of Asparity Decision Solutions. Hundreds of thousands of federal employees have used PlanSmartChoice, the company’s decision support tools, to choose health insurance coverage.