Friday, May 29, 2009

Your 5-minute guide to health insurance

These 29 tips can help guide you through a sometimes bewildering array of options.

By MSN Money staff

Access to health insurance is protected by federal law if your employer offers group coverage. But if you need to buy insurance on your own and you have a history of medical problems, finding affordable insurance can be a challenge.

Either way, you can take steps to control your health-care costs.

Get the most from your employer plan

If you're insured through your employer, review your coverage annually when your company holds open enrollment. (See "9 keys to choosing the right health plan.")
  • You may have a choice of several types of providers. Base your decision on access to quality careand what the plan does and doesn't pay for. Examine deductibles, co-payments, limits on out-of-pocket expenses, lifetime maximum benefits and prescription coverage. (See "When your health plan won't pay.")
  • Have your medical needs changed? A plan that couples higher premiums with lower co-pays is better for people with health problems.
  • You can pay out-of-pocket health-care expenses with a flexible spending account using pretax dollars, meaning Uncle Sam covers as much as a third of the tab. But you'll lose what you don't use in the calendar year (employers can extend the deadline to mid-March), and you can't take it from job to job.
  • You may be able to lower your premiums by taking advantage of employee incentives to lose weight, exercise and stop smoking. (Your employer's plan cannot single you out for higher premiums or drop your coverage if you develop health problems.)

Cheaper ways to buy it yourself

Another option for paying out-of-pocket medical expenses is the health savings account. An HSA is available only if you buy high-deductible health insurance through your employer or on your own. (See "Get cheaper medical coverage -- with a tax break.") Not every high-deductible plan can be partnered with an HSA.
  • The Internal Revenue Service will allow maximum HSA contributions of $2,900 for individuals and $5,800 for families in 2008. Your contribution is either pretax or deductible, even if you don't itemize, and earnings and withdrawals for medical expenses are tax-free.
  • Unlike a flexible spending account, your money is invested, and what you don't spend will roll over to the next year. You can take the account with you if you change jobs.
  • You can make contributions up to age 65. After that, you can make taxable withdrawals for any purpose.

For those awkward in-between times

If you're between jobs, try not to let insurance coverage lapse. Some provisions of federal law that protect access to insurance don't apply if you've been without coverage for 63 days (longer in some states).

COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985, allows you to continue group coverage after your job ends, generally for 18months, but you'll pay the entire premium. Know your rights under federal law and state law.

  • You can continue contributing to your flex account under COBRA, giving you more time to use the money.
  • You can use your HSA to pay COBRA or other health insurance premiums if you're receiving unemployment compensation.
  • Under certain circumstances, you can make penalty-free withdrawals from an IRA to pay premiums if you're unemployed.

When you start a job, enroll in your employer's health plan at the first opportunity. Under HIPAA, the Health Insurance Portability and Accountability Act,you cannot be denied coverage for a pre-existing condition (one for which you've received advice or treatment in the previous six months, including mental health disorders but excluding pregnancy) for more than 12 months (shorter in some states) or 18 months for late enrollees. That period will be reduced by the amount of time you were previously insured without a 63-day break in coverage.

Going it alone?

If you're self-employed or your employer doesn't provide health insurance, use MSN Money's Insurance Planner and read "Health coverage for all" to learn about options.
  • HIPAA says a private insurer cannot deny insurance or exclude coverage for pre-existing conditions if you had coverage for 18 months without a 63-day break, most recently with a group plan; have exhausted or are ineligible for COBRA; and are not eligible for a group or government-sponsored plan. Each state has rules for providing HIPAA coverage.
  • Many states have high-risk pools for people who meet the HIPAA guidelines and for those unable to find affordable coverage because of pre-existing medical conditions. Many states set a cap on pool premiums, usually between 125% and 200% of market rate.

Medicare kicks in at age 65. Even so, a couple should plan to spend $215,000 for out-of-pocket medical expenses in retirement, not including the cost of long-term care.

  • Count on Medicare premiums to go up. By federal law, 25% of Medicare's costs must be covered by premiums.
  • Many of us will eventually need nursing-home care. Consider buying long-term-care insurance with inflation protection in your 50s, when premiums are lower. (See "No long-term-care insurance? Uh-oh.")

More than 46 million Americans have no health insurance. Some help is available. (See "A survival guide for the uninsured.")

Insured or not, you can cut your expenses for medications:

  • Buy generic if possible, and price shop. Check Rxaminer and DestinationRx. Some stores offer big discounts on generics. If you shop online, chose a provider accredited by VIPPS, Verified Internet Pharmacy Practice Sites. Never buy from an online pharmacy that doesn't require a prescription. (See "13 ways to save on prescriptions.")
  • Ask your doctor to double the dosage so you can use a pill splitter to cut costs. Ask for free samples.
  • Go to RxAssist to learn about drug discount cards.

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