Watch for stealth changes in health plans that raise costs

Employers struggling with rising health costs continue to increase employee premiums and co-payments for doctors' visits and prescription drugs, as well as make less obvious changes that could boost your out-of-pocket costs significantly.

So, your current policy may no longer be your best option. Look for these changes when you receive your open-enrollment packet.

• Higher prescription-drug costs. Employer-sponsored plans have been dividing prescription drugs into several price tiers for some time, charging, say, a $5 co-payment for a generic drug and as much as a $30 co-pay for the brand name.

But many employers are switching to co-insurance and charging a percentage of the total cost — such as 10 percent of a generic drug's cost, 20 percent for a brand-name drug on the plan's approved list, and 30 percent for a brand-name drug not on the formulary.

• Lower coverage maximums. Some employers are cutting costs by offering so-called mini-med policies with low coverage limits of just a few hundred thousand dollars. These policies may look attractive because of their low deductibles, but you could have tens of thousands of dollars in expenses that aren't covered if you become seriously ill.

Better to buy a policy with a maximum coverage limit of $3 million or more and to lower your premiums by raising your deductible.

If your deductible is at least $1,100 for individual coverage or $2,200 for a family in 2007, you can also set aside tax-deductible money in a health savings account, which you can use tax-free for medical expenses.

If your coverage limit is still too low, you may do better on your own, especially if you're healthy. To get price quotes, go to eHealthInsurance.com, or find a health insurance broker at www.nahu.org.

• Increased costs for dependents. Some employers are adding surcharges for dependents who have other coverage options, or charging extra fees for large families. If both you and your spouse have employer coverage, find out how much it would cost to add your kids to either policy.

Be sure to compare your total out-of-pocket expenses — premiums, as well as co-insurance — when deciding which plan is best for you. Most employers have tools on their intranets to help you.

---

Kimberly Lankford is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions to moneypower@kiplinger.com.