A Fresh Start: Reviewing Your Health Care Plans

How I loved the holidays as a child. The chance to see family and friends, the wonderful aromas of turkey, ham (and of course cookies!) wafting through the air. And let’s not forget presents! Most Americans typically overindulge at the dinner table this time of year with the "resolution" to start fresh once the New Year starts. Physical fitness and diet aren’t the only things that we may be starting anew after December 31st. With 2008 running out fast now may be a time to take a look at what else might be running out—your health plan.

The biggest item to be concerned with is if you participate in your company’s Flexible Spending Account or FSA. This is the account commonly known as a "flex" account, and, if you’re not careful to use the money by December 31rst, you may lose it. Items such as medical, dental, and vision expenditures typically can be funded by payroll withdrawal from your paycheck before taxes during the year. The funds are held in an account for you and you can withdraw the money when used for appropriate expenses like the ones above. You can also fund daycare expenses. The key is to know when your plan requires you to submit those expenses for reimbursement out of your account. If you miss the deadline, you could be out of luck (and your money).

Similar to an FSA is something called an HSA, and you may or may not have it through an employer. Besides it’s name, it is similar in that you can contribute money into an account which you then use to pay your medical, dental or vision care expenses. Like an FSA, the money can be contributed without paying taxes on it, although oftentimes the funds are simply written off at the end of the year as a line item on your taxes. Unlike the FSA, you cannot fund daycare expenses but health, dental and vision expenses only. The other difference is that you don’t lose your funds if you don’t use it-they roll over to the next year. However, if you miss your company or insurance company’s deadline, you could miss out on your contribution for the year as there is a maximum you can contribute to the account each year (this is calculated on the deductible you chose up to a maximum amount).

Speaking of deductibles, if you’ve met yours for the year, now may be a good time to see your doctor, dentist or optometrist, as deductibles typically are calendar year—meaning you start all over again once the new year starts (some plans go on plan year and may have a renewal other than the first of the year although it is not nearly as common). Similar to deductibles is something called “co-insurance”; that portion that you are responsible for after your deductible that the insurance company cost-shares with you. Most people know it as their 80/20 although many cost-shares are possible, such as 50/50, 70/30, 90/10 and so on. What most people don’t know is that there is a cap on what your "share" can equal, after which the insurance company pays 100%. If you’ve met your share for the year, you in essence get "free" care (not counting your co-pays if they apply) for the year. So it’s important to know where you are when it comes to deductibles and coinsurance maximums. A simple phone call to the insurance company should be able to give you the information you need.

With dental insurance plans, there typically is a maximum amount payable by the insurance company per year, usually $1,000. I’ve also seen them as low as $750 a year maximum benefit or as high as $2,500. If you haven’t used all of your maximum up, it may be a good time to schedule that root canal.

Lastly, with many plans renewing on the first of the year, now may be a time to re-evaluate your health plan if you are offered more than one by your employer. Certain other benefits such as voluntary benefits may only be changed at the beginning of the year as well.

New Year’s may be a fresh start for everyone, health plans included so be sure you’re positioned for the maximum benefits you deserve. A quick review can save you potentially thousands of dollars. Best advice—don’t put it off to next year.

Until next time stay healthy.