Make the Most of Open Season

Kip Tips

Make the Most of Open Season

By Anne Kates Smith, from the September issue of Kiplinger's Personal Finance

If you're lucky enough to still have a job and benefits to choose from, you may soon find a stack of paperwork on your desk courtesy of the human-resources department. As open-enrollment season arrives, resist the urge to default to last year's selections, especially when it comes to health insurance.

Choose carefully because your costs will likely rise again this year, from 7% to 12%, according to Sara Taylor, at Hewitt Associates. The old rule of thumb -- that employers pick up 80% of premiums and you pick up 20% -- is now closer to a 70-30 split, says Scott Ziemba, a senior consultant with benefits giant Watson Wyatt. With higher deductibles and co-pays factored in, you're approaching 60-40.

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That's reason not to gravitate toward the "Cadillac" health-care plan -- the one that covers everything, has the lowest deductible and reimburses the most. A plan with lower premiums that comes with a higher deductible and higher co-pays -- especially one that's coupled with a tax-advantaged health savings account -- keeps more money in your pocket each month and may prove sufficient for your medical needs. These days, more such plans cover up to 100% of preventive services, such as physicals and immunizations.

Take advantage of more freebies this year, plus incentives to stay healthy. You may get discounted premiums or a gift card in exchange for undergoing a health-risk assessment or for participating in programs to stop smoking or step up exercise, for instance.

Expect your spouse to be asked to undergo a risk assessment, too, if he or she is covered by your plan, and don't be surprised if the plan is audited to weed out ineligible dependents. Health-care reform might result in some bennies being taxed, but probably not next year.