Tip of the day: Thinking of switching health plans?

It's open enrollment period for many, and you may be among those considering switching health plans, whether to save on drugs costs, or simply because you're not happy with your coverage. If you're on Medicare Part D, you may have even more reasons to shop around, including rising premiums, the "doughnut hole," and changes in the drugs your plan will cover. Find out whether or not you should switch plans and check out our recommendations on dealing with the doughnut hole.

Making smart Medicare Part D choices

Seniors reeling from the financial crisis and looking to pare living expenses should take a fresh look at their prescription medicines and Medicare Part D plan. Significant savings are possible and the timing is right: The 2009 open enrollment season for Medicare Part D (the prescription drug benefit) began Nov. 15 and runs through Dec. 31.   

Our analysis has found that seniors can save from hundreds to thousands of dollars a year–and possibly keep themselves out of the infamous benefit gap known as the doughnut hole–by switching to lower-cost medicines (such as generics) and carefully picking a Part D plan.

The Consumer Reports Best Buy Drugs team looked at more than 250 Part D plans in six cities (by ZIP code) using Medicare’s “plan finder” tool. Our study found that enrollees who take medicines in 2009 for diabetes, heart disease, high blood pressure, high cholesterol, and arthritis (a not-all-that-uncommon mix of medical conditions for those over age 65 or so) could save in the neighborhood of $5,000 a year by switching to effective alternative nonbrand drugs. (Actual savings depend on where you live, your Part D plan, and the specific drugs you take, as well as your doctor’s judgment that you can, indeed, make the switches.)

Part D enrollees with just one chronic condition can also shave their out-of-pocket costs. Our analysis found, for example, that a senior with type 2 diabetes in Phoenix could save from $497 (lowest-cost plan) to $737 (highest-cost plan) if he or she was taking the brand-name drug Januvia, but switched instead to metformin, a generic drug. Likewise, a senior with arthritis in Atlanta who was taking just one drug–the brand-name drug Celebrex–but switched to ibuprofen, another generic drug, could save from $555 to more than $1,500, depending on his or her choice of plans.

Tip of the day: HMO or PPO?

Enrolling in your health plan, and can't decide between an HMO or PPO health plan? If cost is key, consider an HMO. Members of those plans typically pay lower premiums and out-of-pocket costs, but choice of doctors can be more restricted. Check out how much you paid for coverage in the past 12 months. Then compare that with monthly premiums you would have to pay for a new plan, as well as the deductibles, co-pays or co-insurance, and prescriptions.

If  choice is important, consider a PPO. Those plans provide greater ability to choose any doctor, although reimbursement rates might be lower if you go out of the provider list. So check the list of providers in any new plans you are considering.

Take a look at 5 mistakes to avoid during open enrollment, read more on how to choose a health plan, and check out our HMO and PPO Ratings (subscribers only).

Buzzword: Pay or play

What does it mean? Under a "pay or play" system, employers are required to either "play" by providing health insurance to their employees or "pay" into a government controlled pool to help cover the uninsured. Dozens of state governments have enacted or have considered enacting some form of pay or play mandates in recent years. Massachusetts currently has the country's most comprehensive "pay or play" plan with requirements that all individuals have health insurance, either through their employer, through a subsidized government program, or on their own. Massachusetts citizens who do not have health insurance face penalties.

Why the buzz? Fewer people in the U.S. are being covered by private heath insurance; over the last two decades the extent of coverage has fallen from 70 to 63 percent of the non-elderly population. Thanks to the spiraling costs of health care and larger populations of uninsured people, state governments are facing huge challenges. The uninsured generally seek public health coverage in the form of Medicaid and other state-sponsored programs or costly treatment in emergency rooms. Most "pay or play" proposals are not as comprehensive as Massachusetts' plan. Some combine fairly strict "pay or play" requirements for larger employers with incentives such as tax credits or direct subsidies to smaller employers to encourage them to provide health insurance options for their workers.

Tip of the day: Check medical bills carefully for errors

Billing errors are common at hospitals and other health care facilities, so ask for an itemized bill and check it for accuracy. If you have insurance, compare the bill to your plan's explanation of benefits or Medicare summary notice. Look for all the common errors, which include:

• Incorrect dates of service. Make sure you're not being charged for a room on the day you were discharged from the hospital, which most plans don't allow.
• Inflated room charges. Incidentals like sheets and towels should be included in the basic room charge.
• Duplicate fees for tests and procedures.
• Human errors. One mistaken keystroke could result in the wrong billing code.
• Inflated operating room time. Your hospital should have an exact record of when your surgery began and ended.

Read more money-saving tips from our Health-Care Savings Series.

Open enrollment: Five mistakes to avoid

If your company offers health benefits to its employees, that means two things.

a. Your annual open enrollment period is probably coming up soon.
b. Count your blessings. The proportion of Americans under 65 who have coverage through an employer—theirs or a family member's—has declined steadily since 2000 and now rests at just 63 percent, according to the latest Census Bureau figures.

With the economy struggling and health-plan costs steadily increasing, it's an even worse idea than usual simply to default to your existing plan. Yet that’s exactly what three-quarters of insured adults say they expect to do for this coming year, according to a just-released national poll co-sponsored by the health insurer Aetna and the Financial Planning Association.

Even if you don't end up making changes, you owe it to yourself to review your coverage to make sure it’s still right for you and to take full advantage of your company's options. Here are five mistakes to avoid:

Health-Care Savings Series—Day 10: Take advantage of condition-based programs

Yesterday we blogged about insurance for those facing financial difficulties. There are also public programs that expand low-income coverage to people with certain conditions who may not meet the stringent Medicaid means test, as well as private condition-based programs. We list several below, but if you are uninsured or underinsured, and have a condition that needs treatment, get in touch with your local department of social services or a health-care social worker to learn more about your options. And, as always feel free to list your tips in the comments.

Medicaid Special Coverage Programs:

·    Breast and Cervical Cancer Prevention and Treatment Program. Uninsured women screened through the Centers for Disease Control and Prevention's (CDC) National Breast and Cervical Early Cancer Detection Program, and found to have either pre-cancerous conditions, or cancer, may be eligible for special Medicaid coverage to treat the disease.

The screening program is available to uninsured and underinsured women whose incomes are at or below 250 percent of the federal poverty guideline. Cervical cancer screenings are available to women age 18-64, and breast cancer screenings are available to women age 40-64. Use the CDC website to find a screening program near you. And contact your state health department to inquire about the treatment program. Rules for this program are exacting and differ from state to state.

·    Tuberculosis. States may also expand eligibility to low-income people with a tuberculosis infection who otherwise don't qualify for Medicaid. Services are limited to tuberculosis treatment, but include prescription drugs, physicians, outpatient hospital services, clinics, federally qualified health centers, lab and X-rays, and case management. Contact your state health department to inquire about this treatment program.

Health-Care Savings Series—Day 9: Low-income programs and insurance for the unemployed

The economy has been a source of great anxiety for many of us lately. Healthcare is already out of reach for some 46 million Americans, and with unemployment on the rise, the ranks of the uninsured could grow even larger.

Those with serious financial hardships may be able to get some assistance from Medicaid. A joint state and federal program, Medicaid provides coverage for people with few assets and low income based on the federal poverty guidelines, but eligibility requirements and benefits vary by state. To learn more about your eligibility and how to apply, contact your state health department.

SCHIP (State Children's Health Insurance Program) offers free or low-cost health insurance to children from families who may not be eligible for Medicaid but still have limited incomes. As with Medicaid, states set their own eligibility requirements, but most states cover uninsured children under 19 years old, for a family of four that earns $36, 200 a year or less. Find your state's program to see if your family qualifies. Your state may have other services as well, so contact your local department of social services to find out more.

Health-Care Savings Series—Day 7: Shop around for Rx drugs

Last week, we recommended talking to your doctor about lowering your prescription drug bill. But the work's not done once you have the prescription slip in your hand.

Prices for the drug can vary by store—a lot. In our recent study on drug prices, we found that the cost of the average price of a three-month supply of four common drugs had average total differences of as much as $340 between the highest and lowest priced sources.

Our study focused on 13 stores, and Costco offered the biggest savings overall. Note that you don't have to pay the $50 annual membership fee to use Costco's pharmacy. Web sites, such as AARP.com and Drugstore.com, were also relatively inexpensive, and have very low or no shipping costs. Mom-and pop pharmacies weren’t the lowest-priced overall, but many independent drug stores were competitive, and our survey showed they offer excellent service, so it's worth keeping them in the mix.

Health-Care Savings Series—Day 6: Use tax-free accounts to stretch your health dollar

If your employer offers Flexible Spending Accounts (FSAs), you can use them to stretch your health-care dollar. When you sign up, your employer will put whatever amount you want to contribute, typically up to $5,000 a year, from your wages straight into your spending account, before it's taxed. That means you won't pay income taxes on the money you spend on qualified health care expenses with your FSA. And employers may contribute as well.

Qualified expenses are generally anything that can be deducted, according to IRS Publication 502, which can include co-pays and prescription drugs. However, with an FSA, you can't pay for any insurance premiums, but you can pay for over-the-counter drugs.

The savings depend on your personal health spending and your tax bracket. The administrator of FSAs for federal employees, FSA FEDs, has an online calculator that can help you to estimate your savings.

The catch? It's use it or lose it. Whatever amount you put away in an FSA has to be used in that year; if you don't, it's gone forever. The remaining sum is forfeited back to your employer. So it pays to do some research up front.

Health-Care Savings Series—Day 5: Use available tax deductions and credits to lower your health care spending

Over the course of a year medical expenses can really add up, especially if there is an adverse health event in your family. In these cases, make sure you know the relevant tax laws to claim the appropriate end-of-year tax deductions. There’s also a tax credit to help unemployed workers pay for health coverage. And if you need to hire someone to take care of a sick child or spouse, there is a tax credit for those expenses as well.

• Medical and Dental Expenses. You may be able to claim a deduction on unreimbursed medical expenses for you, your spouse, or a dependent once your total spending exceeds 7.5 percent of your gross adjusted income. (That's about $3,750 in health-related spending for a person with adjusted gross income of $50,000 a year.)

This deduction may be more helpful for those with high out-of pocket medical costs on fixed or low incomes. It may also apply to families with major adverse health events in a year, and the self-employed with significant health care spending. But the deductions can apply to a wide-variety of expenses related to conditions and procedures, including individual health insurance premiums (you can't deduct most employer-sponsored premiums) and medications, as well as ancillary expenses related to a medical condition, such as legal fees, medical lodging, travel, and weight loss programs. If your family has a lot of medical expenses, it might pay to add them up and see if you qualify. For more on deducting medical and dental expenses, see IRS Publication 502*.

Health-Care Savings Series—Day 4: Negotiate your medical bills and check for errors

The cost of medical care continues to rise, and the uninsured often have to pay a lot more for the same procedures than those who are covered. Insurance companies can negotiate group rates with hospitals and other health care providers, but when you don't have insurance, or your procedure isn't covered by your plan, there's nobody to negotiate on your behalf. As a result, the bill can be four or five times more than an insurance plan would pay. And even procedures that are covered can cost a lot more than you expect, especially as insurance covers less of rising health care costs. But you can negotiate on your own behalf.

If you have the means to pay, but the amount is too high, you may be able to get your bill reduced by more than fifty percent if you pay it at the time of service. Figure out how much you are willing to pay and ask to speak to the manager of patient accounts. Billing is an expensive and time-consuming process, so the hospital representative has an incentive to reduce the bill in order to get it off the books promptly.

If you can't pay up front, try to negotiate a reasonable payment plan that you can afford. Avoid putting your balance on your credit card, or on any special medical credit cards or loan programs, or you could end up paying high interest rates. See our full report on medical debt for more.

Health-Care Savings Series—Day 1: Know your coverage

Choose or change your plan based on your needs

Open enrollment season begins in fall for health care and other benefits at many employers. If your employer offers multiple health plan choices, this is the time to review your current coverage to make sure it still meets your needs, and to explore your other options if it doesn't.

For example, if you're in your twenties or thirties, and don't have any health problems, you may roll the dice on a plan with lower premiums and higher co-pays and deductibles. But if you have developed a chronic condition or have young children, a higher premium with lower co-pays may be the wiser choice. Older people may also benefit from more comprehensive coverage with higher premiums and lower co-pays.

To make the right choice, you'll need to do some homework. A key first step: a worst-case calculation of the most you might pay in a year on health coverage. Add up the total annual cost of your premium, and your plan's annual out-of-pocket cap. If it's too high for comfort, you might want to trade a higher premium for a lower out-of-pocket limit. If you have the savings to take a health cost hit, your trade-off might go the other way. Our online calculator can help you decide.

Health-Care Savings Series: 10 ways to save without cutting care

While nobody wants to cut back on medical care, the sorry state of the economy has forced many to do just that. Fast-growing health costs, slow wage growth, and ever-skimpier insurance coverage have conspired to put health care out of reach even for many people who have some kind of health plan.

• Twenty-two percent of the 686 consumers surveyed in a July 2008 poll by the National Association of Insurance Commissioners said that they were going to their doctor less frequently due to economic factors, and 11 percent said that they were cutting back on their medications to help make ends meet.
• Our own survey from May 2007 found that 22 percent of respondents had skipped medications or treatments, 17 percent had an illness get worse because it wasn’t treated immediately, and 49 percent said they were somewhat to completely unprepared to cope with a costly medical emergency.

While health care reform may be on the way, it would take time to be enacted (see our comparison of the plans from each of the presidential candidates).

In the meantime we'll be blogging every weekday for the next two weeks on ways you can save on the health care you need. We're calling it our Health-Care Savings Series. We encourage you to use the comments section to share other ways you've found to save, or to report costly problems that you just haven't been able to solve.

—Kevin McCarthy, associate editor

Cover America: The plight of the uninsured... doctor

Dr. Kesani advises his patients not only on their health, but their health insurance. Get your coverage lined up before you see me for a diagnosis, he tells them. Otherwise the insurance companies will likely leverage the pre-existing condition to charge you outrageous premiums—or reject you outright.

Dr. Kesani knows this better than anyone…he has diabetes, and he's uninsured.

Running his own practice is a near-literal description of Dr. Kesani, who hustles back and forth between several hospitals in the Chicago area where he maintains offices as a kidney specialist.

He wasn't always uninsured. Dr. Kesani had a group plan at a former practice in North Dakota, where he was shocked by the diagnosis of diabetes at the age of 33.

When an opportunity arose to start his own practice in Chicago, he decided to make the move and kept his group insurance through COBRA for a year and half. When it expired he was told that in order to maintain the same policy his premiums would jump to $1700 a month—five times what he'd been paying. Then he tried to apply for an individual policy. He was flatly rejected by his health insurance company of ten years, and several others.

Congress passes legislation to end insurance discrimination

After nearly a decade of fits and starts, this week Congress has passed landmark legislation that ends insurance discrimination against mental health and substance abuse claims for more than 113 million Americans .

If enacted into law as expected, the new federal mental health parity measure would:

• Require health insurers to place mental health and substance-use-disorder benefits on a par with physical health benefits.
• Extend to all aspects of an individual's health plan, including day/visit limits, dollar limits, coinsurance, copayments, deductibles, and out-of-pocket maximums.
• Preserve strong state parity and consumer protection laws while extending parity protection to 82 million more people who cannot be protected by state laws.
• Ensure parity coverage for both in-network and out-of-network services.

"This measure stops insurance companies from setting higher co-pays or placing stricter limits on mental-health benefits," said Adrienne Hahn, a senior attorney for Consumers Union . "It will level the playing field for those suffering from mental illness and give them the same protections and coverage as those with physical ailments."

Tip of the day: Staying healthy while cutting costs

In this time of economic uncertainty, health care costs can be an added strain to your wallet. It's a challenge to take care of yourself and your family's well being, while keeping a watchful eye on your budget. Read our recommendations on staying healthy on the cheap and lowering your drug costs.

Cover America: Somewhere between insured and uninsured

When it comes to living insured vs. uninsured, the Cover America Tour has learned that it usually isn't a case of one or the other these days. A disturbingly large chunk of the people we have talked to and visited with are somewhere between insured and uninsured—a scary place where they pay budget-blasting premiums for health care coverage that really doesn't cover much of anything except for the most catastrophic illnesses or injuries.

Welcome the world of the underinsured.

Record numbers of Americans are paying dearly each month on health insurance premiums for what is politely called 'catastrophic coverage' that only provides protection in case of cancer or getting hit by a bus, the two grim examples everyone we've talked seems to use. But day-to-day coverage? Preventative care? 'Small' problems that can be toughed out? No way. The out-of-pocket costs are just too high.

Loosely defined as having 'insufficient coverage', being underinsured takes its toll in different and often unpredictable ways. If you ask Gina in St. Joseph, Missouri (above) it meant suffering through the pain of a miscarriage, dealing with it on her own instead of going to the doctor because the $5,000 deductible put that option beyond the reach of the family’s budget. Bobbie in Redding, CA knows the importance of follow-up visits after her diagnosis of skin cancer, but hitting her policy's big annual deductible when the premiums are already so high is out of the question? It just costs too much to go.

Cover America: Denied insurance because of a medical coding error

With all manner of high costs, limited protections, and confusing fine print, it’s tough going it alone in the health-insurance market. It’s all the more intimidating for those whose health history is being quietly tracked by a little-known insurance-industry group called MIB.

Few people realize MIB, formerly known as the Medical Information Bureau, has a file on them. Like a credit-reporting agency, MIB monitors virtually every aspect of a person’s health care. When someone applies for individual health-care coverage, the application is routinely run through MIB's huge database of health and medical information. Insurers effectively use the MIB data for health-insurance applicants like they use motor-vehicle administration records for auto-insurance applicants, adjusting premiums or even denying coverage based wholly or in part on what is in a person's MIB file.

Consumer Reports Health's Cover America Tour realized the impact of MIB when we visited Sheila (above) in Gulfport, Miss., the day after her 50th birthday. She and her granddaughters welcomed us in and shared some leftover lemon cake from the previous day's celebration.

Sheila was surprised when she was rejected for an individual health-insurance policy by three different companies. She was even more shocked when she learned why: Her record with MIB listed her as having a history of Chronic Obstructive Pulmonary Disease (COPD). Sheila does suffer from asthma, but COPD is supposed to be used to indicate more severe diseases of the lungs, such as emphysema or severe bronchitis. No company would insure her with this damaging mark on her record.

When health insurance won’t cover your pregnancy

A few weeks after my first prenatal exam, I got a letter from my health-insurance company. It informed me that my pregnancy would not be covered because I wasn’t insured at the time of conception. The fact that I did not know that I was pregnant at the time of conception was irrelevant. I had a complicated pregnancy with preeclampsia, which raised my blood pressure and caused my kidneys to function poorly. Because I required a month of hospitalization and numerous tests, the costs were exorbitant. But I was fortunate. My baby was healthy and my previous insurance company paid the initial bills through the waiting period.

For Tina (right), in Pittsburgh, the solution was not so easy. She, too, developed preeclampsia, as well as gestational diabetes, another high-risk condition. About five months into her pregnancy, she began receiving doctors’ bills and was informed that her individual insurance policy did not cover maternity care. In addition to the mounting financial stress, her mother was diagnosed with cancer, and she had a death in the family. The emotional toll did not help her medical condition. But a newspaper reporter took on her story, and, in the end, the insurance company agreed to cover her bills.

But what about all the women who are not as lucky as Tina and I am?

Cover America Tour: Keeping a job just for the health insurance

Nearly a quarter of Americans are making major life decisions based solely on the ability to get or keep their health insurance, according a recent report from the Kaiser Family Foundation.

Think about that for minute.

People are taking jobs they don’t want, staying in jobs they don’t like—even getting married—just for the insurance benefits. Eight weeks and 28 states into the Cover America Tour, we've met many of the people behind the statistic.

John, 23, from Pelham, AL wrote to Consumers Union with his health care story: His insurance company determined that an emergency helicopter airlift was from an out-of-network provider and left it up to him to pay the $9,000 bill. You can see John talk about his struggles paying down the debt, and his outrage that the emergency transportation wasn’t covered in our video (right).

But there's a lot more to John's story. He recently received a job offer with a hefty pay raise that he was ready to take—especially with that $9000 helicopter bill hanging over the family budget. But unlike his current job, the new one wouldn't include health insurance benefits. He checked out the insurance options he could get for his family, including his pregnant wife and their two-year-old daughter. None would include maternity coverage for the first year—if at all.

John had to pass on the new job simply because he couldn't find affordable health insurance that would cover the pregnancy. Maybe after the baby's born, he says. Then maybe he'll be able to pursue other job options. For now he'll stay where he is for the health insurance.