Whether you're perusing your employer's open-season packet or weighing your options after getting a pink slip, you may be facing some critical decisions about health coverage. Avoid these three common pitfalls:
1. Focusing on premiums alone
Many insurers are now charging co-insurance rather than fixed co-pays for generic, brand-name and specialty drugs. Your cost for a specialty drug could be as high as 38% of the cost of the medication. So if you take expensive medicines, you may end up paying hundreds of dollars more a year.
Your best bet, if you can find it, may be a policy that still charges co-pays for out-of-network visits and prescription drugs.
2. Skimping on coverage limits
A better way to lower your premiums is to buy a high-deductible policy with a coverage limit of at least $1 million ($3 million or $5 million would be even better). If you buy a policy with a deductible of at least $1,150 for single coverage or $2,300 for family coverage in 2009, you can also make tax-deductible contributions to a health savings account and use the money tax-free for medical expenses in any year.
3. Ignoring alternatives to COBRA
The economic-stimulus plan provides a 65% subsidy for COBRA premiums for up to nine months for people who are laid off between Sept. 1, 2008, and Dec. 31, 2009. But after the subsidy ends, you'll pay full freight. The average employer policy costs $4,700 a year for individuals and $12,600 for families, according to the Kaiser Family Foundation.
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