Avoid making these health insurance errors

Either you get your health insurance through your employer, Medicare, or one of the Affordable Care Act exchanges, there is a good chance you are paying more than you require to. In accordance to a study last year by the National Bureau of Economic Research, 63% of the 50,000 employees at a Fortune 100 company selected a health plan that wasn’t the most cost-effective option.

Picking an insurance plan is downright confusing. Here are few common mistakes people make.

The mistake: Automatically reenrolling in the similar plan year after year. Given people’s distaste for researching health insurance, it is not surprising that a 2015 study commissioned by the insurance company Aflac discovered that 9 out of 10 workers stick with the same benefits yearly. Other research indicates that only 13% of Medicare users switch drug plans each year, even though they could save money by doing so.

Solution: Observe all the offerings each year because plan benefits change frequently. Participating doctors are added and deleted, and drug formularies — the lists of prescription medications a plan covers — are revised. Other plan benefits, reimbursement rates, and premiums might also change. Insurance companies give much of this data online, but Consumer Reports discovered that talking with an informed source can be more efficient than sifting through all that information on your own.

The mistake: Miscalculating — or having no idea — how much you spend on health care. You cannot select the most cost-effective coverage without knowing how much you will probably spend on care in the coming year. But some people take the time to calculate their medical spending or even know how to do it.

Solution: The amount you and family members spent on health care this year is a great indicator of about how much you will spend next year, claims Kim Buckey, vice president of client services at DirectPath, a benefit and compliance management firm. After you have determined how much you paid previous year, “Think about what could be different next year,” Buckey says.

The major mistake: Selecting the plan with the lowest premiums. “If you shop by premiums alone, you could spend a lot more in out-of-pocket costs than if you had gone with a higher premium plan,” claims Kev Coleman, head of research and data at HealthPocket, a technology company that compares and ranks health insurance plans.

Solution: In addition to premiums, consider the amount of the deductible. They can range from about $500 to $5,000 or more, but among low-premium plans, the average today is closer to the high end of that range. Also review co-pays and coinsurance.