THE BLOG
11/04/2014 05:16 pm ET Updated Jan 04, 2015

Do I Need to Upgrade My Health Insurance During the Open Enrollment Period?

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This weekly Q&A addresses questions from real patients about healthcare costs. Have a question you'd like to see answered? Submit it to AskChristina@nerdwallet.com.

Question:

My employer is offering a buy-up plan for health insurance next year, and I'm wondering if it's worth the added cost. I typically see my primary doctor three to four times per year and also see a few different specialists. I take three prescription medications on a regular basis and am considering elective bariatric surgery. Is a buy-up option right for me? What should I take into consideration?

Answer:

This is a good question for this time of year, during the open enrollment period that sees companies offering new health insurance options for employees. As with most decisions about your health care, you should make this one with careful consideration.

First, what is a buy-up plan? Many companies offer employees a base health insurance plan, with basic coverage and the company paying a portion (or even all) of the costs. But some companies also offer plans that allow employees to obtain greater coverage at an increased premium -- that is, to buy up to a higher level of insurance. In exchange for higher monthly premiums, these plans may include lower out-of-pocket expenses when you access care, such as lower deductibles and copays, and greater freedom to choose providers out of network.

I recommend the following steps to determine the best policy for your needs:

Step 1. Take stock of your health needs and medical treatments over the last year to estimate the services you'll need in 2015. If you think you'll need less care in the coming year, you probably don't need to consider the more expensive buy-up plan and can extend your current coverage.

However, if you aren't sure, start by making a list of your 2014 health needs and itemize your out-of-pocket expenses. If you used a health savings account or flexible spending account, refer to your statement to build your list of health expenses. Don't forget to include the cost of elective procedures, as well as your prescriptions, specialist appointments and regular doctor visits.

Consider how your health needs will change over the coming year. If you do pursue an elective bariatric procedure, know that it requires medical care before and after surgery. You will visit a doctor many more than three or four times in the year of your surgery and will require additional prescription drugs. These costs can add up.

Preventive care is free under the Affordable Care Act, and routine screens like mammograms and colorectal cancer screens will not come at an added cost to you so long as you meet age qualifications. But if you know you will need additional, non-preventive care or treatments in 2015 -- like bariatric surgery -- you should consider the buy-up plan.

Step 2. Evaluate the physician network size of each plan -- that is, check out the number and quality of physicians included under each one. When you buy insurance, you are in many ways buying discounted access to a network of physicians. Thus, you should consider doctors you'll need to see in the year ahead and the quality of doctors available through each plan. The simplest way is to ask the insurance company how many doctors are available across the specialties you need. If you're considering bariatric care, now is the time to research doctors in your area and see if your preferred doctors are included in your insurance plan. Seeing an out-of-network doctor can drive up your costs by thousands of dollars. If the buy-up plan does not include the doctors you need or improve the quality of doctors in your network, it may not make sense to pay extra for the buy-up plan.

Step 3. Make sure you understand what's covered -- and what's not covered -- in each plan. It's especially important if you are considering an elective procedure like bariatric surgery that you know what's covered under both plans. States treat bariatric benefits differently, and different plans have different policies on top of that. Though buy-up options often cover more medical services, they still might exclude some elective surgeries completely.

Here are a few ways to find the information you'll need. Get the plan documents or call the insurance company to understand what's included. For your prescriptions, look up the plans' drug formularies to see which of your prescriptions are covered. But don't stop there: Look up the tier of coverage for your drugs under each plan and confirm the copay assigned to that coverage tier. A more generous plan may cover your prescription drugs with a lower copay. Take the buy-up option if it covers care you need that your standard plan doesn't include.

Step 4. Examine the plans offered by your employer and calculate how much under each one you would owe in monthly premiums. Also look up the out-of-pocket expenses you'll incur, including copays, coinsurance and any deductibles. There should be an inverse relationship between your monthly premiums and your out-of-pocket expenses: The higher your premium, the less your need to spend for doctor visits and prescriptions. You also want to know you've purchased enough insurance so that you needn't worry about health expenses. If you need more care in 2015 and predict your extra premium expenses will offset your extra costs, choosing a buy-up plan could be a good decision.

Choices made this year during open enrollment will determine your coverage only in 2015. Though it's important to make the right decision now, you can adjust your policy again next year if your needs change or your employer offers a better choice.

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