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7 ways to make smarter choices about your health care benefits

While benefits such as health insurance and flexible spending accounts programs make up a major part of employee compensation, more than half of American workers are wasting money because they aren't taking full advantage of many of them.

About 56 percent of employees waste up to $750 a year as a result of mistakes when making benefits selections, according to the 2012 Open Enrollment Survey of the Aflac WorkForces Report, which gathered input from 2,500 U.S. consumers in July 2012.

health-care-benefitsOne reason people are wasting so much money is because they don’t understand their benefits options, saysAudrey Boone Tillman, executive vice president of corporate services at Aflac.

Here’s how to avoid benefits mistakes that can be costly.

1. Know when open enrollment comes around.

Most companies designate one time a year, usually in the fall, when employees can make changes to their benefits plans. If you miss it, you may be stuck with your current benefits options for the following year.

Companies often will make a splash by sending emails, making announcements and holding events to let employees know when they can make changes. If you don’t know when open enrollment season takes place in your company, ask a human resources employee or a manager, says Angie Kirk, a human resources consultant in Baltimore.

2. Expect changes from year to year.

One of the biggest mistakes employees make, according to the survey, is being ignorant of changes to their benefits plans. In fact,61 percent of employees say they aren't always aware of all the changes that take place in their benefits packages from year to year. Some people assume that if they have the same health insurance provider as last year, then everything remains the same, says Martin Rosen, co-founder of Health Advocate Inc., a company that helps employers and employees navigate the health care system.

But insurers may change anything from co-payment amounts to prescription drug coverage limits, Rosen says. If your company offers information sessions to let you know about changes, plan to attend at least one, Kirk says. Also, read all mail and notices that you receive pertaining to your health benefits.

3. Think like a consumer.

“We as Americans will shop around to save a nickel on a gallon of gas or a quart of milk,” Rosen says. It’s important to apply that same due diligence by comparing the costs of different health insurance plans, he says. “In an era where money is tight and choices have to be made, you can save yourself some serious money in the review of your health care spending,” Rosen says.

4. Don’t let satisfaction make you complacent.

Eighty-nine percent of employees say they elect the same benefits options every year, which is often a mistake, according to the survey. Even if you’re happy with your health insurance, you should take the time to review any changes and new offerings. Companies use benefits packages as a way to attract and retain talented employees, so they’re constantly looking to improve them, Kirk says. “You may think, ‘I’ve got the best health insurance plan for my family,’ but when you talk to folks, you may find out there’s something you haven’t thought about,’” Kirk says.

5. Make sure benefits keep up with life changes.

The benefits you care about likely will change at various times in your life. For example, a day care benefit may go unnoticed by you until you have your first child. If you’ve had a major life change such as a birth, death or divorce, make an appointment with a benefits representative to discuss how your benefits can better serve you, Kirk says.

6. Make sure your coverage matches your needs.

When it comes to health insurance, different people have different needs. For example, a person with a chronic illness may save the most money with a plan that has higher premiums and a small co-payment, while a young, healthy person may save more with a plan that has a high deductible and a smaller premium, Rosen says. He outlines the decision-making process in the book "The Healthcare Survival Guide: Cost Saving Options for the Suddenly Unemployed and Anyone Else Who Wants to Save Money."

Married employees who work for different employers should determine which spouse has the better health benefits plan and whether it makes sense for both spouses to be covered through it, Rosen says. If you’re confused about picking a plan, “ask for time to discuss benefits choices with a human resources professional or insurance consultant,” Tillman says.

7. Plan contributions to flexible spending accounts.

Only 16 percent of those surveyed acknowledged contributing the right amount to flexible spending accounts, which are plans that let employees set aside tax-free money for things such as medical expenses. One distinction of flexible spending accounts is that you can’t carry savings over from year to year, so if you don’t use the money in a given year, you lose it. To avoid putting too much aside into an account, calculate yearly medical expenses to plan for the right contributions, Tillman says.

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