Avoid These 5 Costly Health Insurance Mistakes

How little do most consumers think about their health insurance? The 2015 Aflac Workforce Report found that 23% of adults would rather clean their toilets than research their health benefits during their employer’s open enrollment period.

This is too bad. Not researching their health insurance choices could cost them.

"Too many people get their health insurance from their employers and then never research it again," says Hector de la Torre, executive director of the Transamerica Center for Health Studies. "They don't change their plans even as their lives change. And that can cost them a lot of money. You need to monitor your health insurance over the years. Most people don't think much about their plans until they're making a co-payment or paying a bill."

Here are the five costliest mistakes consumers make when it comes to health insurance. If you want to keep more money in your pocket, you'll be sure to avoid them.

1. Not Living a Healthy Lifestyle

Dr. Sam Ho, chief medical officer with UnitedHealthcare, says that a growing number of employers are offering their employees discounts on health insurance premiums if they pursue healthier lives. Your employer might slash $400 off your annual health care premium if you don't smoke. Others might give you a discount if you lose weight.

Ho says this trend isn't going anywhere. A recent study by Fidelity Investments and the National Business Group on Health found that employers will spend an average of $693 per employee on wellness-based incentives in 2015, up from $430 five years ago.

2. Focusing on Premiums Only

Rebecca Palm, chief strategy officer of Boston-based healthcare expense management company CoPatient, says that too many consumers choose the health insurance option that comes with the lowest premium, whether or not it's the best plan for them and their families.

For example, an HMO plan might come with lower premiums than a PPO program. But that doesn't mean you'll be happier with the lower-cost HMO option, Palm explained.

"Yes, HMO premiums could be lower, but do you prefer your primary care doctor directing traffic for you, or do you want to go the PPO route, where your care is more self-directed?" Palm asked. "With a PPO plan, you won't necessarily need to ask your primary care physician for a referral before you go to see a specialist. If you see a lot of specialists, you might be happier with the PPO choice."

3. Not Understanding How Their Plan Works

Matthew Owenby, senior vice president with insurance provider Aflac, said that too many consumers never take the time to fully learn how their health insurance plan works.

Some consumers don't understand how a plan's co-pay system works until they actually show up at their doctor's office with the stomach flu. Others don't understand how high their deductibles are, or don't realize that when they have health insurance with a deductible of $1,000, that they'll actually need to have that money available before scheduling an expensive medical procedure.

"Most people don't spend enough time researching their options before making benefits decisions," Owenby says. "The reasons for that are broad. Some people think health insurance is too complicated. Often, the enrollment period offered by employers is too short. Other times, people are feeling healthy and they don't consider health insurance to be a priority."

4. Going to the Emergency Room Too Frequently

Ho said that hospitals are increasingly investing in freestanding clinics to offer patients an alternative option to the emergency room. These options are less expensive — and offer shorter waiting times, too — than do traditional emergency rooms, Ho said.

And that's just the beginning. Medical providers are increasingly offering telemedicine and online services for routine and preventive care, Ho said. By using these alternatives, consumers can keep their health insurance fees low.

"Emergency rooms should be reserved for true emergencies," Ho says.

5. Never Questioning Their Medical Bills

Palm said that medical providers aren't perfect; they might charge consumers for a service they never provided. But most consumers simply pay their medical bills without ever reviewing them for mistakes, Palm said.

"There is a lot of complexity with medical bills," Palm says. "Consumers don't always understand what they are being billed for. They just assume that the bill is right and pay it right away. We always encourage people to make sure everything is correct on the bill and to wait to pay that bill until they are sure they are being charged correctly."

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