Take Charge of Your Health Care

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New Rule No. 2

You can pay a lower premium.

But you'll have to assume more financial risk. High-deductible health plans like the ones Vertelney and the Jeffords have are taking cost sharing to new extremes. For many self-employed people or those without insurance at work, these are often the only affordable option.

High-deductible policies - sometimes called "consumer directed" plans - used to be unusual in the world of big-company group health insurance. That's changing quickly. At almost 10% of large companies, high-deductible plans are the only choice. Millions more people will see a high-deductible plan as one of their options at their next open enrollment. This year at least 40% of big firms planned to offer a policy with a deductible of $1,100 or more, according to consulting firm Watson Wyatt.

Here's what's in it for you: High-deductible plans charge lower premiums. And depending on your plan, you may get one of two tax benefits. With a health reimbursement arrangement, or HRA, your company can give you tax-free money to spend on health care, but it's not yours to keep. You will usually lose it when you leave the company. HSAs, on the other hand, let you build up your own savings. You just have to use it for health care or pay taxes and penalties.

What's the point of these tax incentives? Policymakers are in a panic about rising medical costs and hope that if you have more financial skin in the game, you'll be more careful about how you spend your health-care dollars. This is still a controversial notion.

"The whole idea that people will be able to shop the medical marketplace, fully informed, the way they shop for computers or airlines, is fanciful and won't work," argues Robert Berenson, an M.D. and senior fellow at the Urban Institute.

This much is clear: No matter how much you might try to keep your costs down, the health-care system will always be full of surprises. You can't, after all, shop around in an emergency.

Jack Savage of Middleton, N.H. learned that when he crashed his motorcycle in 2004. The first hospital he was taken to didn't have a working MRI machine, and that meant a second expensive ambulance ride to another hospital. Since he had a $7,500 deductible, he paid for it all.

Take charge. Obviously, switching into a high-deductible health plan can be risky. So what should you consider before you leap?

First think about your overall health. If you take a lot of pills or expect to see the doctor often, the amount you have to spend out of pocket on a high-deductible plan could easily outweigh what you save on premiums. (Unlike some traditional plans, however, all HSA-eligible plans have limits on in-network out-of-pocket costs.)

Most high-deductible plans with HSAs will pay for some preventive basics, such as annual physicals and mammograms, even before you reach the deductible. So a young, healthy person might go a long time before paying for anything. Indeed, one big worry about high-deductible plans is that they'll be too attractive to the healthy - if only sicker people want traditional insurance, those plans could become more and more costly.

You also need to be sure you are financially healthy enough for a high-deductible plan. (Obviously, that's easier if your employer helps with HRA or HSA contributions.) Rule of thumb: Make sure you can pay not only the deductible but any additional co-insurance or co-pays.

And not necessarily for just one year. Say you have an accident in December - after your company's open enrollment has ended - and rack up $5,000 in immediate costs. You may have covered your deductible for the year, but if your physical therapy runs into the next year, you'll have to pay again.

Still, for high-income people who have the savings to handle surprises, a plan with an HSA might be the best retirement vehicle since the Roth IRA. Like 401(k) contributions, HSA dollars aren't taxed when they go in. But they are also tax-free when you spend them on health care. That's huge: You already know you have to spend plenty on medicine in retirement.

Retirees spend an average of $4,300 a year on health expenses, according to the Medicare system. And if you wait until you are 65, there's no special penalty for using HSA money on nonmedical expenses. You just have to pay taxes, as with a traditional IRA.

Whether you join a high-deductible plan for the tax break or simply because you have no other choice, you'll need to be vigilant about costs. (That's the point of these things.) Even though you'll be spending a lot of your own money, you'll still have to deal with your insurer's bureaucracy.

Try to stay in-network because you'll be able to pay your insurer's lower negotiated rate, and out-of-network costs may not count toward the main deductible. And try to negotiate where you can.

"If you have a high-deductible plan, tell your physician that you are paying the bill out of pocket and ask if you can pay a lower rate," says Jim King, president of the American Academy of Family Physicians. He or she may be especially receptive if you can offer to pay on the spot. Of those who negotiate with a doctor, around 60% succeed, according to a Harris Interactive poll.

New Rule No. 3

It pays - sometimes in cash - to change your lifestyle.

Jeff Erb of St. Louis used to weigh 288 pounds. His cholesterol was climbing. He took high-blood-pressure medication and suffered heart palpitations. In January 2007, Erb's company, the online brokerage house Scottrade, launched a Biggest Loser-style contest for its employees.

"I didn't think I would be able to do it," says Erb, who is 26. "I have been big since I was five years old." But motivated by a chance to win extra vacation days and money, he started watching his portions and hit the gym three days a week for 45-minute cardio sessions. A year later, Erb has lost a whopping 114 pounds. His team came in second and he won $250. But more important, that list of medical problems has disappeared.

Nearly 75% of big companies plan to dole out financial incentives to their workers to encourage healthy lifestyles, says Watson Wyatt. And it's not just about contests.

Here's a more typical deal: You can nab, say, $100 cash or a $25 lower premium by completing a health-risk assessment, which asks details about you and your family's medical history and current health, such as body mass index, blood pressure and nutrition. The insurer then analyzes it, often along with your claims history.

If you are at risk for health problems, a nurse or "health coach" will help you create an action plan. Simply showing up to that weight-control or smoking-cessation class may earn you another $200. "Right now it is more about participation - going to the weight-management class - not necessarily losing weight," says Alexander Domaszewicz of Mercer, another benefits consultant.

But some companies reward results - $5 for every 1% of body fat shed, for example - and a small but growing number even penalize you for unhealthy behaviors. In fact, 16% of the nation's largest employers now charge smokers more for health insurance than they do nonsmokers.

Take charge. It's swell that your employer wants you to be healthy, but your bosses aren't doing it out of the goodness of their hearts. They want to save money. So don't be afraid to stick up for your rights if the company gets a little too pushy.

For example, let's say your firm offers a $40 lower premium if you have a body mass index between 19 and 26. If getting there requires you to drop 50 pounds, it's unrealistic and unhealthy to do that too quickly. Ask your employer if you can lose that weight, or maybe half of it, over a year. They are required by law to offer an alternative if the incentive is based on an outcome that is medically inadvisable or too difficult for you.

As for those health-risk assessments - what about your privacy? If the form is being collected by the insurance company, the truth is they may already know a lot about you, so there's not much to lose by filling it out.

If your employer or a wellness program they've hired is collecting the form, ask some questions about who will see it. Let's say your boss learns that your family could cost him big money in health-care expenses. It's illegal for him to use that information against you, but it might be hard to prove that that's why you were fired, says Tom Bixby, a health-care lawyer at Neal Gerber & Eisenberg in Chicago. You'll have to weigh this risk against the financial reward the company is offering.

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