Retiree medical insurance. Most workers won’t receive retiree health benefits from their former employer. Only 28 percent of large firms with 200 or more workers offered retiree health insurance in 2010, down from 66 percent in 1988, according to a Kaiser Family Foundation survey of employers. And just 3 percent of small firms with between three and 199 workers have health plans for retirees. Companies can generally increase out-of-pocket costs or even revoke retiree health benefits at any time.

To encourage employers to maintain their healthcare coverage for early retirees, the healthcare reform bill promised to reimburse employers for high healthcare costs for retirees age 55 and older who are not yet eligible for Medicare. So far, more than 5,000 employers have signed up for the Early Retiree Reinsurance Program and collected $535 million from the federal government to subsidize retiree healthcare costs. Retiree health plans can also be expensive for individuals, depending on whether your former employer subsidizes your coverage. A Towers Watson survey of 552 primarily Fortune 1000 companies found that retirees under age 65 pay an average of $633 per month for individual coverage and $1,633 monthly for family coverage.

COBRA coverage. You can buy back into the group health insurance plan offered by your former employer using COBRA continuation coverage, typically for up to 18 months if your company had at least 20 employees. “If your company offers you COBRA when you get to be 63 1/2, then you could use COBRA for 18 months and then go right into Medicare,” says Nancy Davenport-Ennis, founder and CEO of the National Patient Advocate Foundation. But COBRA coverage, while guaranteed, could put a significant strain on your retirement budget. “COBRA is expensive and it’s time-limited,” says Elisabeth Schuler Russell, founder and president of Patient Navigator. You may be required to pay the entire cost of the health insurance premiums out-of-pocket, including any amount the company pays for active employees plus a 2 percent administrative fee. And if your former company closes or goes bankrupt, you will lose your COBRA coverage.

Other forms of group coverage. If your spouse is still working, you may be able to get health insurance through his or her employer. You will generally need to request enrollment within 30 days of losing eligibility for your previous health plan. “A lot of professional associations and societies and some churches have group coverage,” says Russell. “Group coverage in most cases will be less expensive than individual coverage.”

Individual insurance. Shop around carefully when selecting an individual insurance policy. Price points to consider include premiums, deductibles, co-pays, coinsurance, the annual limit you have to pay out-of-pocket before insurance covers everything, and the record of annual premium increases. But the price of a policy shouldn’t be the only determining factor. “Look at your family’s health history and be certain you are buying a plan that is going to give you the benefits you need when you are diagnosed,” says Davenport-Ennis. Examine whether your preferred doctors are in-network and whether preapproval is needed for procedures. “Check with the state insurance regulatory agency to see what complaints exist against that insurance company,” says Russell. “Go online and see what other people using it have to say.” You can compare a variety of insurance options in your area at healthcare.gov.

High risk pools and pre-existing condition plans. Many states have high-risk pool programs that help people with medical problems get health insurance. If you have been uninsured for six months, have a pre-existing condition, and have been denied coverage because of a health condition, you may be able to get health insurance through a pre-existing condition insurance plan. PCIPs were created by the healthcare reform bill to make health coverage available to individuals who have been denied health insurance by private insurance companies. Every state is required by law to have a PCIP. If you live in one of the 23 states where the U.S. Department of Health and Human Services runs the program, the monthly premium for a 50-year-old enrollee ranges from $267 to $605, depending on your state of residence and the plan options you choose. But it’s generally not a good idea to voluntarily go without coverage for half a year in order to qualify. “No one with a pre-existing condition should go uninsured for six months,” says Davenport-Ennis “If you spend six months uninsured with a pre-existing condition, your disease can move to a new status and you may not be able to get control of it again.”

Part-time job. If you are still able and willing to work in retirement, some companies provide health benefits to part-time employees. Starbucks, for example, offers health benefits to part-time employees who work a minimum of 240 hours in each calendar quarter, or about 20 hours a week. Find out the requirements to qualify for the health plan and make sure you stay ahead of the cutoff. “If you don’t think you can get individual health insurance because of your health status, you are better off staying employed,” says Deloitte health actuary John Schubert. “Some people will take a part-time job with reduced work hours or take a job they are overqualified for just to get health insurance.”

Exchanges coming in 2014. People who retire before age 65 will be able to purchase health insurance through insurance exchanges beginning in 2014, with tax credits for those with low and moderate incomes. “On July 1, 2012, you could take COBRA for a year and a half and then be able to purchase health insurance through the exchanges in 2014,” says Schubert. The risk is that the health reform law could be changed before exchanges become operational and then you won’t have a guaranteed way to buy health insurance. Says Schubert: “I would personally wait until after the 2012 election to find out how likely it is that you can do this.”

To which one reader responded:

I do completely reject that there are no cost controls in the Ryan budget. If there is no federal, state, insurance or private money to pay for extremely expensive care such as in Post No. 7 above, such care will simply not be delivered or paid for.

Let me, for all to see, acknowledge this well-taken point. If less money were available to be spent on health care, then overall health spending would be lower.

But let me also reproduce a comment from that Post No. 7:

If cutting Medicare is so important, why not start now, rather than with today’s 55-year-olds? Start by not paying for life-support treatments for critically ill very old people, as Medicare did for my 92-year-old father’s PEG feeding tube three years ago. He got one, recovered enough to spend three more years in nursing homes and died last month after running up another $300K or so in medical bills paid by Medicare and his health insurance as a retired teacher.

Clearly, these comments land us smack in the middle of the treacherous terrain of cost-effectiveness analysis, end-of-life care and rationing of health care — all issues over which President Obama and his allies in Congress got into hot water during the health care debate of the last two years.

Among the harshest critics were Betsy McCaughey, the former lieutenant governor of New York, and Sarah Palin. Longtime readers of this blog may recall that I have explored all of these topics in a number of earlier posts, for example in a piece on rationing; a post on cost-effectiveness analysis and one on pricing human life.

The two readers I cite above advocate rationing of health care through the marketplace, by price and the patient’s own ability to pay, rather than by government. Furthermore, at least one of them argues, with apparent approval, that the Ryan plan will force that result.

The general idea is that, using whatever financial resources are available to them, patients or their loved ones will, of necessity, engage in a benefit-cost analysis and decide whether the anticipated benefits of end-of-life care exceed its expected cost to the household in terms of what that household has to forgo to buy the extra care. This is how markets work.

Economic theory suggests that, other things being equal, rich and less rich households will come to different conclusions on this question. If less money is available over all to spend on elderly Americans, it is the lower middle class that is likely to do most of the self-rationing.

Note that the Ryan plan proposes a means test to determine the federal contribution to Medicare — the very poor elderly will receive larger federal subsidies, although the size of these subsidies remain unspecified. But the middle and lower-middle class is likely to be on its own.

Another way of putting this issue is that patients and their loved ones will calculate the cost of end-of-life year per unit of medical outcome, measured by “quality-adjusted life years” (known as QALYs). That cost is, in effect, a price at which the household can purchase added QALYs from the health care sector.

Once that price is known, patients or those responsible for them can decide whether to buy the added QALYs yielded by end-of-life care at the available price. This forces patients or loved ones to compare the price with the monetary equivalent value of the benefits they anticipate from those QALYs.

This is the private version of what is known as cost-utility analysis, the analytic approach that is anathema in the halls of Congress (see the section starting on Page 519).

For reasons that escape me, many Americans do not regard rationing scarce resources through the marketplace, by price and ability to pay, as rationing at all, reserving that term for government withholding of marginally beneficial procedures, based on formal cost-effectiveness analysis.

I do beg to differ. In their well-known textbook “Microeconomics,” Michael L. Katz of Harvard and Harvey S. Rosen of Princeton, put it thus:

Prices ration scarce resources. If bread were free, a huge quantity of it would be demanded. Because the resources used to produce bread are scarce, the actual amount of bread has to be rationed among its potential users. Not everyone can have all the bread that they could possibly want. The bread must be rationed somehow; the price system accomplishes this in the following way: Everyone who is willing to pay the equilibrium price gets the good, and everyone who does not, does not.

That states the matter succinctly, although the authors could have been more precise by writing “willing and able to pay” rather than just “willing to pay.”

I have also applied the economist’s reasoning to an analysis of styles of rationing in Canada and in the United States and would be happy to hear what readers make of that.

Others commenting on last week’s post have suggested that privatizing Medicare along the Ryan plan will not lead to rationing, because the private health insurance system can deliver the same quality care more efficiently and more cheaply. They cite the prescription drug plan under Medicare Part D as support for their position. I will take up that proposition in the future.

2) Physical exams and health screenings as a form of entry into a plan. Does this work for you or not, and do you not want to disclose your medical issues prior to getting a quote. Many insurance companies want to have you seen by one of their physicians to make sure you won’t cost them money by having any chronic illnesses. If you have some medical conditions that require frequent visits and treatments you may not want to look at these providers for help with coverage.

3) Care by specialists. If you require the care of specialists, such as a cardiologist, nutritionist for diabetes or obesity, or any other type, you want to make sure this is fully covered on your chosen plan. You don’t want to just sign up for a plan that is in your price range and then find out you can’t see the doctors you need to. Be sure to see all the information on added coverage above and beyond just basic needs.

4) Hospitalization and emergency care. Most HMOs require a referral from your primary care doctor before you may go to the hospital. Some insurance companies will not pay for hospital visits on the weekends unless the doctor was called and gave the referral prior to you going. Some will even require that you wait till the next available business day to see your doctor first if it isn’t a life or death emergency. If you have conditions that might require a trip to the hospital, be sure that your policy works for you. In the middle of a panic attack is not a good time to wait for the “on-call” to call you back, give permission, and call the hospital for you. You need to know that are safe to call and get emergency care and get the referral the next business day.

5) Prescription drugs and what will the company pay for? You might want to take into account how many prescriptions you need and what the cost of each one is. If you are used to small co-pay, it can be a slap in the face to find out you have to pay 20% of a $150 prescription. Many people who require some or lots of daily medications will benefit more from a HMO that has a small fee like $5 or $10 per prescription and/or a small deductible.

6) Vision care and dental services. Find out if these are included in your plan or whether you need to purchase one or both separately. Many plans will include yearly and emergency eye exams and visits. Also many offer some coverage on eyewear to some extent. Most dental plans are separate and require a separate insurance or slightly higher monthly fee to be added.

Always remember to read your application, especially if the insurance representative completed the application for you. This allows you to make sure all the information is correct and exactly what is being submitted. The company can decline the policy if information was not disclosed on the application that was required. All health plans have a provision titled “Exclusions and Limitations.” Make sure you read that section over carefully for your policy so you know what to expect. If it doesn’t cover some things you know you might need or want coverage on, then don’t buy this policy and keep searching. If a benefit or service is limited or excluded, you will not be covered even though treatment may be considered medically necessary.

In addition, before an insurance company will accept you as a potential policyholder, the company may want to know if you have any pre-existing illnesses that require constant treatment and care. They might want to place an exclusionary rider on your policy for a specified condition. If the policy is issued with an exclusionary rider you will be responsible for the cost of any medical care received for the treatment of the excluded condition. This can pose a problem if that is why you want the policy, so be sure they will cover any already existing medical needs you might have. Individual policies generally pay benefits for your spouse, and on your dependent children up to the age specified in the policy. However, your insurance company cannot terminate coverage for dependent children who lack other means of support due to mental or physical handicaps.

Some individual policies contain both In-Network And Out-of-Network benefits at different percentages (In Network 90% vs. Out-of-Network 60%). The insurer is not required to pay the Out-of-Network provider at a higher percentage and it will be your job to pay this if you chose to go outside of your network. Use caution when making the decision to utilize an Out-of-Network provider for medical care and Treatment. You may find yourself paying more than you anticipated. Most groups have an array of medical persons in all branches to choose from or are referred to. It is a good idea to look at the handbook of providers in your area to make sure there are plenty of doctor available in your area. It would also be a good idea to see if they accepting new patients with the insurance you are considering purchasing. Buying a policy would not be a good idea if none of the doctors are taking new clients at the moment and you have to travel completely out your town to find a doctor who can see you. Make sure that you know whether or not your particular plan requires referrals to other care providers from your general practitioner. If you choose to see another doctor with out a referral you can find you will be paying that bill completely.

To establish an HAS, there are some rules and regulations. It is like establishing an individual retirement account (IRA) in most cases. In fact the documents are very similar and the procedure as well. An HSA trustee can add terms to their agreement regarding the effecting policy and procedure of their HSA. These terms can include any of the following but that may not be all that is required. Included in your agreement could be definitions, fees and expenses, amendments, disqualifying provisions, investment options, distributions, transfers and rollovers, reports and records, termination and/or resignation, and liability protection. There might be more of less of these conditions depending on the insurer. HSA eligibility requires you to have an Internal Revenue Code to even desire to be eligible. You must be enrolled in a high-deductible medical care plan. So, people who don’t pay a deductible or it is very low, do not qualify for this benefit. Some exemptions do apply of course but you would need to contact the right person to find out. You must not be able to be claimed as a dependent for anyone else or on Medicare. To qualify your deductible needs to be for an individual a minimum or $1000, and your out of pocket expenses can’t exceed $5,100 for that year. For a family, the deductible needs to be a minimum of $2000 and the out of pocket portion can’t exceed $10,200 per year. There is a cost of living deduction as well and your agent to better save you money will adjust things. Many organizations require that you prove you are eligible prior to a contract. It is the individual asking for the HSA that must figure out that they qualify or might qualify.

The yearly contribution can’t exceed the deductible amount or combination with out of pocket expenses. As long as the individual has the high-deductible health plan they are qualifying. If you lose this plan, you will not be eligible for that month or period of time. If you are married and have separate high-deductible health plan, it is the lowest deductible amount that the family as a whole can meet. There are no combining deductibles to get a higher benefit. If you qualify, you can establish a regular contribution, a rollover contribution, or a transfer contribution plan. For the money to be deductible for a specific tax year, one must file by the deadline to receive the benefits. If an eligible individual’s employer contributes to his or her HSA, the employer, not the HSA owner, is entitled to a deduction.

An HSA custodian or trustee reports the contributions on IRS Form 5498-SA, HSA, Archer MSA, or Medicare Choice MSA Information. Copies of the report are due to each participant and the IRS by May 31, 2006. The owner is responsible for reporting the contribution amount on the proper forms to be submitted and file them with the income taxes that year. The distributions are to be made by the owner, if different than the participant. These will tax-free if used to pay for, or reimburse qualifying medical expenses that occurred after putting the plan into effect. These expenses include and could exceed the diagnosis, cure, treatment, or prevention of disease, prescription and certain nonprescription drugs, and transportation and certain lodging costs primarily for and essential to qualified medical care and certain qualified long-term care services. It is an HSA owner’s responsibility to determine the taxability of an HSA distribution and whether it is legitimate. The guidance of a tax or legal professional may be necessary to determine whether an expense is a qualified medical expense to avoid penalties.

Supplemental medical insurance only provides coverage after your regular medical insurance has been exhausted. Supplemental medical insurance is used to pick up where basic medical insurance leaves off. You will have to hold a regular health plan to be able to use the supplemental insurance. When this coverage is exhausted, your supplemental medical coverage would begin paying. Supplemental medical coverage is written in a separate policy, and does not include coverage for basic doctor visits. Supplemental insurances are definitely lifesavers for many people. The only downside is that they can be expensive and useless if you never need them. You have to pay for your regular medical coverage and now add an extra policy or two and that can get pretty high. If you try to purchase a policy after you have become ill or injured it won’t cover a pre-existing condition, so you will pay out and not receive and benefits for the condition you already have. The idea is that you have to buy into a supplemental plan prior to the incident so they can collect off of you being healthy. Here are some plans for supplementing your health insurance that can be used at any age.

Cancer Insurance provides benefits to help cover costs for cancer treatment and other related expenses associated with the disease. Most policies provide direct-to-policyholder cash benefits for daily hospitalization and intensive care unit confinement, as well as for surgery, anesthesia, chemotherapy, radiation, and preventative care. This is a good plan to have if you have a family history of cancer, it could save your life and your wallet.

Critical Condition/Critical Illness Insurance is a policy designed to provide you with a lump sum benefit to help pay out-of-pocket expenses if you suffer a heart attack, stroke, have heart surgery, cancer (except skin cancer) or several other conditions. It covers illnesses and diseases that cause you to hospitalized for critical condition and picks up where you regular benefits left off.

Disability Income Protection supplements lost income by paying a monthly benefit to you if you become partially or totally disabled due to a covered illness. This also provides a daily benefit for in-patient hospitalization for a covered illness. This policy has a reduction in benefits after age 65.

Hospital Emergency Recovery & Outpatient Insurance (Supplemental Medical) provides benefits for treatment due to a covered illness including daily benefits for in-patient hospitalization, intensive care and recovery care following hospital confinement due to a covered illness. It also provides a benefit for outpatient surgery and emergency room treatment for each covered illness.

Some of the plans geared toward the elderly and retiring persons are actually very smart to have. They can help pay for things that Medicare won’t or can’t. They also offer assistance if you ever need to be cared for at home, move to an assisted living home, or need to go to a nursing home. These types of expenses can leave other family members in debt after you are gone. Funeral and burial are usually also covered. This gives many folks the ability to leave their families something other than bills. Also with assistance for medication there is more money to enjoy while you are still around. Some age related supplemental insurances are:

Long Term Care Insurance can help cover the high cost of a variety of long-term care options such as: assisted living facilities, medical home care, custodial home care, adult day care, and if necessary, nursing home care, up to specified policy limits. Includes bed reservation benefit, respite and hospice care, emergency response system, and caregiver training. For an additional cost, you have the option of a valuable cost-of-living adjustment option. Separate Nursing Home Care and Home Health Care only policies also are available in most states. These will pay if you or your spouse needs to go into a nursing care facility.

Medicare Supplement Insurance is for people 65 and over mostly. These offer a wide range of standardized plans that supplement expenses not covered by Medicare. This will help pay for doctors visits and prescriptions that were only covered partially by Medicare.

When going with a private company make sure you shop around. Check several companies and have a checklist of your definite needs and requirements. Also know how much you are willing to pay. Plan ahead for the future. Buying insurance at a younger age and better health will get you that low cost deal you have been looking for. Take a plan with a higher deductible if you can afford to pay out a few hundred dollars here and there till it is met. This will save you money on your monthly fee and won’t be a huge bill if you have an emergency. Look for a HMO, PPO, or POS plan, they are cheaper than traditional plans and tend to have very low co-pays. Don’t over-insure your self, you don’t need anything more than normal coverage. Most plans will pay if you get sick or injured after the policy is bought.

Managed care plans are the way to go for those who are limited on funds. They offer the best policies for the least amount of money. Most of these plans are available to anyone and can save you a ton of cash. Make sure you find out if you have a deductible and how much it is. Most HMO’s don’t have one at all, and most basic PPOs and POS only have a small one, usually $200 to $500 per year. The co-pays are also very reasonable with these types of plans. If you choose to purchase an HMO, expect to pay about $5-$10 per office visit and per prescription. With PPOs and POSs, you will have a 20% co-pay with both visits and medications. Usually this is because the plan is less expensive and you have more freedom to see whom you want so the insurer makes you more responsible for payment. HMOs tend to be the least expensive and best policies for people with fixed incomes.

The best and most assured way to guarantee that you are getting the best-reduced prices for health care benefits is to make sure you work for a large company. The more employees there are, the cheaper the cost out of your pocket. Find out how many employees a company has and what the percentage is that have taken the company’s insurance. Talk to the other employees and ask them if they like the coverage and has it suited their needs. Also, ask them if there have been any problems with it at all. Talking to the people who have used the coverage that is being offered and what it has done for or to them will let you know if this is the type of company you want to work for. Think long term when job hunting, it isn’t just about a paycheck. Sometimes a few dollars less per hour is better to take if the insurance plan is a gem. You also need to think about what will happen if you are ill and can’t be at work and how to pay for these expenses. Look for a job that pays well and has great medical coverage, you will be much better off in the future. Not to mention you never know when you might get sick or injured and need coverage for those expenses.

During the first two days of committee action on his bill, Baucus, a Democrat from Montana, beat back repeated attempts by most of the committee’s Republicans to gut provisions that would slow runaway growth in Medicare spending. Republicans want us to believe that they care deeply about the federal deficit and about keeping Medicare from going broke, while at the same time demanding that there should be no cuts in benefits, no cuts in payments to insurers or providers, and no reduction in the utilization of medical services. It was the most craven, cynical, hypocritical performance by a group of elected officials that I can remember, and a good measure of the political, intellectual and moral bankruptcy of the Republican leadership in Congress.

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There is, however, one feature of all the Democratic health proposals — including Baucus’s — that’s been bothering me for a while, and it has drawn little attention. That’s the two-tiered structure of the health-insurance market that the proposals envision.

One part of the market — the one that has received all the attention — would be organized around the new government-sponsored health-insurance exchanges, in which insurance companies would offer standardized policies to small businesses, self-employed individuals and employees of any firm that does not offer insurance.

By going through an exchange, these firms and individuals would get the purchasing power and risk-spreading that comes with being a part of a large, heterogeneous group. Insurers would be required to offer the policies to anyone, regardless of health condition, at a price that varies only by age. Plans would have to offer preventive care with no deductibles or co-pays, and annual out-of-pocket costs would be capped.

People who purchase insurance through an exchange would have, as one option, the choice of an insurance plan run by the government — or, in the case of the Baucus proposal, a nonprofit insurance cooperative. Most significantly, lower-income workers who purchase insurance through the exchange would be eligible for federal subsidies to help them pay for their insurance premiums, as would small businesses that offer health-insurance benefits.

If they work as envisioned, these exchanges would be a huge step toward extending coverage and lowering the cost of health insurance for about 25 to 30 million Americans, according to congressional estimates. But that still leaves roughly 125 million workers and family members who would continue to get their health insurance from medium and large employers under the existing system, where the insurance reforms would not apply and where there would be few — if any — subsidies.

In the Baucus plan, for example, workers with the lowest wages in the current system could opt out of their employers’ plans and buy coverage through an exchange instead, triggering a “free-rider” tax on their employers. In several proposals, the new rules on benefits, pricing and guaranteed coverage would not extend to insurance plans offered outside the exchange. The size thresholds that would determine which businesses qualify for the exchanges or the subsidies or an exemption from providing health benefits are all over the map. Nobody outside the exchange could opt for the government-run public plan.

The reasons given for maintaining separate markets are mostly political. It allows politicians to assure Americans who already have and like their health insurance that they can keep things as they are. It saves money by limiting the worker subsidies to employees of small firms or companies that don’t offer insurance. And it allows Congress to continue kowtowing to small-business owners who throw a political hissy fit any time anyone proposes that they live by the same rules as everyone else.

Unfortunately, what this means is that the system not only winds up unnecessarily complicated and susceptible to all manner of games-playing by companies, workers and even insurance companies angling to qualify for subsides and exemptions. It means that the government will be in the awkward position of subsidizing some low-wage workers but not others, simply because one works for a small firm and the other does not. And it means that both labor and product markets will be distorted by variations in health-care costs.

As a practical matter, it’s probably a good idea to get the exchanges up and running by limiting them initially to individuals and small businesses that now have the hardest time finding affordable insurance. But if they prove to be efficient and effective at spreading risk and offering a wide choice of plans at competitive prices, there’s no reason why they shouldn’t be quickly opened to all workers and all companies, as Sens. Ron Wyden (D-Ore.) and Olympia J. Snowe (R-Maine) have proposed. Under the pressure of competition — and with some tweaks in the regulations and the structure of the subsidies — the distinctions between the two markets could fade away.

It’s all a bit wonky, I realize, but it sure beats the shouting matches over death panels and government takeovers.

There’s no simple answer.

“It may be they can get a plan that’s just as good or possibly even better than what their employer offers for less money on the individual market if they are young and healthy,” says Karyn Schwartz, a senior policy analyst with the Henry J. Kaiser Family Foundation. But there are lots of individual plans that lack the comprehensive coverage of an employer-based plan, she adds.

“You can end up with a situation where your health care needs aren’t being met by the insurance you bought. It’s hard to figure out, and you don’t have [a human resources] department to help navigate it,” Schwartz says. “If you have any health problems, you can end up with some pretty serious bills.” And you won’t be able to switch back to your employer plan until the next open enrollment.

Make no mistake, you need insurance. Going without insurance to save a buck is not an option. And there are plenty of good reasons to stick with your work plan. Besides often offering generous benefits, employer plans don’t require that you be in perfect health to be covered. Employers also pick up a good chunk of the cost, which many workers don’t realize. A Kaiser study found this year that the average annual premium in a workplace plan was $13,375 for family coverage and $4,824 for singles. Yet the employee on average pays $3,515 for family coverage and $779 for single coverage.

At $779 a year, that’s about $65 a month. “For most people, that would be tough to find comprehensive coverage for less than that,” Schwartz says. Kaiser also found that 81 percent of workers enroll in employer-sponsored plans when offered them. Of those who don’t enroll, the likely reason is they are being priced out, Schwartz says.

For those in such a squeeze, it’s worth investigating whether they can find an affordable policy in the individual market, she says. One of the advantages of an individual policy is you can select your benefits, says Sam Gibbs, senior vice president of eHealthInsurance.com, an online insurance broker. “Only pick and choose the benefit you need and save a substantial amount of money.”

A young male, for instance, doesn’t need maternity benefits that are typically included in a workplace plan. (Some states, including Maryland, mandate coverage for certain conditions.)

Don’t just choose the cheapest policy, Gibbs says. “Spend extra time and know what you are getting for your money,” he says. Also, look at the maximum out-of-pocket costs you could pay each year under the policy.

According to eHealth, a 25-year-old Baltimore man who doesn’t smoke can find a policy with premiums ranging from $33 to $373.70 a month. But dig into the details. With the cheapest policy, the annual out-of-pocket costs – including the deductible – can be as much as $12,500.

“Try to look carefully at the plan and exactly what it covers. A lot of plans have caps that might be hidden in the fine print,” Schwartz says. A plan may cap, say, outpatient hospital care, which might not seem like a big deal. But given that more and more illnesses, including cancer, are treated on an outpatient basis, a cap could be significant, Schwartz says.

Be warned, you might not qualify for an individual policy if you have certain health conditions. And once you look closely at the numbers, it’s possible that an employer plan may be cheaper after all because of the company’s subsidy.

Consider Blue Cross and Blue Shield plans and HMOs (health-maintenance organizations), even if your agent doesn’t handle them. The Blues in some areas, offer clear advantages to small companies. Experts regard HMOs as the best buys in health care. Find out if your company is eligible for new, low-cost health insurance plans now available in five states. In addition, foundation-funded pilot projects in several parts of the country are demonstrating that it is possible to cut health-coverage costs 30 to 40 percent. In short, health insurance isn’t as simple as it used to be. And the pace of change is accelerating, offering new hope for a truce in the business battle with exploding health-care costs. The next couple of years present as much potential for change as at any time in the past 20 years. You can be part of that change by putting at least some of the following 5 ideas to work for your company.

1) Increase Cost Sharing By Employees This recommendation is at the top of every consultant’s list. Small companies tend to pay far more of their workers’ total health-care bill than large companies do. Yet research shows that insulating employees from the costs of care encourages unnecessary use of health services. Fifty-two percent of the companies responding to the Nation’s Business health survey said they pay 100 percent of their employees’ health-insurance premiums. But 45 percent said they intended to implement or increase employee contributions to these premiums. An equal number said they plan to increase employee deductibles. Insurance companies first attached $100 deductibles to major-medical plans in the early 1950s. But 40 percent of employers still set deductibles at $100 or less. Raising a $100 deductible to $250 would cut premium costs for single coverage by about 11 percent. A $500 deductible would cut costs by about one-fourth. A $1,000 deductible would save about one-third.

2) Allow Employees To Pay For Health Premiums With Tax-Free Dollars Set up a so-called flexible spending account, which allows your employees to pay their share of health-insurance premiums and un-reimbursed health-care expenses with pretax dollars. A flexible spending account could save employees 20 cents to 35 cents on the dollar, because state and federal income taxes and Social Security taxes are not imposed. Moreover, the company saves by reducing the employee’s base salary on which it pays Social Security and other taxes. Hire an outside payroll accounting firm to handle the paperwork. You can pay the service fee and still come out with a net savings. The monthly administration fee would run between $2 and $5 per employee.

3) Transfer High-Risk Employees To The State’s High-Risk Pool Insurance premiums soar whenever someone in a small-group plan becomes very ill–with cancer or heart disease, for example. As an employer, you should explore the possibility of moving employees with serious health problems into a state high-risk pool and then negotiating a lower premium for the healthy members of your group.

4) Switches To An Open-Enrollment Blue Cross And Blue Shield Plan Blue Cross and Blue Shield plans operate as de facto high-risk pools in a number of states by providing “open enrollment” periods during which any group can buy insurance. Among the 74 Blue Cross and Blue Shield organizations nationwide, 21 offer open enrollment. All the Blues once used community rating to set premium levels. But that began to change in the 1960s when commercial insurers started to lure away firms with low risks by offering them cheaper health insurance.

5) Replace Your Traditional Health Plan With An HMO Unlike traditional health insurance, HMOs cover all medical needs, including routine preventive care, for a flat monthly fee that typically is less expensive than traditional health insurance. Moreover, two types of HMOs, the staff and the group models, have proven to be more effective at controlling costs than any other form of health-care delivery. Staff models employ physicians directly and put them on salary.