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Workers may be in for health plan sticker shock
USA TODAY
10/21/2005
Button up your overcoat. It's health insurance enrollment season, and many workers are facing higher premiums and larger out-of-pocket costs. In today's Managing Your Money, we look at what to expect when you get your annual enrollment package.
Co-insurance. Many workers have become accustomed to making co-payments of $15 to $20 every time they go to the doctor. Now, some companies are switching to a co-insurance model that requires workers to assume a larger percentage of their health care costs, says Tom Billet, benefits consultant for Watson Wyatt. Instead of paying $20 for a doctor's visit, for example, you might have to pay 20% of the bill.
Companies are "trying to make people be better health care consumers by giving them a stake in the dollars they spend upfront," Billet says.
Restrictions on prescriptions. Companies are also shifting to co-insurance for prescription drugs, which means you could end up paying more for your prescriptions, says Sara Taylor, annual enrollment expert for Hewitt Associates.
Companies are taking steps to encourage workers to use generic drugs, in many cases by raising co-payments or co-insurance for brand-name drugs, she says.
Workers who need maintenance drugs for chronic conditions, such as asthma or high blood pressure, may be required to sign up for mail-order programs, says Barry Barnett, partner with PricewaterhouseCoopers' human resources group.
High-deductible plans. For the past several years, companies have sought to lower their costs with so-called consumer-driven plans. With these plans, the amount employees pay toward their share of health care premiums is reduced in exchange for a higher deductible.
Adding a health savings account may make these plans more attractive to workers. An HSA allows workers to save money toward their deductible in a tax-free account. In some cases, employers contribute money to the account. Withdrawals aren't taxed as long as the money is used for qualified medical costs.
The number of Hewitt clients offering HSAs has doubled in the past year, Taylor says.
A high-deductible plan may make sense for young, healthy employees who don't spend a lot on health care, Billet says. Consumer-driven plans with an HSA also may appeal to workers in high tax brackets who can afford the out-of-pocket costs, he says.
Money contributed to HSAs "goes in tax-free, accumulates tax-free and comes out tax-free as long as it's spent on qualified health care expenses," he says.
Designer plans. In recent years, companies have reduced the number of plans available. Workers who once had the choice of several health maintenance organizations may have just one HMO. Some no longer offer an HMO.
But in an effort to give workers more flexibility, some companies are allowing participants to design their own plans, Taylor says. For example, within your preferred provider organization, you may have the option of paying a higher deductible in exchange for a lower premium, she says.
Carrots and sticks. Healthy employees are less expensive to insure than people who eat beef jerky for breakfast, so companies are continually looking for ways to encourage wholesome behavior. Some employers, for example, are imposing a surcharge on workers who smoke. "We're seeing a little movement in that direction," Billet says.
More commonly, employers are offering workers incentives to quit smoking or participate in wellness programs. The American Institute for Cancer Research in Washington, D.C., will give a $500 check to any employee who quits smoking for one year, says John McIlveen, director of human resources. Three employees have signed up for the program since it was launched earlier this year and all have remained smoke-free, McIlveen says.
At Xerox, employees who take a health assessment receive a $200 credit that's applied toward their benefits costs. Employers hope such assessments will encourage workers to take better care of themselves, Barnett says. "The idea is to communicate to employees that they're not as healthy as they think," he says.
Meanwhile, companies are continuing to take steps to avoid insuring more people than necessary. For example, if you and your spouse enroll in your plan and your spouse has coverage through his employer, there's a good chance you'll have to pay a spousal surcharge, Barnett says. Companies don't want the added risk of insuring your spouse, he says.
"Their commitment is to the employee, not the spouse," he says.
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