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More than half (55 percent) of U.S. employees default to their current benefit coverage for the coming year, instead of actively reassessing their plan options, according to research by consultancy Aon Hewitt. What many workers do not realize is that the old selection may not be the best option.
“It is easy to fall back on the status quo and assume that this year's benefits choices will continue to meet your needs next year,” said Craig Rosenberg, Aon Hewitt’s national leader for health and welfare benefits administration. “But changes to family health care needs, employer plan offerings and costs make it important for workers to reevaluate their selections every year.”
Rosenberg and his colleagues offered the following tips to give employees this open enrollment season.
• Understand what’s changing with your health benefits.Encourage employees to start by evaluating how they and their family used health care this year. Consider how much was spent out-of-pocket on deductibles, flat-dollar co-payments and percentage-of-cost co-insurance, the number of doctor visits and the cost of ongoing medications.
Under the Affordable Care Act (ACA), employees will have access to Summary of Benefits and Coverage (SBC) statements that provide a standardized overview of health plan coverage features, such as co-insurance, deductibles and examples of out-of-pocket costs related to having a child and managing Type 2 diabetes. For workers at most large employers that provide decision support tools, SBCs will serve primarily as a supplement. For those employees at smaller companies, SBCs may provide new information that will be helpful in selecting coverage for next year.
Those participating in a flexible spending account (FSA) should evaluate if the contribution is too little or too much based on actual expenses. Keep in mind that beginning in 2013, employees' contributions to health care
FSAs will be capped at $2,500 annually under the ACA. Previously, there was no regulatory limit, but many employers capped contributions at $5,000 or more.
Those that have a health reimbursement arrangement (HRA) or health savings account (HSA) should determine what remaining balance they might have to apply to next year's expenses, even though amounts in HSAs always—and HRAs typically—roll over from year to year.
• Consider whether a Consumer-Driven Health Plan (CDHP) meets your needs.More employers are offering CDHPs, while fewer offer traditional options, such as health
maintenance organization (HMO) and preferred provider organization (PPO) plans. CDHPs are intended to encourage employees to take an active part in managing their health care.
Pairing CDHPs with an HRA or an HSA
to help pay for eligible out-of-pocket health care costs allows employees to control how and when they use these funds.
CDHPs may be available at a lower cost than other coverage; however, employees should consider how much they will spend out of pocket—for example, before meeting their deductible. In the case of CDHPs offered with an HSA, the deductible may be higher than they have experienced in the past. Employees should understand how the accounts work. Key messages for employees include the following:
“While workers are more frequently enrolling in CDHPs with an HSA or HRA because they often pay less out of their paychecks, they find these plans and accounts confusing and hard to navigate, especially at the beginning,” said Joann Hall Swenson, partner and health engagement best practice leader at Aon Hewitt. “However, employees also report that they are often willing to re-enroll in CDHPs. As they become more familiar with these plans, they find that they like having a better sense of what their care and prescriptions actually cost and the ability to manage their costs more carefully. Many workers report that they make smarter health decisions as a result of being in this type of plan.”
• Take advantage of incentives and opportunities to improve your health.Employers continue to offer tools to help employees, and increasingly employee spouses and partners, better understand their health risks. These include biometric screenings for cholesterol, blood pressure and blood glucose, with follow-up consultations so employees can take steps to improve their health. Recognizing the importance of these programs, many companies offer incentives to participate (84 percent of employers that offer health risk assessment questionnaires provide incentives for completing them, according to Aon Hewitt). Often, these
incentives are monetary, such as a reduction in medical premium costs, but they may also take the form of a reduction to employees’ deductibles, so the plan starts paying benefits sooner.
Advise employees to take full advantage of all health and wellness programs available. In addition to receiving incentives from their employer, they may benefit from long-term savings by getting a good picture of their health, and identifying and addressing health risks quickly.
• Assess dependent coverage.Finally, employees should consider which dependents will need to be covered next year. The ACA allows them to
cover adult children, through the month in which they reach age 26, regardless if they are full-time students. However, it is still important to consider all available coverage options for dependents. If a spouse or partner has access to medical coverage through an employer, it may be more cost effective to enroll in that coverage instead, particularly since some companies apply a surcharge to cover a spouse or partner who has declined coverage from their own employer.
Remind employees that the new SBC statements will be a helpful tool in comparing coverage from their employer with coverage available from other sources, since they present information in a standardized way.
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