Open Enrollment For 2012…Where’s The Affordable?

Health care costs rose faster than inflation and wages this year – a trend that will hit home for many workers in the next several weeks as employers offer open enrollment.  Employers are expected to shift more of this growing burden onto workers next year. That means employees are likely to see higher premiums and deductibles. And a growing number will be required to pay more up front, as more companies are adding “consumer-driven” plans.

For some time, workers have been feeling the pain of paying more.

Kaiser Family Foundation reported recently that the typical annual premium for family coverage rose 9 percent this year, at a time when pay went up an average of 2 percent.

The total annual premium – shared by employers and workers – amounted to $15,073 for family coverage and $5,429 for singles, Kaiser says.

Kaiser estimates that up to 2 percentage points of this year’s increase can be attributed to popular new benefits required by the Affordable Care Act, the health care overhaul that won’t take full effect until 2014.

That law requires many health plans to fully cover preventive care, such as immunizations and mammograms. And young adults now can stay on their parents’ insurance until they turn 26. Kaiser figures that 2.3 million young adults were added to parents’ plans this year thanks to the law.

A recent survey by benefits consultant Mercer found that costs next year are expected to go up by an average of 5.4 percent – the smallest increase in 15 years.  Some of that is because of a drop-off in the number of people seeking care, possibly as a way to save money during the weak economy.

Here are the details of what you might see in some enrollment packages:

HIGH-DEDUCTIBLE PLANS: These health plans, which come with an employee-controlled spending account, are about 15 percent cheaper than the usual offerings, Mercer reports. That’s one reason they appeal to employers.

The steep deductibles – they averaged $1,908 this year, Kaiser reports – keeps premiums lower.

The plans often are paired with a health savings account. Workers – and sometimes employers – contribute money into a tax-free account that employees can tap to pay the deductible or medical expenses. Money that’s not used will accrue over time to be used for future health bills. And if workers leave their jobs, they can take the money with them.

The theory is that when employees control how money is spent in the account – and, ultimately, how much they can end up with – they will be savvier shoppers of health care.

Some health experts say these plans aren’t suitable for workers with chronic health problems because they won’t be able to build up any money in their savings accounts. Only 4 percent of employers in 2006 offered such a plan, Kaiser says. Now, 17 percent do.

WELLNESS PROGRAMS:  Companies continue to prod workers to live more healthful lifestyles.

Many companies launched wellness programs years ago, offering $25 gift cards or small tokens to workers who filled out a health questionnaire to identify health risks. Now employers are ratcheting up their efforts.

For example, employees with chronic illnesses might pay lower premiums if they enroll in a disease-management program. But to keep those premium discounts next year, he said, they might have to show that they followed health regimens of taking medicine or undergoing regular testing.

VOLUNTARY BENEFITS: Employers don’t like to be seen cutting benefits year after year, so many are adding “voluntary” benefits such as legal services or life, auto or disability insurance.

Workers pay the entire cost of voluntary benefits, although they get them at a group rate.  The employer is doing the vetting to figure out which is the best vendor.

HEALTH REFORM CHANGES: Many employers exercised their right last year to maintain a “grandfather status” that allowed them to delay adopting some of the early benefits of the health care act. The catch: They couldn’t substantially raise premiums or make major changes to the plan.

But a lot of employers discovered grandfather status wasn’t as beneficial as they thought, and are giving it up next year. That means your premiums could go up sharply or you’ll pay more for services, she said. But you could also see new benefits, such as having preventive care fully covered.