With benefits open enrollment season upon us, employees at many U.S. companies will be faced with making decisions regarding their 2012 choices for health care and other plans. Aon Hewitt, the global human resource consulting and outsourcing business of Aon Corporation, says that while health care reform remains a key business focus for organizations, it will have less of an impact on most employees' health plan choices in 2012, compared to 2014 and beyond.
Employees at many organizations can expect to see examples of the following trends as they enroll in benefits for next year:
Health care costs continuing to rise. Aon Hewitt's data indicates that overall health care costs are expected to rise 7.0 percent in 2012 to $10,475 per employee, compared to $9,792 per employee in 2011. While employers continue to fund the majority of this cost, employees are projected to contribute $2,306 on average in 2012 to the overall health care premium, an increase of nearly 11 percent over 2011. Complicating matters for employees is the fact that they will spend an average of $2,275, in additional out-of-pocket costs while seeking care in 2012, according to Aon Hewitt's analysis.
Employers encouraging employees to take responsibility for their health. Employers are offering tools— such as health risk assessments, and blood pressure and cholesterol screenings—to raise awareness of personal health status among employees and their family members. The Consumer Health Mindset survey, Aon Hewitt's recent survey of 3,000 health consumers, shows more than half of consumers participated in health risk assessments and/or screenings in the past 12 months. In addition, many employers offer programs to assist employees in addressing health risks and chronic conditions, such as programs to better manage diabetes or quit smoking. In many cases, employers offer incentives (e.g. enhanced medical coverage benefits or reduced premiums) to encourage employee and family member participation.
Increasing employee accountability to manage health care usage and expenses. More than 50 percent of employers surveyed by Aon Hewitt offer Consumer Driven Health Plans (CDHPs) that include Health Savings Accounts (HSAs) or Health Reimbursement Accounts (HRAs). HSAs can be funded with employee and/or employer contributions and are paired with higher-deductible health plans, while HRAs are funded only with employer contributions. With either type of plan, employees can access their individual accounts to "pay" for out-of-pocket health care costs, controlling how and when they use these funds. These plans typically encourage employees to utilize health care more efficiently, while still protecting against significant/catastrophic expenses.
"When it comes to choosing and using their employers' health care plans and programs, workers want their employers to do four things, according to our Consumer Health Mindset survey: make it easy to do, make it personal so I know how to get the best value, make it move me in the right direction, and make it meaningful, so I feel supported as I try to improve my health," said Joann Hall Swenson, health engagement best practice leader with Aon Hewitt. "Employers who craft their health engagement strategies around these four insights will have a chance at reaching and engaging their employees, which in turn will lead to improved health and productivity, and reduced cost."
Tips for Open Enrollment Season
According to Craig Rosenberg, Aon Hewitt's national practice leader for Health & Welfare Benefits Administration, "The most important advice we can provide to an employee is to be an active participant in the open enrollment process. Health care needs and benefit costs can vary from year to year, and when you combine that with the changing health care landscape, it's critical for employees to educate themselves on their available coverage and reevaluate their choices."
To help employees make effective decisions and get the best value, based on their needs, Aon Hewitt offers the following open enrollment tips:
Assess Your Needs
Start by reviewing your 2011 health care usage. For example, consider how much you spent out of pocket on copayments and coinsurance, the number of times you visited the doctor and the cost of medications you take on a regular basis. If you are participating in a Health Care Flexible Spending Account, evaluate whether you contributed too little or too much based on your actual expenses. Also, consider which dependents you will need to cover and remember that health care reform now allows coverage for adult children through age 26, in most cases. Doing this analysis will provide the data needed to make smart decisions in the benefits selection process.
In addition, take a holistic view of how you are spending your benefit dollars. If you are not currently contributing to your 401(k), is there an option to reduce your spending in another area to ensure you are planning for retirement? Many employers offer online retirement modeling and health care cost estimators that can help you compare, make trade-off decisions among your benefits options and help evaluate the total cost (contributions plus out-of-pocket) of available health plan choices. Remember, the plan with the lowest employee contribution amount may not end up being the lowest cost plan based on your health care usage.
Make sure you understand what's changing. Even if your current health coverage is available next year, there could be changes to costs and plan design elements, such as deductibles and coinsurance amounts. Don't assume your current coverage is still the right choice for you. There could be new options that better meet your needs.
Review your employer's rules related to dependent eligibility for coverage. An increasing number of employers are conducting dependent eligibility audits to make sure only people who are eligible are covered by the company's plan. Conducting these audits can help preserve an employer's ability to offer affordable coverage.
Verify that doctors or other providers you plan to visit regularly in 2012 participate in the health plan you select. There can be changes in plan participation and you may place a high value on maintaining the relationship established with your providers. Most employers provide access to search tools to quickly find if a particular provider participates in your available health plan choices.
Save Money Wherever You Can
Nearly three-fourths of participants in Aon Hewitt's Consumer Health Mindset survey express concern about their ability to afford health care coverage in the next few years. Many employers provide a number of ways to reduce benefits costs, while helping employees achieve or maintain good health. Often, employees pass up these opportunities simply because they don't realize they are available. Common cost savings opportunities include:
- Health/Wellness Incentives – By completing a health risk questionnaire or getting your blood pressure checked, you may be eligible for a cash incentive or a lower health plan premium. In some cases, your spouse or partner may also be eligible for an incentive. Conversely, some employers assess a penalty for not completing these actions.
- Consider whether a plan that includes an HSA or HRA may meet your needs. These plans may be available from your employer at a lower cost than other coverage and can generate additional savings through active management of your health care usage; for example, while HSAs are paired with higher-deductible medical coverage (minimum of $1,200 deductible for individual and $2,400 for family in 2012), you can offset this deductible by contributing to the HSA on a pre-tax basis. This saves additional money by lowering your taxable income. Funds in your HSA can be used to pay for qualified health care expenses, earn tax-free interest and grow over time, with no "use it or lose it" rule. To help you spend wisely, many health plans offer tools that provide information on physician and treatment costs.
- Health Care Flexible Spending Accounts – You can set aside pre-tax money for health care expenses through a health care flexible spending account. This creates savings by reducing your taxable income. Be sure to do an assessment of how much you think you'll be spending on out-of-pocket health care in the next year as any unused amount is forfeited. Also, note that over-the-counter medications require a prescription in order to be reimbursed from the Flexible Spending Account (as well as from HRAs or HSAs).
- Spouse/Partner Coverage – Consider whether it is more cost effective for your spouse or partner to enroll in coverage under their employer's health plan. In some cases, you may pay a surcharge if you cover a spouse or partner who has access to health coverage through their employer.