For most employees, November marks the start of the open enrollment period when workers get a chance to rejigger all of their benefits, including health insurance.
After years of employers passing a larger share of health-care costs onto employees in the form of higher deductibles, co-pays and other out-of-pocket costs, employees may be pleasantly surprised this open-enrollment season by more plan options and only moderate cost increases.
Job-sponsored health insurance premiums rose 5% in 2019, to an average of $20,576, according to the 2019 Benchmark Kaiser Family Foundation Employer Benefits survey. Workers' share of the premium costs for family coverage is an average of $6,015, with employers paying the rest. The increase is considered moderate but still outpaces the rises in workers' wages (3.4%) and inflation (2%).
At the same time, some employers are offering more health plan choices, continuing to reverse a long-standing trend of narrowing down health insurance choices to the least costly policies, such as those with high deductibles. Among employers with 20,000 or more employees, those offering only a high-deductible plan fell to 16% from 22%, according to the annual Mercer National Survey of Employer-Sponsored Health Plans for 2019.
This is good news. Preferred provider plans with lower deductibles and standardized co-pays or coinsurance can help employees better predict out-of-pocket health-care costs. At the same time, low-deductible plans with narrow networks of providers can help bring overall premium and out-of-pocket costs down. Meanwhile, high-deductible plans with health savings accounts (HSAs), which show no sign of going away, can help bring premium prices down and allow healthy individuals to save for future health care needs in a tax-advantaged way. Having more choice creates more options for workers to stave off the rising cost of job-sponsored health insurance and get the health care that best suits their needs.
But more choice also makes it more important than ever for workers to carefully review all the plans offered to find the best choice. Here's what you need to do.
Evaluate all of your options
Nearly three-quarters of working adults spend only 45 minutes or less evaluating their employee benefits during open enrollment, according to research from the employee benefits firm Unum.
What's more, most people tend to stick with whatever health care plan they are currently enrolled in, even if other options exist, said Tracy Watts, senior partner and national leader for U.S. health policy at benefits consultancy Mercer.
"This year, it's really important to do the math to figure out which health-insurance option will give you the best care for the lowest cost," she added.
Think of it as a worst case, best case scenario, advised Myles Ma, health care expert and personal finance writer at Policygenius, a website that allows consumers to search for and purchase insurance. In the worst case, you fall ill or have an accident and spend your premium, full deductible and full out-of-pocket costs, he explained. In the best case, you'll at least pay your premium and you may get an employer contribution to an HSA if available. You have to figure out what you'll spend in each case and decide what you can best afford, depending on your health and financial situation, Ma said.
"I know this is hard to believe, but many people buy more health insurance than they need," Watts said. She advises employees to look past just premiums and deductibles and include any money your employer puts in an HSA as part of the equation. "Quite often the lowest cost plan is the most financially beneficial plan," she said.
The choice is not completely a mathematical decision. Many people choose health insurance based on provider networks and whether or not their doctors are part of the network.
But here, too, things change from year to year. Even if you decide to stick with your current health insurance option, always double check that your doctors are still part of the network, Ma said. You don't want to be paying full freight in premiums only to discover you must switch doctors.
Take advantage of potential money-saving extras
Read your enrollment materials carefully to find potential perks, advised Watts. For instance, some employers provide a financial incentive or a discount on your premiums if you complete a health assessment or participate in certain screenings.
Many employer-sponsored plans also provide help with chronic conditions that can keep ailments such as diabetes and asthma under control, boosting your overall health and avoiding costly doctor and E.R. visits.
A relatively new benefit: Employers' increasing use of expert provider programs. When you have a serious illness, your employer may provide a service to send your medical records for review by a top expert in the field. This review can determine if there is something your providers may have missed in your diagnosis or treatment or they may recommend another treatment altogether. Getting the wrong care initially is a lot costlier than having insurance cover the most effective care, Watts explained.
In addition, there has been a dramatic increase in the number of employers providing a telemedicine benefit, although employees have been a bit slow to sign up. Telemedicine services allow you to access a doctor or other health-care provider by phone or video usually with 24-hour access. In some non-emergency cases it can be the easiest, cheapest and fastest way to access care for ailments such as colds, flu, sinus infection or dermatology issues. Co-pays range from $10 to $40 a visit and initial visits often are free, depending on your employer's plan.
Make the most of your HSA
If you decide on a high-deductible plan with an HSA, or you work at one of the dwindling number of companies that offers only a high-deductible option, you'll want to make sure you open an HSA and take advantage of any employer contribution. The savings from these plans is triple tax advantaged because contributions, earnings and withdrawals (when made for eligible health-care expenses) are all tax free. The money is in your account and you take it with you when you leave your employer.
If you're seriously ill, the limits on HSA contributions can be too low to significantly help with your overall out-of-pocket costs. But for relatively healthy people, a high-deductible plan can offer significantly lower premium costs and provide a way to save for future medical bills.
Watts recommends putting the amount of money you would have saved on premiums for a higher-cost plan straight into your HSA. "Unlike premium payments, HSA contributions are yours to keep," she said. "If you don't use the health care that you're paying a high premium for, that money is gone."