As the debate over health care reform rages in this country, workers who have employer-sponsored health insurance may be surprised to learn how much more they’ll have to dish out next year — irrespective of the new legislation.
A Kaiser Family Foundation survey released Sept. 15 showed that premiums have more than doubled in the last decade — to $13,375 annually for family coverage — for U.S. workers who get health insurance through their companies, with employees on average paying $3,515 and employers paying $9,860. In the past year alone, family premiums rose 5 percent.
Many companies that have been hard hit by both the recession and skyrocketing health care costs are shifting more of these costs to workers. The Kaiser survey found that 21 percent of firms offering benefits say they are “very likely” to raise employees’ premium contributions next year, and 16 percent are “very likely" to raise deductibles.
“Employees will be paying a greater share of cost,” said Randy Abbott, a senior health benefits consultant for Watson Wyatt, a global consulting firm.
That means co-payments that were $20 for a doctor’s visit could climb to $25, he said, and an annual deductible of $250 could easily climb to $300. Maximum limits on individual and family plans that were $1,500 to $2,500 a year could rise by $500 to $1,000, he said.
Read the fine print
Given the rapidly changing health care environment, including legislation being debated in Congress that, if passed, could go into effect as early as 2010, this may be the year you actually have to read through all the details provided by your employer regarding your coverage come open enrollment time.
Most workers spend more time comparing airline ticket prices than they do comparing health care plans, said Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University and author of “Risk Management and Insurance.”
That means it’s time for employees to do “a cost-benefit analysis and not just look at premiums,” she said.
First, you have to figure out the basic insurance lingo:
Copay: The flat fee you pay every time you get medical care, such as a visit to your primary care physician or lab services.
Deductible: The amount you’re responsible for paying to your doctor or for hospital visits before insurance coverage kicks in.
Coinsurance: The percentage of the medical care you’re responsible for paying that the insurer does not. For example, your coinsurance for a hospital stay may be 20 percent of the total cost, while the insurer pays 80 percent.
Maximum out of pocket: No matter how much medical care you get during the year, there is a maximum amount annually that you will have to shell out. Once you hit that number, insurance typically covers all the remaining medical expenses.
The second thing you’ll want to figure out, to the best of your ability, is how much health care you expect to use next year, said Robert Slayton, vice president of the Illinois State Association of Health Underwriters.
Slayton offered some guidance:
- To compare plans, it’s always smart to take a snapshot of a year of typical care and a snapshot of a worst-case scenario. For example, employees should multiply their portion of the medical premium by 12 to annualize it. Then take the typical number of office visits and prescription costs into account and any unique factors (such as if a person is diabetic or has another chronic condition). Then take the worst-case scenario where the patient maxes out the deductible and coinsurance, plus copays, plus annual premium amount. When employees compare plans, they will get a good feel for which one they will be most comfortable with.
- If employees will be having elective surgery, they should compare reimbursements between plans to make sure there is no cap. They also need to determine if the doctor they want to use is in the plan’s network.
Physician and hospital networks in many plans will be shrinking as a result of employers trying to ratchet down costs, Slayton explained. So that means if you think your HMO or PPO is exactly the same as last year because you see little change, you still need to look closely at the network list.
Ways to save
Many workers mistakenly think they can save money by keeping family members off their health plan, adding individuals later in the year if they need medical care, said Roger Sevigny, president of the National Association of Insurance Commissioners. This can’t be done, he said.
If you just can’t afford the standard PPO or HMO being offered by your company, Sevigny added, you may want to consider a high-deductible plan, which means you’ll pay less in premiums but a higher deductible. You could potentially end up paying big time in out-of-pocket costs if you fall ill, but at least a major illness won’t likely bankrupt you.
You also might be able to reduce the monthly premium or copayments on your plan by participating in wellness initiatives if they’re available at your company, said Watson Wyatt’s Abbott.
A so-called personal wellness assessment that identifies ways to reduce your health risks could save $100 to $1,000 a year, depending on the employer, Abbott said.
One big no-no, Abbott said, is assuming the plan you had last year is the same this year or even if that’s still the best option for you.
“We find a lot of employees are overinsured,” he said. For example, a single man in good health may be signed up for a plan that offers free gynecology visits or low-cost prescription drugs. Reading the fine print of what’s covered and what’s not could mean big savings and peace of mind, he added.
Health insurance literature is “painful to read, but it’s your health,” Abbott said.