Open enrollment: Help employees make informed benefits choices

More than half (55%) of U.S. employees default to their current benefit coverage for the coming year, instead of actively reassessing their plan options, according to a 2012 survey by HR consultancy Aon Hewitt. What many workers do not realize is that the old selection may not be the best option.

Healthcare costs are expected to rise 6.3% in 2013 to $11,188 per employee, compared to $10,522 in 2012. In most cases, workers should expect to see their portion of the total cost rise in the form of increased premiums and out-of-pocket costs. The amount employees will pay for their health care benefits in 2013 is expected to be close to $5,000 -- $2,385 in premiums and another $2,449 in out-of-pocket costs.

“It is easy to fall back on the status quo and assume that your 2012 benefits choices will continue to meet your needs in 2013,” said Craig Rosenberg, Aon Hewitt’s national leader for health and welfare benefits administration, in a media statement. “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 in 2012. 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 Patient Protection and Affordable Care Act (PPACA), 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 2013.

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 PPACA. 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 2013 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 will offer CDHPs in 2013, while fewer offer traditional options, such as health maintenance organization (HMO) 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:

• HRAs: Review how much your employer will contribute, as well as how unused funds are handled at the end of the year or if you terminate.

• HSAs: Determine how much you will be able to contribute in 2013 -- up to $3,250 ($6,450 if you have family coverage). If you will be age 55 or older in 2013, you may contribute an additional $1,000. These funds often grow over time by earning tax-free interest, and there is no “use it or lose it” rule, even if you leave your company. In many cases, employers make contributions that supplement money you contribute.

“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 in 2013. The PPACA allows them to cover 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.

©2012 SHRM. All rights reserved.

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