Cecily O'Connor
RedwoodAge.com
Workers' health care premiums and out-of-pocket expenses will jump 10 percent in 2010 - an increase that's tough to shoulder with salaries rising at one-fifth that pace.
Premiums and out-of-pocket expenses combined are expected to rise to $4,023, up from $3,656 in 2009, according to a study by Hewitt Associates. Employers' health care rates, meanwhile, are expected to climb 6 percent to $9,120 next year from $8,607 in 2009.
Even as tabs mount, most employers are taking a "wait-and-see" approach and skipping benefit plan overhauls in 2010 until they know what health care reform holds. Legislation could be on the floor of both houses of Congress as early as mid-October.
But workers' shouldn't take their employers' wait-and-see approach during open enrollment season. Now is a good time to explore health care and retirement plan options, Hewitt urged.
"It's imperative for workers to understand that 'not making major changes' doesn't mean 'I don't have to do anything different this year,'" said Sara Taylor, Hewitt's health and welfare strategy leader. "History tells us that most workers - even during a significant economic downturn - default to their previous year's benefits. In doing so, they may be losing out on a huge opportunity to save money and fully maximize the benefits available to them. And in today's economy, every dollar counts."
That's especially true now, given that salary increases have been minimal. The average U.S. worker received a 1.8 percent salary increase in 2009, which is the lowest in 33 years.
Consider All Options
"Given the impact benefits can have on overall quality of life - both now
and in retirement - you owe it to yourself to seriously evaluate all of your
options," Taylor said.
Hewitt offered the following tips:
Make choices. About 8 percent of employers will enroll those workers who do not make a decision during enrollment to the highest benefit coverage levels. Another 10 percent default employees to no coverage at all. So it's vital to participate in choosing benefits.
Review last year's coverage. How much did you spend on co-payments and out-of-pocket costs last year? Are your doctors still covered under your plan? Did you start seeing any new doctors that were not covered? Did your flexible spending account last or dry up early? Armed with this knowledge, you'll be in a better position to choose a benefits package that will adequately meet your needs.
Explore options. You might find a different lineup of options in 2010. For example, due to high HMO premium increases next year, many companies are eliminating less efficient HMOs and adding new ones. Some employers may eliminate HMO plans altogether. In addition, more companies are offering high-deductible health plans (HDHPs), which require you to take on a larger burden of health care costs in exchange for lower monthly premiums.
Make time for tools. Most companies offer tools that aggregate and analyze health care claims from the past year. Nearly all employers offer health care cost estimators, and an increasing number are offering data on providers, with ratings and reviews of various aspects of benefits packages. Taken together, the information from these tools helps you weed out the best plan.
Maximize tax-free benefits. An increasing number of employers offer flexible credits or dollars to put toward different benefit choices. Many companies also offer flexible spending accounts (FSA) to set aside a pool of money from your paycheck before it's taxed. Consider that an average family of four earning a household income of $50,233, and annually contributes $5,000 into a dependent care account and $3,000 into a FSA, could save as much as $1,800 annually in federal taxes.
Dip into wellness programs. Employers view health and wellness programs as an important investment, and are offering more programs and initiatives such as weight management and smoking cessation. Some companies are even requiring you to complete a health risk questionnaire (HRQ) to receive benefits in the coming year. In certain cases, employees' spouses covered under the plan also need to complete HRQs.
Note any dependent changes. An increasing number of employers are conducting dependent audits to ensure they are only providing coverage for those who are entitled to receive it under their plan rules.
Tune up your 401(k). Annual enrollment is a great time to examine your 401(k) plan to make sure you're on track for retirement. Use your employer's online tools to determine if you are contributing enough and investments are well diversified.
