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Employee Benefits

Make the Most of Your Benefits

We help you weigh your health-insurance options and stretch your premium dollars.

While the country debated the future of health-care reform last summer, employers wrestled with what to do about the soaring costs of providing health insurance for their employees. The average cost of a family policy offered by an employer rose 119% between 1999 and 2008, according to the Kaiser Family Foundation.

So, inevitably, employers are looking for ways to shift more of the burden to employees by raising premiums and out-of-pocket costs. But by making high-deductible policies a better deal and beefing up incentives to get employees to participate in wellness programs, employers are also encouraging employees to control their own health-care expenses. With that in mind, be prepared for some big changes when you get your open-enrollment packet this fall.

Higher premiums for dependents. Most employers still pay the bulk of health-insurance costs for their employees -- on average, about 80% of the premium, says Ron Cornwell, a consulting actuary with Milliman, a benefits consulting firm. But employers have gradually been scaling back subsidies for employees' family members. They now pay an average of just 67% of a family premium, leaving you to pick up the remaining 33%, says Cornwell.

What you can do. It may still be cost-effective for you to remain on your employer's policy. But investigate other options for your family. If your spouse has health coverage at work, compare the cost of keeping family members on your policy with the cost of shifting them to your spouse's plan. Also look into how much it would cost to buy an independent policy for your spouse and children. If they are relatively healthy and you live in a state with a competitive health-insurance marketplace (most states other than New York and New Jersey), that might be your best bet.

The strategy worked for Fernando and Amelia Robledo of Dallas. Fernando, an electronics technician, has coverage that is completely paid for by his employer. Amelia, who works at a children's hospital, also has good coverage through her employer. But when their son, Alexander, was born in August 2008, they discovered that they'd have to pay $300 per month to add him to Fernando's policy, and that it would cost even more to add him to Amelia's.

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"The human-resources person at my job said that if we looked on our own, we could find insurance that's a lot cheaper for our son," says Fernando. "She was being honest with me, and she was right."

The Robledos shopped for policies at eHealthInsurance.com and found a Humana policy for Alexander that cost just $94.61 per month with a $5,000 deductible. Despite the high deductible, the policy covers all of Alexander's well-baby visits, immunizations and other preventive care -- and the Robledos pay only $35 for each of the first six doctor visits that aren't for preventive care. Before they found the Humana policy, each visit cost the Robledos $150.

Higher out-of-pocket costs. Many employers are modifying the way they cover prescription drugs and doctor visits by switching from co-payments to coinsurance. With co-pays, you pay a fixed amount for every doctor visit or prescription, such as $10 for a generic drug and $35 for a brand-name drug. With coinsurance, employees pay a percentage of the overall cost -- for example, 10% for a generic drug and 25% for a brand-name medication.

What you can do. If your employer gives you several health-plan options, compare the out-of-pocket costs for the types of doctor visits and drugs you typically pay for as well as the premiums -- the plan with the lowest premium could actually cost you more, especially if you take expensive brand-name drugs that have no generic alternative (some employers have calculators on their intranet Web sites to help with the math). Also compare the bottom line -- your maximum out-of-pocket expenses. No matter how many medications you take or doctor visits you make, this is the most you will have to pay for the year. The ceiling is typically $2,000 to $5,000, says Sam Gibbs, senior vice-president of eHealthInsurance.com.

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Also keep your ultimate liability in mind when calculating how much money to set aside in a flexible spending account for 2010. Because your FSA contributions avoid income and Social Security taxes, you can save 35% or more compared with spending after-tax money on these medical expenses.

Higher annual deductibles. Employers are raising plan deductibles, which lowers their premiums and encourages you to pay more attention to your health-care costs. And many employers are offering incentives to steer employees toward low-premium, high-deductible policies -- for example, by depositing pretax money into an employee's health savings account (you must have a high-deductible policy in order to contribute to a health savings account). As the Robledos discovered, the coverage provided by these policies has improved; many now offer full coverage for preventive and well-baby care, as well as routine health screenings.

What you can do. The incentives may make it worthwhile to buy a high-deductible policy. And you can add money to the HSA yourself, which will give you a stash of tax-free money for future medical expenses.

You can also take steps to lower your medical expenses. Your employer may provide online tools to help you compare the cost of prescription drugs with generic or other lower-cost alternatives. Or visit Destination-Rx.com and use the My Medicine Cabinet feature.

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Think carefully about where you receive your care. Emergency-room visits tend to cost $300 to $1,000, compared with $150 at an urgent-care center and $65 to $75 at a doctor's office. For some routine visits, a convenience-care clinic, such as CVS's MinuteClinic, may make sense (for a list of services and fees, go to www.minuteclinic.com). For nonemergencies, call your insurer's 24-hour advice hotline.

Wellness programs. Over the past few years employers have been offering incentives to encourage people to watch their weight, cholesterol and blood pressure, and to exercise and eat healthfully. They've also been expanding programs that help people with chronic conditions, such as hypertension, to manage their symptoms. Some employers now have blood-pressure monitors in the office that employees can use to take their pressure and a care advocate who checks the results, says Alan Gubitosi, of benefits consulting firm Towers Perrin.

What you can do. Take a second look at wellness benefits. It might have been a hassle to participate in a wellness program when all you got was a $50 bonus. But now you may actually receive extra money in every paycheck. "The passive employee is missing out on opportunities to cash in on significant incentives," says Michael Thompson, of PricewaterhouseCoopers. And if you have a chronic condition, the new programs can provide you with access to some valuable care that may help you stay a lot healthier and significantly reduce your medical costs.