Ease the Pain of Higher Health-Care Costs

If you get your health insurance through work, expect to see a memo soon asking you to share more of the pain of rising costs. New health-care-reform initiatives, such as the requirement to offer coverage to children up to age 26, are just one factor in ever-rising medical costs that continue to push up premiums. And sagging profits from the weak economy mean health care hogs a bigger share of the budget.

Large employers expect their health-care-benefit costs to rise 8.9%, on average, in 2011, compared with 7% in 2010, according to a survey by the National Business Group on Health. Part of that increase will be passed on to workers, who have already seen their share of health-insurance premiums skyrocket nearly 150% over the past decade, according to a study by the Kaiser Family Foundation.

Although the total price of a family policy rose just 3% in 2010, to an average of $13,770, the employee share jumped 14% -- an increase of nearly $500 -- to about $4,000, according to Kaiser. Average annual premiums for individual coverage rose 5% in 2010, to $5,049, but the employee share jumped 15%, to about $900 a year. As you choose from the health-plan menu during open-enrollment season, a few tactics will help you lessen the sting.

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Compare out-of-pocket costs. Nearly two-thirds of large employers intend to boost their employees' share of premium payments. They will also increase deductibles and co-payments. So if you have a choice of plans, don't compare only premiums; factor in potential out-of-pocket costs, too.

Consider a consumer-directed plan. More than 60% of employers say that they will offer a consumer-directed health plan in 2011 -- usually a high-deductible policy combined with a health savings account -- and 20% will make a consumer-directed health plan the only option. Others are steering employees toward high-deductible plans by reducing premiums and contributing money to their employees' HSAs, says Pearce Weaver, senior vice-president of Fidelity Consulting.

Contributions to an HSA -- the boss's, which are tax-free, and your pay-ins, which are made with pretax dollars -- plus earnings may be used tax-free for medical expenses, even after you switch jobs or retire. You are eligible for an HSA if your policy has a deductible of $1,200 or more for single coverage ($2,400 for family coverage); you can contribute up to $3,050 for single coverage in 2011 (or $6,150 for family coverage).

Grab the wellness incentives. Many employers plan to reduce or eliminate co-pays for primary care and preventive care. And they're improving the incentives for participating in wellness programs, too, with an average bonus of $386. So grab the cash, and take advantage of free preventive and primary care.

Order generic drugs. Most employers are adjusting out-of-pocket costs to steer employees toward cheaper prescription-drug options. Switching from brand-name drugs to generics and filling your prescriptions through mail-order services can save you a bundle.