Open Enrollment and Employer Health Insurance – Making the Most Despite Fewer Benefits and More Expensive Premiums, Deductibles and Co-pays

It’s that time of year again when workers have to review and are able to modify their employer sponsored health care insurance and other “fringe” benefits.

Unfortunately as I reviewed my health care benefits it seems that my employer is providing less (like excluding Chiropractic benefits) but raising premiums, co-pays and deductibles – which was justified due to health care reform and the rising costs of health insurance, and staying “in-line” with the market average.

The premium I pay for my families health coverage has gone up by 16%, the deductible up by 15% and the co-pays up by a whopping 25%!

However, it looks like I am not the only one suffering with Hewitt Associates, a human resources consulting firm, estimating workers will pay more than $4,000 next year in out-of-pocket health care costs and premium shares this year.

That’s a 10 percent increase over last year and more than triple the average amount workers paid a decade ago. Yet the average worker salary increased less than 2 percent this year, Hewitt estimated.

This makes reviewing your health care choices and the use of a Flexible spending account even more important this year. While the choices and financial impacts can be dizzying, there are some simple and key items to consider that could reduce your cost of health insurance and/or ensure you are adequately covered.

Take advantage of the wellness or get fit programs offered  

Most employer sponsored insurance plans now offer some kind of monetary discount if plan participants partake in some kind of fitness program or demonstrate they are taking actions to stay in shape (normally determined through a questionnaire).  

The reason this is simple, healthy people are less likely to get seriously sick and so the insurance company has to pay out less.

Employers, benefit from healthy employees due to higher productivity (less sick days for example) and it also decreases the amount of money they spend on health coverage. So if you can take advantage of these programs, do so. It is good for your well-being, employer and your wallet.

Understand your health insurance needs 

To figure your health insurance needs, you need to spend some time estimating what your costs over the last few years were and if you expect any major life changes in the year ahead (e.g. potential new job, pregnancy or elective surgeries like a knee replacement).

Once you do this, then look at the plans offered by your employer and see which ones best meets your needs (a pro’s and con’s analysis essentially). If you are in a 2 worker/income household then do the same exercise with your spouse’s open-enrollment packet to see which plan offers the best value.  

This is my situation and based on a comparison last year, I saved over $50 p/month by getting my medical coverage via my company, but dental, vision and FSA through my wife’s plan.   To get a sense of what benefits are best for your situation you can use the popular employee benefits simplifier tool at, which is available to anyone, regardless of their insurer.

I found it a pretty good starter tool, though you need to remember it is a general tool and that your circumstance and employer options may limit it’s applicability.

Boost your medical flexible spending account contribution

If your employer is increasing deductibles and co–payments for your health insurance, as many are, then it’s a good idea to put more money into your flexible spending account.  

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. But you must use the money by December 31 (or March 15 of the following year, in some plans) or lose it.  

Make the most of a dependent–care flexible spending account for child–care expenses (or home health care for a parent or other dependent family member), since studies show families will come out ahead by using this account rather than the dependent–care tax credit.

Consider a Health Savings Account (HSA) to deal with higher deductibles.  

More employers are nudging workers toward high-deductible health plans because they cost less — about 20 percent less than a P.P.O. or an H.M.O. — and they force employees to take more responsibility for their health care.   To offset this employers are providing a HSA to offset the higher deductible (e.g. if the deductible is $5000, employers many contribute $1000 to a HSA).   If you spend all the money in the health savings account, you then have to dip into your own pocket to pay your medical bills until you exhaust the deductible. But if you don’t spend the money, it stays in the account for next year’s expenses. So compare the cost (using an average for yourself and family over the last 3 years) to determine is a regular plan or a HSA based plan is a better option for you. If you are relatively healthy then a employer subsidized HSA based plan could be the better option.

Educate yourself about health insurance options and all the key terminology/concepts.  

Not only will it save you money in choosing the best option, it will help during the year when dealing with doctors, hospitals and billing staff when trying to figure how much you will or should pay for medical services.

A good place to start is the educational information offered by your company and their insurer (online or via open enrollment meetings). Understand and learn what the basic terms mean.  

Co-payments How does my deductible work? What is an “out of pocket maximum” and when does it apply? Be sure you understand “‘in-network” versus “out of network”.

Seeking services “out of network” is often the source of denials or increased share of costs (co-insurance) paid by you.  

Again, don’t be shy or embarrassed – a lot of people don’t really understand their health insurance and end up paying too much and/or not taking advantage of the benefits their plans can offer.

Always ask questions if you are not sure of certain concepts and particularly before seeing a medical professional to ensure you are adequately covered.  

Despite the ongoing increase in employer sponsored health insurance, it is still a much better deal for most than private or independent insurance thanks to the employer subsidy.

However, you should get an idea of how much your company is really subsidizing by check how much you would pay privately via leading health insurance portals

If, like many people, you typically default to your current option and do nothing, you could potentially be short changing yourself and your family hundreds of dollars.

So take the time, read the latest benefits booklet or go to the relevant website, and more likely than not it will be worth the time and effort.

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