Why 2011 Open Enrollment May Call for Tough Choices

health insurance

Open enrollment for 2011 health insurance benefits is rapidly approaching. While the actual time frame can vary from company to company, most are expected to start around the middle to end of October.

For some, enrolling in yet another year of benefits will be routine, but experts predict that some companies will reveal increased premiums and changes in payment arrangements, making health insurance more expensive.

If significant changes do occur with health benefits this enrollment year, are you prepared to make tough choices? How would you change your coverage options to make paying for medical care a little easier?

Employers to Increase Health Coverage and Per-Visit Costs

While the open enrollment process is excepted to mirror most other years as far as signing up for health coverage with an insurer of choice, the costs associated with insurance this year are projected to increase considerably.

The increase in employer sponsored health insurance costs is attributed in part to an overall increase in the cost of health care—and employers are looking to share more of the financial burden with their employees.

Benefits consultancy Towers Watson released a survey recently, revealing most employers will not only increase the premiums their workers pay by nearly 12 percent, but many also plan to shift per-visit contributions from co-pays to coinsurance.

The difference between the two types of coverage is major: A co-payment requires you to pay a predetermined amount each visit to the doctor, specialist or emergency room, which could be as low as $10. However, co-insurance requires you pay a percentage of the total cost, which could be anywhere from 10 percent to 25 percent.

Co-insurance is clearly the more expensive option of the two, which means employees affected by this choice can expect to pay considerably more for their out-of-pocket health care expenses.

The consultancy firm also noted more companies plan to offer so-called consumer-directed options, which usually come with lower up-front costs, but in return will require employees to pay very high deductibles before receiving care.

Tom Billet of Towers Watson told CNN Money that the changes are sure to surprise employees who were expecting similar premium costs and payment structures as last year. “Hoping the plan you had last year will still be fine is simply not an option,” he said.

Tips for Cutting Health Care Costs This Year

If you haven’t enrolled in a health care plan with your employer, it’s a good idea to explore options that could help you save money this year:

1. Decide Whether High-Deductible Options Are for You

High-deductible plans create a double-edged sword for employees. They provide low-cost coverage options if you need insurance, but come with deductibles in the ballpark of $1,000 for an individual and $2,000 for a family. Because the deductible must be paid before the insurance company will cover any costs, people are avoiding care because they can’t afford to pay.

So before you agree to consumer-directed (high-deductible) coverage, it’s important to look at the needs of your family, as well as your financial health, to determine whether you can afford the deductible when necessary. 10 percent of employers may offer it as the only option, so you may have a tougher choice to make: Take this coverage or shop for an independent insurance plan.

2. Take Advantage of a Health Savings Account

Health savings accounts allow individuals to set aside part of their earnings, tax-free, to pay for health care costs. This type of account will allow you to contribute $3,100 as a single or $6,250 for a family in 2012.

For many, this is a remedy to the high-deductible coverage option in that it allows you to have a specified amount deducted from your paycheck each month so when you need to pay your deductible, it can come out of the HSA.

Also, it can ensure you have money set aside for other out-of-pocket expenses not covered by your insurance.

3. Take Advantage of Company Incentives

Many employers are offering their workers incentives to get healthy, something that makes the cost of insurance cheaper for everyone. These company wellness incentives reward employees for obtaining physicals, agreeing to make improvements based on the physicals then agreeing to additional checkups and physicals.

In exchange for being proactive, companies often offer employees cash or contributions toward their health care benefits. To learn about possible incentives offered by your employer, talk to your human resources department.

With open enrollment promising to showcase more expensive coverage options than ever before, it’s good to be prepared for how you will keep your health care costs under control. The sooner you make decisions about what’s best for you and your family, the easier the decision-making process will be when the time comes to enroll.