Health plans to feel pinch
Surveys suggest many companies will pass rising costs to workers
Published: Wed, Oct. 15, 2008 12:30AM
Modified Wed, Oct. 15, 2008 05:54AM
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closeGas and food prices are up. Home values and stock portfolios are down.
Brace yourself for the next financial whammy:
It's open enrollment season for workplace health insurance plans -- and many of the 158 million Americans who receive employer-based health insurance can expect to pay more of the costs.
HEATH PLAN OPTIONS
Health care costs are going up, but employers say they are reluctant to shop for cheaper plans because of the disruption it causes employees. Many shift some of the burden -- a larger share of the premium and higher co-pays -- onto employees. Here are some of the options employers are considering:
* Health Savings Accounts. HSAs are high-deductible health plans that, like IRAs, can be rolled over from employer to employer. The accounts can receive contributions from individuals and employers. Money in the account is to be used to pay for medical expenses tax-free.
* Health Reimbursement Accounts. These are employer-funded plans that reimburse employees for medical costs, up to a predetermined cap. Distributions are tax-deductible to the employer and reimbursement dollars generally are tax-free to the employee.
* Wellness programs. More than half of organizations with fewer than 200 employees and nearly 90 percent of larger firms offer some kind of program to encourage better fitness and prophylactic health care, Kaiser reported.
* Eliminating coverage for retirees. The Kaiser report found that only about one in three large firms continued to offer retiree health benefits this year, down from two-thirds of employers two decades ago.
The report also noted that preferred provider organizations covered 58 percent of covered workers; health maintenance organizations, 20 percent; point-of-service plans, 12 percent; consumer-directed plans, 8 percent; and conventional indemnity plans, 2 percent.
More Business
About two-fifths of U.S. firms do not offer employee health benefits. And even at those that do, many health-benefits packages will be "skimpier and less comprehensive," said Drew Altman, chief executive of the Henry J. Kaiser Family Foundation.
Kaiser, together with the Health Research & Educational Trust, recently released a 2008 snapshot and 2009 outlook for employee health benefits.
Cost increases for 2009 actually continue a modest cost-containment trend of the past three years -- an improvement over double-digit cost increases before 2005. But the long-term effect on employers and employees is that premium costs have more than doubled since 1999.
In 1999, total family premiums for employer-sponsored health insurance averaged $5,790, of which workers paid an average of $1,543, according to Kaiser.
This year, premiums for such coverage rose to $12,679, with employees paying an average of $3,354 out of their paychecks to cover their share of the costs, the Kaiser report said.
In 2009 -- provided you're fortunate enough to work where an employer-sponsored plan is offered -- you could be asked to pay a bigger share of the premium cost, a higher deductible amount and more out-of-pocket expenses for prescription drugs and office visit co-pays.
Nationally, cost increases for employers who offer health insurance plans will average between 8 percent and 10 percent, a Mercer survey indicates. A Towers Perrin survey puts the employers' cost increase as low as 6 percent.
But employers have said in several surveys that they do not intend to shoulder their increases alone.
"Many working people will have higher out-of-pocket costs," Altman said.
Some employers are shuffling their benefits packages in other ways.
For example, Jim Wolf, senior sales representative for Assurant Employee Benefits in Kansas, says some companies will continue to offer group dental plans, but only if the employee opts to pay 100 percent of the costs.
"That still may be a better deal than the employee could find individually on the open market," Wolf said. "And there's also an access question. With a group plan, the employee is guaranteed access where he might be refused individually."
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