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Archive for Thursday, October 23, 2008

Don’t overlook vital health care decisions

October 23, 2008

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While you're caught up in watching the stock market ricochet or worrying about the current market value of your home, don't forget the mundane matters of your personal finances.

Yes, folks, it is open enrollment season for those who are still fortunate to have a job that provides decent benefits. During open enrollment, millions of employees make decisions about their employer-provided benefits. Miss this window or fail to make the right choices and you won't get a chance to correct it until next year, unless there is a change in your personal situation, such as the birth of a child or divorce.

So is your open enrollment packet still sitting on your desk or the kitchen counter unopened?

It probably is, according a survey by Aetna and the Financial Planning Association. Eighty-seven percent of survey respondents said they were more worried about their finances this year because of the struggling economy. And yet the majority of people interviewed admitted they will spend an hour or less, or no time at all, reviewing their health benefits options during open enrollment.

Hewitt Associates found in its open enrollment survey last year that the majority of workers default into the plans they selected in previous years. I wonder how much their inertia cost them.

If you can set aside time to watch a sports program or "Dancing With the Stars" - my favorite television show these days - certainly you should also be reviewing your benefits packet. I know it's not as fun as watching actress Cloris Leachman try to tango, but hey, it's time that could save you money.

When you do review your benefit offerings, you will likely find that your employer is asking you to pay more for your benefits. It's been that way for the last several years. And so it will be for 2009, according to the benefits consulting firm Mercer.

In its annual survey of employer-sponsored health plans, Mercer found that the total cost for employees to renew their current health plans - with no changes - would increase by nearly 8 percent on average. People working for small employers - firms with 500 workers or less - would see an even higher increase of about 10 percent.

Employee cost-sharing has risen sharply over the past five years. Between 2003 and 2007, the median family deductible for in-network services in preferred provider organizations, or PPOs, increased from $1,000 to $1,500, according to Mercer.

More than half of employers in cost-cutting moves will offer health plans that increase deductibles and co-payments.

Nineteen percent of small employers in the Mercer survey said they would lower their 2009 costs by adding a high-deductible plan that's coupled with an employee-controlled spending account. These accounts are known as health savings accounts, or HSAs. An HSA works like a savings account but in this case, the funds you deposit are pre-tax and can only be used for medical expenses.

Watson Wyatt Worldwide, a leading global consulting firm, found a few trends in its open enrollment survey this year:

¢ Some employers are requiring that employees complete health risk assessments. In exchange for their participation, they receive an incentive award.

¢ More employers are also replacing co-payments for prescription drugs with co-insurance arrangements in an effort to control costs. With a co-payment you pay a specified amount depending on the type of medication you take or whether there is a generic form available. Co-insurance is when you share a percentage of the cost with the insurance company. A typical split is 80/20. So, for example, your insurance picks up 80 percent of the cost of your medication and you pick up 20 percent.

¢ Nearly 30 percent of employers surveyed by Watson Wyatt and the National Business Group on Health plan to operate on-site clinics next year.

¢ More employers are covering preventive medical care and even preventive drugs at 100 percent with no deductible.

To help you make better choices during open enrollment, Aetna and the Financial Planning Association have created "Plan for Your Health," a public education campaign for workers. I suggest you go to the Web site planforyourhealth.com, where you will find some very helpful tools and information. On the right-hand side of the home page you will see a link for open enrollment information.

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