Signing up for health insurance during your company's annual enrollment period, which for many plans is right now, may feel like taking a nasty dose of medicine: You know it's good for you, but it sure doesn't go down easy.
On the plus side, nearly two-thirds of companies are still offering health insurance to their employees, according to the Kaiser Family Foundation's annual survey of employer health benefits. That's worth a lot.
But that coverage won't come cheap, as premiums, deductibles and cost sharing continue to rise, sometimes even more steeply than in previous years. More employers are also moving to high-deductible plans that shift increasing expenses onto their employees, requiring them to pay more before benefits kick in. And companies are making it pricier to insure spouses and children.
There is a bright spot, however: Employees who participate in the increasing number of company wellness programs can often reduce premium and other cost increases.
"It makes sense for the employer," says Ron Fontanetta, a director at benefits consultant Towers Watson. "They're trying to encourage healthy behavior. If people participate, [employers expect they] will see a reduction in overall costs, while employees will see an opportunity to mitigate their out-of-pocket costs."
Employees are going to need that helping hand. According to the Kaiser survey, premiums for family coverage rose 9 percent this year, to an average of $15,073 a year. The employee share of that was $4,129. For employer-provided individual coverage, premiums rose 8 percent, with workers typically picking up $921 of the average $5,429 annual tab.
Mary and Jon Berg have coverage through the Las Vegas landscape company where Jon works. Last year, the company asked employees which they would prefer for the company's two health plans: higher premiums or higher out-of-pocket expenses. Rather than raise premiums, the employees, many of whom don't have high health-care costs, voted for higher out-of-pocket expenses through deductibles.
The change has been hard on the Bergs.
Mary is being treated for a gastrointestinal stromal tumor, a type of soft-tissue cancer. The couple pays $70 weekly for coverage through the company's HMO plan. Under the new cost structure, they now have a $250 deductible, and they have been paying $150 every time Mary visits the emergency room, an increase from $50. The changes came on top of the co-payments the Bergs already make of $110 monthly for Mary's daily Gleevec cancer pill and $750 for annual PET scans, among other out-of-pocket expenses.
They would like to join the company's other health plan, a PPO that would give them access to a wider network of doctors. But that plan costs an additional $40 a week in premiums and has a $1,500 deductible. That's more than they can afford. Mary says they're anxiously waiting to hear now about the cost of coverage for 2012. "They've indicated possible premium increases," she says.
While most people are still enrolled in traditional plans such as HMOs and PPOs, employers continue to shift toward "consumer-driven health plans" or high-deductible health savings plans.
These plans typically have deductibles of at least $1,200 and get their name because they put consumers, however reluctantly, in the driver's seat for covering that deductible amount before most benefits are covered. (Some preventive services such as annual physicals and mammograms are typically not subject to the deductible.) The plans are accompanied by tax-advantaged savings accounts funded by the employer and/or the employee; employees can use these funds to pay for medical expenses.
Seventeen percent of employers reported that more workers were enrolled in high-deductible health plans than in any other type of plan in 2011, up from just 6 percent in 2008, according to an employer survey by PricewaterhouseCoopers.
These types of plans are particularly popular among the largest firms: More than half of companies with more than 20,000 employees offer one, but the number is growing among companies of all sizes, says human resources consultant Mercer.
For many workers, company wellness programs are helping to limit higher out-of-pocket costs because some employers partially cover deductible or premium expenses for workers who join those programs. During annual enrollment, it's worth checking closely for these opportunities. An employer may pay a big chunk of the deductible, for example, for employees who take a health risk assessment and agree to health coaching if necessary to get their blood pressure or cholesterol levels under control.
Under the 2010 health-care overhaul law, employers must allow the adult children of their employees to stay on their parents' plan until they reach age 26 unless those children can get coverage through their own jobs. Insuring these generally healthy young people adds about 2 percent to the cost of a plan, says Tracy Watts, a partner at Mercer. But the firm's survey data show that more than a third of employers are increasing employee costs for dependent coverage next year.
Coverage for spouses may be pricier as well. If an employee's spouse can get insurance through his or her own job, some employers are trying to nudge them in that direction by adding a surcharge to the insurance cost.
Unmarried couples may fare better in some respects. Employees at companies that offer domestic partner health insurance benefits typically face an income tax liability on the value of their partner's coverage. Some companies are increasing the pre-tax pay of such employees to bring it into line with their married counterparts. "It's an emerging practice," says Deena Fidas, deputy director of the Workplace Project at the Human Rights Campaign Foundation, an advocacy group. "The numbers are not huge yet."