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PERSONAL FINANCE

This open enrollment period, expect rewards and penalties

Employers are getting serious about pushing 'wellness' programs to cut healthcare costs.

October 11, 2009|Kathy M. Kristof

American workers, get thee to a gym.

This is open-enrollment season for employer health benefits, and employees are increasingly likely to see "wellness" programs that offer discounts to those who participate. And watch for significant disadvantages, such as fewer health insurance choices, for those who don't opt for wellness.

Companies have long used incentives -- small bribes, such as a $25 break on health insurance premiums, for example -- to get workers to take health-risk assessments that help spot looming problems or unhealthful habits such as smoking, alcoholism or overeating.

Now some companies simply won't allow their employees to sign up for health insurance until they take the risk assessments, said Kirby Bosley, Western Division practice leader with benefits firm Watson Wyatt Worldwide in Los Angeles.

If the assessment discovers manageable problems, you may be encouraged to join a fitness or smoking cessation program. Do that and you're likely to get bigger financial incentives -- somewhere in the neighborhood of $100 to $500 annually, she said.

But if you don't, your employer might restrict your health insurance choices to plans that demand higher deductibles and offer fewer services and benefits, which could cost you hundreds of dollars.

"Employers are drawing a line in the sand," Bosley said. "There will be consequences for ignoring your health."

The carrot-and-big-stick approach to wellness programs is among the most prevalent trends this open-enrollment season, experts agreed. However, other trends also suggest that employees will find it costly to ignore their benefit selections this year.

Not only are benefits choices changing -- largely to require more cost-sharing by workers -- some companies are demanding that workers make active choices or get dumped from the plan completely.

In the past, companies commonly allowed workers to re-enroll in their current benefit choices by doing nothing. Now if you do nothing, you may not be covered at all, said Karen Kocher, chief learning officer at insurance giant Cigna.

"There are radical differences in dealing with open enrollment today than in years past when it was simpler," Kocher said. "People need to be smart about the options, their needs and matching up the two to minimize out-of-pocket spending and get the most out of the coverage."

Other trends:

Higher out-of-pocket costs. More than 40% of employers surveyed by Watson Wyatt said they would hike deductibles, co-payments and maximum out-of-pocket payments as a way to control costs. Deductibles are likely to rise by $50 or more, while co-payments might rise by $5 or more for each doctor's visit. In addition, some plans now require co-payments for services that previously were free. The idea is to make workers more aware of -- and more frugal about -- health costs.

Tighter rules for dependents. Companies are increasing premiums for spousal coverage, particularly when the spouse has the option of being covered by another employer plan.

Dependent audits are also becoming more common, so it's likely that you'll have to provide proof that your family members have the right to be covered under the plan.

Better wellness incentives. Participate in a smoking cessation or fitness class and your company is likely to give you cash, discounted premiums or a gift card.

Fewer options. Some employers will cut health plan choices down to just a few -- and one of them probably will be a so-called consumer-driven plan.

These plans typically offer free check-ups but have high deductibles that apply when you visit the doctor when you're sick.

Many companies pair them with employee health savings or flexible spending accounts, which can be tapped to then reimburse you for co-pays, prescription costs and other qualified medical expenses.

Employers believe these plans will make employees more cost-conscious and better healthcare consumers.

Drug therapy. A number of employers are introducing prescription drug benefits that offer better coverage for drug treatments that are known to lower health costs and reduce hospitalizations.

What's the best way for you to deal with open enrollment? Spend a few hours thoroughly reading the plan documents and comparing the benefits offered by your plan with what's being offered by your spouse's plan, if applicable.

Many companies also offer online tools that can help you compare the costs and benefits of competing plans based on your typical usage.

Use them, Cigna's Kocher suggests: "There is a lot that you need to be savvy about if you're going to get good coverage that protects you and your family."

--

kathykristof24@gmail.com

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