Making smart choices during health open enrollment

If such terms as deductibles, health savings accounts, flexible spending accounts and preferred provider networks are swirling in your head, then it must be open-enrollment period at work.

Most jobs that provide health-insurance benefits give employees a chance annually to change health-insurance plans or health-plan options.

Fall is that time for many companies with the new benefit year starting Jan. 1.

The choices can be confusing for workers -- unsure whether to opt for a plan with lower premiums, higher deductibles and more risk, or to stick with a traditional low-risk plan that takes a bigger bite out of weekly pay.

"I always get the cheapest plan," said Ladelle McWhorter, 49, a philosophy professor at the University of Richmond.

"The way that it was when I was first employed here, if you took the least expensive plan, they picked up the entire cost. All you had to do was the co-pays. The other plans, you have to do the co-pay plus you have to pay every month."

She knows she should spend more time scrutinizing the plans but confesses: "I usually don't process it very well."

A lot of consumers feel likewise and go with what they know.

A changing array of options, however, makes it worthwhile to at least give other plans a look. The economic downturn is putting financial pressure on companies to trim costs, and many are shifting more costs to employees.

"Probably more so with smaller companies, they are probably taking a little more drastic steps, but I think companies in general right now are decreasing benefits or decreasing their contribution amounts, or holding those flat," said Jeff Ricketts, regional vice president of sales at Anthem Blue Cross and Blue Shield.

"That's why it's especially critical in open enrollment for people to look really closely at what changes there are in their benefits," Ricketts said. "What we often find is people don't understand their plan or don't want to understand until they need it."

About 60 percent of employers offer health-insurance benefits, according to a survey by the Kaiser Family Foundation and the Health Research and Educational Trust. Among firms with 200 or more employees, 98 percent offer health plans. That drops to 87 percent of companies with 25 to 49 workers.

The health-benefits survey, in its 11th year, tallied responses of 3,188 randomly selected non-federal public and private firms contacted between January and May.

For family coverage, the annual premium in 2009 is $13,375, up about 5 percent from the year before. On average, the employee pays about $3,515 of that, with the employer picking up the rest.

Also in the survey: More workers are enrolling in plans with an annual deductible of $1,000 or more. At small firms (fewer than 200 workers), 40 percent of covered workers were in such plans. At larger firms, the percentage was 13 percent.

. . .

High deductibles are a feature of health plans that are paired with health savings accounts, or HSAs. Such plans typically come with lower monthly premiums and let workers put pretax dollars into savings accounts that can be used to pay medical bills as they arise. Unused funds in the account can be rolled over from year to year and the account can be moved from job to job.

"HSAs are becoming more popular as people understand them a little better," said Tracey A. Baker, a financial planner in Northern Virginia and co-author of a consumer guide, "Navigating Your Health Benefits for Dummies," supported by Aetna.

Employers often contribute to an employee's HSA. Workers who don't have a lot of medical costs can come out ahead financially, but they are also taking a risk if hit with big bills during the year.

"Premiums are a little lower," Baker said. "The thing I do caution folks, if you are going to do that high deductible, you need to be sure the health savings account piece is also being funded."

. . .

Flexible spending accounts are often confused with HSAs.

The flexible spending accounts allow workers to put pretax dollars into an account to use to pay medical expenses and other services such as child care.

That money, however, does not roll over and what you don't use you lose.

And whereas HSAs can be used only with high-deductible plans, flexible spending accounts don't carry that restriction.

LaMonte Thomas, market leader for Cigna Healthcare in Virginia, said HSAs seems to be catching on slower in the Richmond area.

"Part of me wants to believe that from a cost perspective, this area is not necessarily feeling the pain just yet," Thomas said.

"We are seeing it at the larger companies. When I look at Richmond, from the makeup of company size, you have more of the midsize and smaller companies. So it's coming, the adoption rate is just not as fast."

. . .

Another trend that might jolt some employees off their couches are wellness programs that reward healthy behavior, such as getting recommended preventive health screenings, enrolling in a smoking-cessation class or maintaining a healthy weight.

On the flip side, workers might get penalized with a higher premium if they continue to smoke.

With some estimates that 70 percent of medical costs are attributed to lifestyle choices, it's another way to reduce costs, Thomas said.

"As opposed to tweaking benefit plan design, they are putting more emphasis around resources and support for changing lifestyle and putting incentives in place," Thomas said.

But is it fair to ask employees to meet a standard when there are multiple factors that contribute to health status, including genes and even a stressful workplace?

"When we do coaching, we really try to find out what is going on, where is there willingness to change," Thomas said.

"So if you are a smoker and stressed and overweight but say you are not ready to stop smoking, there are other places we can help with change, such as dealing with the stress, which in turn can help deal with the smoking."

. . .

Some companies are starting to look for savings by making sure dependents covered by health plans are eligible for coverage.

These dependent audits ask for proof. If, for instance, you have a niece living with you but are not the legal guardian, you could get hit with a penalty if you try to have coverage for her.

"I think the state just did one. We, in all likelihood, will do a dependent audit," said Sharon Jahn, employee benefits manager for the Virginia Commonwealth University Health System. "You have an outside company come in."

Examples of proof that may be requested: marriage license, birth certificate, child support order for a child claimed. Parents also may have to prove that their older dependents are college students and are properly enrolled.

Some audits have found 15 percent of "dependents" ineligible for coverage.

The state of Virginia's dependent audit was initiated after the new benefit year started July 1. In early September, about 52,000 employees and retirees were sent affidavits asking them to certify eligibility of their dependents.

"We are currently in the middle of the audit, so results are not yet in," said Anne F. Waring, spokeswoman for the state Department of Human Resource Management.

"This audit is an effort to manage health-benefit costs and protect the benefits of those who are eligible to receive them," she said. "We are committed to being good stewards of the commonwealth's resources in these tough economic times."

. . .

For workers at small businesses, where getting any coverage at all is the issue, legislation passed by the Virginia General Assembly and signed into law may open up options, said Doug Gray, executive director of the Virginia Association of Health Plans.

"Really what the bill did was try to find and permit affordable policies," Gray said. "Small businesses are having trouble affording the cost of plans that include all the mandates."

The bill, introduced by Del. Daniel W. Marshall III, R-Danville, permits health plans to offer plans that cap benefits and that offer a set cash benefit.

"What I see among small businesses is a lot of confusion," said Debra Girvin a human-resources consultant. Many are nervous about what national legislation may mean for them but are mindful that providing benefits can give them a competitive edge, Girvin said.

"In our society, having benefits is so very, very important. I almost think that having benefits is more important to a lot of folks than salary. It is very important on a competitive basis unless it's an industry that does not customarily offer benefits."

. . .

Adding an interactive blog is one way VCU Health System's Jahn is communicating health-plan changes to the health system's employees this year.

Employees still will get information mailed to their homes and sent to their e-mail addresses.

"We will be doing some cost-sharing with whatever premium increase we get," Jahn said. "We try not to make any big dollar changes as far as the benefits are concerned. We are really mindful of the economic times."

A new voluntary benefit the health system is offering allows employees to buy a policy that covers costs related to critical illness in their family.

"Say an employee's spouse is diagnosed with cancer," Jahn said. "They have bought a $15,000 benefit. The policy would cut them a check for $15,000. It would help the employee because they have to take time off to take care of their spouse."

Contact Tammie Smith at (804) 649-6572 or .