"It’s imperative for workers to understand that ‘not making major changes’ doesn’t mean ‘I don’t have to do anything different this year,’" says Sara Taylor, Hewitt’s health and welfare strategy leader. "History tells us that most workers - even during a significant economic downturn - default to their previous year’s benefits. In doing so, they may be losing out on a huge opportunity to save money and fully maximize the benefits available to them. And in today’s economy, every dollar counts."
To help workers make the most of their benefits dollars, Hewitt offers the following tips to employees this enrollment season:
- Be proactive. In many cases, workers who don’t make an active decision during enrollment simply believe they will be defaulted into the coverage in which they were previously enrolled. But this can be a risky assumption. According to Hewitt data, 8 percent of employers default employees who do not make an active decision during enrollment to the highest benefit coverage levels. Another 10 percent default employees to no coverage at all. It’s vital that you actively participate in choosing your benefits to ensure you make the best decisions for you and your family.
- Assess last year’s coverage. When choosing your benefits, it’s important to know which elements of your coverage were effective and which weren’t. A few questions you might want to ask yourself: How much did you spend on co-payments and out-of-pocket costs last year? Are your doctors still covered under your plan? Did you start seeing any new doctors that were not covered? Did your flexible spending account (FSA) last throughout the year, or did that pool of cash dry up early? Many employers have tools to help you easily compile and assess this information. Armed with this knowledge, you can be sure you are choosing a benefits package that will adequately meet your needs.
- Research your options. "Many people spend more time shopping for a new refrigerator than they do selecting their benefits. Given the impact benefits can have on overall quality of life - both now and in retirement - you owe it to yourself to seriously evaluate all of your options," says Taylor. In many cases, you might find a different lineup of health care plan options in 2010. For example, due to high HMO premium increases for 2010, many companies are eliminating less efficient HMOs and adding more efficient network models. Some employers may even be eliminating HMO plans altogether. If you’re currently enrolled in an HMO plan, it’s important to take time to research whether your same plan will be available next year.
In addition, an increasing number of companies are now offering high-deductible health plans (HDHPs). Because HDHPs require you to take on a larger burden of health care costs in exchange for lower monthly premiums, companies are increasingly viewing them as an effective way to control rising health care costs while still meeting the needs of many employees. Employees who enroll in an HDHP are often attracted to the ability to use funds in the savings account for this year’s care, while saving unused funds for use in future years. HDHPs also tend to include generous preventive care benefits, which may allow you to focus on improving your own health.
According to the Kaiser Family Foundation, 28 percent of employers with more than 1,000 employees offered an HDHP with a savings option in 2009, compared with 22 percent in 2008. In some cases, companies are shifting a greater share of the cost for other, more expensive plans to employees in an effort to make HDHPs a more cost-effective and attractive plan option to you.
- Ease the selection process. Hewitt research shows that most companies offer tools that aggregate and analyze your health care claims from the past year, and then help determine the most appropriate plan for you. Nearly all employers (90 percent) offer health care cost estimators and an increasing number are offering quality data on providers, giving you the opportunity to see ratings and read reviews of various aspects of your benefits package before you sign up.
- Use your tax-free benefits. An increasing number of employers offer flexible credits/dollars that you can allocate to different benefit choices. In addition, the vast majority of companies offer flexible spending accounts, which enable you to set aside a pool of money from your paycheck before it’s taxed. For example, an average family of four earning a household income of $50,233, and who annually contributes $5,000 into a dependent care account and $3,000 into a flexible spending account, could save as much as $1,800 annually in federal taxes by taking advantage of these accounts. However, just 23 percent use an FSA and only about 3 percent take advantage of their dependent care accounts. To maximize your “spending power,” you may want to consider the tax savings as a way to stretch your paycheck.
- Get healthy. Despite the economy, employers still view health and wellness programs as an important investment. As a result, they are offering you the chance to participate in more wellness programs and initiatives such as weight management and smoking cessation programs. What’s more, a growing number of companies are requiring you to complete a health risk questionnaire (HRQ) or biometric screening to receive benefits in the coming year. Some employers are also requiring spouses who are covered on their health plan to fill out an HRQ. In many cases, employers offer incentives for completing these programs - including lower premiums - so it pays to participate!
- Note any dependent changes. An increasing number of employers are conducting dependent audits to ensure they are only providing health care coverage for those who are entitled to receive it under their plan rules. Make sure you are seeking coverage only for those dependents that are actually eligible. In addition, some companies are charging higher premiums for working spouses who have access to other health care coverage, and some are even reducing and/or eliminating their subsidy for spousal and dependent coverage.
- Make sure your 401(k) is setting you up for a secure retirement. Annual enrollment is a great time to give your 401(k) plan a comprehensive examination to make sure you’re on track for retirement. Use your employer’s online tools to make sure you are contributing enough and that your investments are properly diversified. Because most employees are not savvy investors, take advantage of valuable features that might be available from your employer to put your plan on autopilot, including contribution escalation, lifestyle funds, and automatic rebalancing.
