Make the Most of Health Insurance Changes in 2013

What’s going to happen to employer health insurance prices and coverage during open enrollment this year? Do you have any advice on picking the best plan?

The National Business Group on Health conducts an annual survey of health benefits offered by many of the largest employers nationwide, and it always provides a first glimpse at health-plan changes for the coming year. The big headline is that employers expect benefit costs to rise by an average of 7% in 2013 -- on top of increases of about 7% in both 2011 and 2012. Sixty percent of employers say they plan to pass along a portion of the increase in the form of higher premiums in 2013; in general, premiums will increase less than 5%. Large employers still subsidize a big portion of premiums, typically covering about 80%, leaving employees to pay the remaining 20%. The premium split for dependent coverage is usually 70% for employers and 30% for employees. Smaller companies generally pay a smaller proportion of costs.

Employers are making other adjustments to costs and incentives that may make a big difference in your expenses. Here are some changes to look out for and strategies for making the most of them.

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Extra out-of-pocket expenses. Many employers are shifting additional costs to employees: 40% plan to increase in-network deductibles, 33% plan to increase out-of-network deductibles, and 32% plan to boost their out-of-pocket maximums. Also, 13% of employers plan to increase the co-payment for buying drugs at a retail pharmacy (with a smaller increase for mail-order prescriptions), and about 8% plan to increase the coinsurance rate for primary and specialist care (coinsurance is the percentage of the bill you pay yourself). Compare overall costs -- premiums, coinsurance rates and deductibles -- when picking a policy. And be careful to choose providers and pharmacies that participate in your plan; otherwise, your deductibles as well as your co-payments could be higher.

More high-deductible health plans and health savings accounts. In 2013, more than half of employers plan to offer a consumer-directed health plan (usually a high-deductible health plan paired with a health savings account), which is similar to the numbers offering such plans over the past five years. But a big change is in the number of employers that plan to offer a high-deductible plan as their only option -- 19% in 2013, up from 7% in 2009. Employers are also making larger contributions to HSAs to encourage people to pick these plans: 43% of employers contribute a fixed amount to the HSA for each participant (average: $500), 40% make contributions based on completing a wellness program (average: $400), 21% put seed money into new accounts, 12% make matching contributions, and 10% make contributions based on progress toward a health goal. Only 14% make no employer contributions. Don’t leave free money on the table. Find out what you’d need to do to qualify for employer contributions, and factor in your employer’s contribution to an HSA when picking a plan. See What to Know About Health Savings Accounts for more information.

Better tools to compare health care costs. It has always been difficult to compare prices for medical procedures, especially because each insurer has different deals with providers. But as insurers boost deductibles and coinsurance to help reduce their expenses, you have more of an incentive to become a savvy health care consumer. And more health plans and employers are providing tools to help you research how much each provider under their plan will charge you for a procedure. Sixty-five percent of health plans now provide online price-transparency tools, and 14% offer the information through a third-party provider. Only 21% provide no tools to help you compare costs. Make the most of these resources when choosing a provider, hospital or facility for medical tests and urgent care. See 30 Ways to Cut Health Care Costs for more information about making the most of these resources.

Stronger incentives to participate in wellness programs. Nearly half of employers are using incentives to encourage participation in wellness programs, and 29% reward specific health outcomes (such as achieving certain goals for body mass or cholesterol levels). The incentives for participating in wellness programs have increased over the past few years, with maximum payouts averaging $450 for employees and $375 for dependents in 2013, up from $250 for employees and $203 for dependents in 2011. It may not have been worth the hassle to participate in a wellness program in the past, but the bigger rewards may now make them worth a second look. On the flip side, you could lose by choosing not to participate. About one-fourth of employers plan to apply surcharges to employees for not participating in certain programs.

Reduced flexible-spending limits. Ninety-four percent of the companies said they will have to lower their medical flexible spending account ceilings to comply with the $2,500 maximum for 2013 written into the health care reform law (many employers currently let employees contribute $3,000 to $4,000 to these tax-advantaged accounts). For more information, see New Limits on Flex Accounts Coming.