WASHINGTON -- Employers will soon be offering workers their yearly opportunity to make changes to their health care benefits. All too often this open-enrollment period has required combing through pages and pages of confusing insurance terms.
But this year workers will receive help translating that jargon thanks to a new requirement that insurers provide a user-friendly coverage summary of all health plans. Combined with innovative wellness plans that reward employees for staying health, experts say millions of workers should be able to make smarter benefit decision and save money in the process.
"There's a $5 or $10 bill just sitting there," says Jody Dietel, chief compliance officer with WageWorks. "They have to do a little bit of homework, but that $5 or $10 is theirs for the taking."
More than 55 percent of insured workers estimate they waste up to $750 each year because of mistakes during open enrollment, according to a recent survey by insurance provider Aflac. Those wasted dollars are more crucial than ever. Even three years after the recession ended, 62 percent of middle class Americans tell the Pew Research Center they have been forced to cut back on spending in the past year.
Here are ways to make sure you're getting every dollar's worth from your health benefits:
"I think people spend less than an hour on (open enrollment) -- not because they don't want to -- but because they feel it's overwhelming and complicated," says Rebecca Madsen, a senior vice president with UnitedHealth Group. Open enrollment generally starts in October or November for plans that begin Jan. 1.
Many insurers are trying to present benefit information in interesting, more user-friendly ways. UnitedHealth runs the website www.healthcarelane.com , which lets visitors explore a virtual town, where each person they encounter offers information and advice about a different health plan offering. The Department of Health and Human Services offers a more straightforward website designed to demystify health care topics: www.healthcare.gov .
This year's open enrollment should be easier to navigate even for those who get their information from paper and ink sources. Starting this month insurers are required to provide standardized 8-page summaries that explain key terms and cost details of their plans. The rule was passed as part of the Obama administration's health care overhaul and is intended to make it easier to compare policies and the costs and benefits of various plans.
Stay fit, save money
Most large employers now offer wellness programs designed to keep employees healthy and, ultimately, cut medical expenses. These programs often come with financial perks to increase participation. More than 81 percent of businesses with 50 or more employees offer at least one wellness benefit, such as gym memberships, quit-smoking programs and stress management classes, according to the Wellness Council of America, an insurance industry group.
These companies are trying to curb health insurance costs that have climbed more than 25 percent over the last five years, outpacing inflation.
For several years now, many companies have offered cash or gift certificates to encourage employees to participate in their programs. Some still do, but low participation rates have prompted an increasing number to offer insurance cost breaks instead.
For instance, employees enrolled in UnitedHealth's personal rewards program can cut their premiums by $1,000 per year for meeting basic health benchmarks for cholesterol, blood pressure and other measures.
"The two-pronged trend here is that there is more money on the table, but at the same time you have to do more to get it," says Ian Duncan, actuary and professor of Actuarial Statistics at University of California, Santa Barbara.
In some cases employees must provide evidence they are filling important prescriptions, or attending exercise classes before they can claim the financial reward.
Meanwhile, other employers are trying an opposite strategy by assessing penalties on those who have health risk factors. Eleven percent of large employers require employees with unhealthy habits like smoking to complete classes to avoid higher premiums, according to a survey by the Kaiser Family Foundation.
Experts say such carrot and stick approaches will likely increase in the years ahead. Under President Obama's health care overhaul, employers can increase the value of such penalties to as much as 30 percent of workers' total premiums.
Take a health care tax break
Employers continue to give workers a chance to save money by setting aside pre-tax money for medical expenses. These flexible spending accounts can help employees save 20 to 40 percent on medical expenses not covered by insurance, such as braces, glasses and contact lenses.
Employees should estimate their out-of-pocket health care expenses and have that amount withdrawn from their paychecks over the course of the year. The money contributed to an FSA is not subject to payroll tax, which effectively lowers participants' taxable income, but with the condition that they must spend the money before the end of the year. Money left in the account on Dec. 31 is forfeited.
Wageworks estimates about 75 percent of U.S. employees have access to a flexible savings account, though just 20 to 25 percent participate, mainly because of concerns about the "use it or lose it" rule.
The health overhaul makes one major change to flexible spending accounts beginning in 2013: Health care flexible spending accounts will be capped at $2,500, which could limit tax savings for people with large families or expensive medical conditions. The government previously didn't limit how much workers could set aside, but most companies capped contributions at around $5,000.