Expect cuts in your 2010 health coverage

Look for employers to cut more deeply than ever into health care coverage for their workers in 2010.

Companies are getting walloped by higher than expected costs just when they can least afford it. Employers had figured on a 6 percent hike in health care this year, but it now looks as if the increase will be closer to 7.5 percent.

The spike is due to employees making more trips to the doctor and dentist and undergoing more exams, tests and treatment, a common occurrence in a recession. It's driven by stress-related illnesses and by workers worried that they'd better race to use their benefits while they still have them.

Employers say that as a result of economic conditions, they will make more cost saving changes than usual to their health plans. In a recent survey by Mercer, firms said they are planning on making changes to slow the increase in health costs to an average of 5.2 percent in 2010.

A popular method for cutting costs will be to embrace consumer-directed health plans, which combine high deductible insurance with tax advantaged savings accounts, either a health reimbursement account (HRA) or a health savings account (HSA).

"Employers are getting more comfortable with these plans, and our survey indicates they are planning the biggest increase we've seen to date in their adoption," says Beth Umland of Mercer.