Health care costs rose faster than inflation and wages this year — a trend that will hit home for many workers in the next several weeks as employers offer open enrollment.
Employers usually pick up much of the tab for health insurance, but many are expected to shift more of this growing burden onto workers next year. That means employees are likely to see higher premiums and deductibles. And a growing number will be required to pay more up front, as more companies are adding so-called consumer-driven plans.
For some time, workers have been feeling the pain of paying more.
Kaiser Family Foundation reported recently that the typical annual premium for family coverage rose 9 percent this year, at a time when pay went up an average of 2 percent.
The total annual premium — shared by employers and workers — amounted to $15,073 for family coverage and $5,429 for singles, Kaiser says.
Kaiser estimates that up to 2 percentage points of this year's increase can be attributed to popular new benefits required by the Affordable Care Act, the health care overhaul that won't take full effect until 2014.
That law requires many health plans to fully cover preventive care, such as immunizations and mammograms. And young adults now can stay on their parents' insurance until they turn 26. Kaiser figures that 2.3 million young adults were added to parents' plans this year thanks to the law.
As we head into a new year of benefits, there's some consolation for workers:
A recent survey by benefits consultant Mercer found that costs next year are expected to go up by an average of 5.4 percent — the smallest increase in 15 years.
Some of that is because of a dropoff in the number of people seeking care, possibly as a way to save money during the weak economy, says Melissa Jimeno, a principal in Mercer's Baltimore office.
But Jimeno adds that wellness programs offered by employers to try to get workers with chronic conditions to take better care of themselves also appear to be paying off.
Columbia-based W.R. Grace & Co. is putting the finishing touches on its benefits package for next year. Pamela Wagoner, chief human resources officer for the chemical maker, wrote in an email that the goal is to help workers stay healthy and give them more flexibility on how they spend health care dollars.
For example, Grace will offer employees and their spouses $100 each if they complete a health-risk questionnaire and undergo testing for such things as cholesterol levels.
Grace, which employs about 1,050 workers in Maryland, also is adding two consumer-driven plans to encourage workers to be more judicious users of health care. The company says workers switching to these plans could see premiums fall by as much as 35 percent — a carrot to entice them to participate.
Here are the details of what you might see in your enrollment package:
High-deductible plans These health plans, which come with an employee-controlled spending account, are about 15 percent cheaper than the usual offerings, Mercer reports. That's one reason they appeal to employers.
The steep deductibles — they averaged $1,908 this year, Kaiser reports — keeps premiums lower.
The plans often are paired with a health savings account. Workers — and sometimes employers — contribute money into a tax-free account that employees can tap to pay the deductible or medical expenses. Money that's not used will accrue over time to be used for future health bills. And if workers leave their jobs, they can take the money with them.
The theory is that when employees control how money is spent in the account — and, ultimately, how much they can end up with — they will be savvier shoppers of health care.
Some health experts say these plans aren't suitable for workers with chronic health problems because they won't be able to build up any money in their savings accounts.
Only 4 percent of employers in 2006 offered such a plan, Kaiser says. Now, 17 percent do.
"This is the quiet revolution going on in health insurance," says Drew Altman, Kaiser's chief executive. "Those plans are certainly cheaper, but the nature of health insurance is changing without a great deal of analysis or debate."
Altman says insurance is gradually shifting from the comprehensive coverage favored by liberals to the model championed by conservatives who want workers to have "skin in the game."
Wellness programs Companies continue to prod workers to live more healthful lifestyles.
"Employers are saying, 'If we are going to control health care costs, we really have to work on the most serious problem: employees' poor health habits,'" says Helen Darling, president of the National Business Group on Health, a nonprofit that advocates for large employers.
Many companies launched wellness programs years ago, offering $25 gift cards or small tokens to workers who filled out a health questionnaire to identify health risks. Now employers are ratcheting up their efforts.
"This is not the wellness we have known," says Steve Dillman, a senior vice president with benefits consultant CBIZ Employee Services in Columbia. "It's much more focused and more intense."
For example, Dillman says, employees with chronic illnesses might pay lower premiums if they enroll in a disease-management program. But to keep those premium discounts next year, he says, they might have to show that they followed health regimens of taking medicine or undergoing regular testing.
Voluntary benefits Employers don't like to be seen cutting benefits year after year, Dillman says, so many are adding "voluntary" benefits such as legal services or life, auto or disability insurance.
Recently launched Capella Tax Network in Columbia, for instance, offers a benefit through employers: tax preparation and 90 minutes of tax advice for $312 a year.
Workers pay the entire cost of voluntary benefits, although they get them at a group rate.
"The employer is doing the vetting to figure out which is the best vendor," Dillman says.
Health reform changes Many employers exercised their right last year to maintain a "grandfather status" that allowed them to delay adopting some of the early benefits of the health care act, Mercer's Jimeno says. The catch: They couldn't substantially raise premiums or make major changes to the plan.
But a lot of employers discovered grandfather status wasn't as beneficial as they thought, Jimeno says, and are giving it up next year. That means your premiums could go up sharply or you'll pay more for services, she says. But you could also see new benefits, such as having preventive care fully covered.