Most people have health insurance through their employers, and every fall they discover what’s going to happen to their premiums and coverage options for the upcoming year. Health-care costs have been rising steadily over the past several years at a much faster pace than the inflation rate, and the trend is expected to continue in 2020.
Some smaller employers are making their health insurance decisions right now, but larger companies generally had to lock in their benefits in May and June. The National Business Group on Health’s annual survey of health-care plan design is usually the first glimpse of changes employers expect to make to their health insurance coverage for the upcoming year. This survey focuses on large companies, but smaller companies often follow similar trends. Here’s what to expect from your employer’s health insurance during open enrollment for 2020, and strategies for making the most of these trends when choosing and using your coverage for the year.
Expect to pay about 5% more in health-care costs.
Large employers expect the total cost of health benefits covering employees and their dependents to rise by 5% in 2020, to an average of $15,375, including premiums and out-of-pocket costs. Most large employers will continue to cover almost 70% of the costs, leaving employees to pay an average of more than $4,500 in premiums and out-of-pocket costs.
Expect to find more plan choices with lower deductibles.
Many employers had been reducing the number of health insurance choices over the past few years and moving employees into high-deductible plans that can be paired with a health savings account. In 2020, an HSA-eligible policy must have a deductible of at least $1,400 if you have single health insurance coverage, or $2,800 for family coverage.
In 2018, 39% of the employers only offered high-deductible plans and didn’t offer any plans with lower deductibles. But in 2020, just 25% are offering high-deductible plans as their only option. “There is a growing realization that out-of-pocket costs for many employees may be too high,” says Steve Wojcik, vice president of public policy for the National Business Group on Health. “The tightening labor market also prompts employers to offer more health benefit choices and options.”
Expect more incentives to sign up for the high-deductible plan.
Even though more employers are bringing back low-deductible plans as an option, they’re still trying to steer employees towards the higher-deductible plans, hoping that the extra out-of-pocket costs will encourage employees to become better health-care shoppers and help reduce medical expenses. Most of the employers now contribute to employees’ HSAs just for signing up for the high-deductible plan — with an average contribution of $632 in 2019. In the past, many employers would match HSA contributions or would contribute to the account if employees participated in or completed a program to improve their health, but that number is decreasing from 34% in 2019 down to 24% in 2020.
Expect employers to offer more virtual services for medical care.
More than half the employers said their top health-care initiative in 2020 is to expand virtual health solutions to help control costs. Almost all large employers now offer telehealth services, up from only 7% in 2012, which lets people visit with a doctor or nurse through phone or video chat and can be a low-cost and convenient way to treat basic ailments, such as sinus and upper respiratory infections, allergies, flu and coughs. More than one-third of the employers also offer telehealth for specialty services, such as dermatology.
Even though 98% of the large employers offer telehealth as an option — with lower co-payments than a visit to the doctor, and much lower costs than visiting an urgent care center or emergency room — employees tend to be slow to use the services. “It’s critical that employers communicate about their availability and the benefits in terms of convenience and lower costs,” says Wojcik.
Nearly three-quarters of the large employers offer virtual services for mental and behavioral health, and 9% expect to add them in 2020, which can convenient and private way for people to access these services, even if they don’t have mental health professionals nearby. Employers are also offering virtual services for weight management programs, as well as managing diabetes care, prenatal care and sleep management.
Expect more virtual services to help employees navigate the health-care system.
The large employers are also offering more virtual solutions to help employees navigate the health-care system and make choices about their providers and path of care. “It’s hard to get good information about health care costs and quality and to shop for health care services,” says Wojcik.
Almost three-quarters of the employers plan to offer medical decision support tools and second-opinion services, and nearly three-quarters plan to offer virtual solutions to help with claims assistance. About 60% will be offering special full-service concierge programs that help employees navigate the health-care system, make decisions about their treatment options, find in-network providers who specialize in the services they need, and even help with claims issues.
Expect financial incentives to use national or regional centers of excellence for more types of care.
Many employers are making arrangements with well-known hospitals in other parts of the country to provide care for certain conditions or procedures, such as transplants, bariatric surgery, orthopedics (knees, hips or spine), cardiovascular/cardiac care, cancer, fertility, mental health, and substance abuse. Some of these centers of excellence are nationally recognized hospitals, such as the Cleveland Clinic for complex cardiovascular care, and some employers use regional centers of excellence, says Wojcik.
These hospitals are covered as in-network providers, even though they may be hundreds of miles away, and some employers are even reducing or eliminating cost sharing for employees who choose to have their procedure at the plan’s center of excellence rather than a local hospital in the network. The employers generally cover travel expenses for the patient and their caregiver or family member as part of the benefit, says Wojcik.
Strategies to Make the Most of These Trends When Choosing and Using Your Plan
— Make sure the doctors and hospitals that you want to use are still covered in your insurer’s network. Networks can change from year to year. Use your employer’s virtual tools to help research providers that are covered by your plan, and find out whether the plan covers any centers of excellence for specialized care.
— Don’t just compare premiums when choosing a plan, but also factor in the deductible and out-of-pocket costs for the types of care and prescription drugs you typically use. Many employers offer web tools that can help you run your numbers for each plan.
— If you have a choice between a low-deductible policy and a high-deductible policy, don’t just look at the difference in premiums and out-of-pocket costs, but also factor in the benefits of a health savings account and any employer contribution to the account (employers contributed an average of $632 to employees’ HSAs in 2019).
If you have an HSA-eligible policy, you can contribute up to $3,550 pre-tax to the account in 2020 if you have single health insurance coverage or up to $7,100 for family coverage (plus an extra $1,000 if you’re 55 or older). HSAs provide a triple tax break: Your contributions lower your taxable income and the money grows tax-deferred through the years, then can be withdrawn tax-free for eligible medical expenses anytime in the future (unlike flexible-spending accounts, there’s no annual use-it-or-lose-it rule). You can’t make new contributions to an HSA after you enroll in Medicare, but you can continue to use the money tax-free for eligible medical expenses at any age — and after you turn 65, you can even use HSA money tax-free to pay premiums for Medicare Part B, Part D and Medicare Advantage plans (but not medigap).
— Consider any upcoming health needs when choosing a plan. If you’re expecting to have surgery or get pregnant, for example, you may want to choose a different health plan for the year than you had in the past. If you need specialized care, find out whether any of the plans offer in-network coverage for centers of excellence throughout the country.
— If both spouses have health insurance coverage through work, consider all of your options — compare the premiums and coverage if each spouse gets coverage from his or her own employer, or for both spouses going on one plan (although some companies charge a surcharge for spouses who could get coverage elsewhere), and compare the costs of adding your children to either policy. Also compare the costs and coverage for other types of health-related plans — one spouse’s employer may have better health insurance coverage, but the other might have better dental or vision coverage, for example. Your family could get health insurance with one spouse’s employer but dental and vision coverage through the other spouse.
— Find out whether your plan offers telehealth and other virtual services, and learn about when it would be appropriate to use them. You may have much lower co-payments — and a more convenient appointment — for using virtual doctor’s visits rather than scheduling an office visit or going to urgent care or the emergency room for minor ailments.
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Saturday Insurance Services, LLC (“Saturday” or “Saturday Insurance”) is a licensed, digital insurance advisor. All tools, quotes, and information provided by Saturday are for educational purposes only and based on the limited information, if any, provided by you. We urge you to consult with your financial and tax advisors before making any purchase decisions. All quotes and estimates are non-binding and are not to be construed as a guarantee you will be able to purchase insurance. Availability of insurance and final pricing is determined solely by our insurer partners and subject to their review and acceptance of a completed application. All product guarantees are subject to the claims-paying ability of your insurer.