As we move looking forward to 2020, health policies for the employees are also changing in the US. So, the insurers are recommending people to sign up for the next year’s employee benefits. Otherwise, it could cost you.
More than 90% of US employees are losing on health benefits
An insurer Aflac set up a poll for the employees working in the U.S. in March and April. About 2000 employees took part in the poll. As per the findings of Aflac, more than 90% of workers simply choose the same benefits each year. They do not make any changes during open enrollment. Perhaps this happens because they least understand what they are signing up for. About 76% of the employees admitted that there were at least some portions of their current coverage that they couldn’t understand yet.
The vice president of client services at DirectPath, Kim Buckey, shared his experience of dealing the employees in the US. He stated that he had heard different stories of people who ignored the 18,000 reminders about the health benefits enrollment. And now when the window is closed, they realized that they needed to change something.
People don’t realize that bad decisions or late decisions can cost them money. More than half of the employees estimated that they had been wasting $750 a year due to their mistakes at the time of open enrollment.
Kim said that most of the people don’t take a look at the total cost of a health-care option. It is like a knee-jerk reaction seeing what costs them the least out of their pocket every paycheck. The analysts have highlighted the following health benefit enrollments decisions that could cost you more in 2019:
Repeating the health benefits from last year
Repeating the last year’s health benefits is the easiest thing people usually do. This is because they spend just 30 minutes or less reviewing the benefits and the updates before signing up.
The insurers suggest that this action can become a huge mistake if you had planned some major life changes like getting married or having a baby. In such cases, you’d have to reconsider your insurance policy by including the new family members under your coverage.
Another major loss people could face by repeating the last year’s benefits if they are diagnosed with a serious health concern in the next year. They re-elected last year’s plan without considering deductibles, medical treatments, and prescription costs. So, surprise medical costs could ruin their finances.
To avoid such hassle, it’s important to go through the enrollment guide in detail. Look for the page that says ‘What’s New’. In this way, you’ll be aware of any substantive changes to your plan.
Ignoring the costs of different health plans
There are different health care plans but people are mostly aware of the premium plans only. They do not have much information about how much costs they could save on these plans. So, it is better to review your out-of-pocket maximums, copayments, and coinsurance on your last year’s benefits. This includes the cost percentages you share with your insurer and your deductible.
According to the National Business Group on Health, 9 out of 10 employers expect to offer high-deductible health plans. The minimum deductible for these plans is $1,350 annually for self-only coverage. And it is $2,700 annually for family plans.
These health plans are often combined with cost savings accounts in terms of pre-tax basis and accumulate interest on a tax-free basis. If you are paying for qualified medical expenses, you can easily withdraw money free of taxes.
Buckey explained how she saved herself additional costs by switching from a high-deductible health plan to a provider organization. In this plan, the providers offer plan members services at reduced rates.
This plan worked for her because one of her family members needed prescription drugs due to a new health condition. If she had stuck with the high-deductible plan, the overall cost would have been higher.
She suggested that everyone should look at the total cost of the plan before signing up. If you have a family member who is prone to getting sick, it will assist you in taking a good decision. She further added that high deductible plans aren’t a bad thing as such. But it doesn’t suit everyone.
The employees who do not smoke can further avail median annual reduction of $520 in premiums. If you add your spouse to the plan with available coverage, you’d also have to pay spousal surcharges. In a poll by Willis Towers Watson in June and July 2017, half of the 555 employers expected to use spousal surcharges if other coverage is available in 2019.
Ignoring reminders and missing deadlines
Generally, the employers start sending out benefit enrollment reminders to their employees as early as late summer. So that they have at least two to three weeks in the fall to review their plan and sign up for coverage.
However, many employees ignore such reminders at first. And once the benefits enrollment sign-up period is closed, they need to change something in their plan. But, it’s not that easy to make changes as they are locked into the plan for the following year.
The only exception to this rule is if you already have a qualifying life event. This could be a loss of health coverage, marriage, divorce, or having a baby.
The benefit of participating in a high-deductible plan is that you can save money in a health savings account. In 2020, you will be able to save up to $3,500 in an HAS. For this purpose, you would need self-only coverage or up to $7,000 for a family plan. If you’re 55 years old or more, you can contribute an additional amount of $1,000 in your plan.
According to data obtained from Alight Solutions, employers can also assist you in funding your account. More than 3 out of 4 employers offer high-deductible plans with some kind of matching contribution with HAS workers. HAS givers savers an opportunity to accumulate and invest their money for long time periods. This will further be able to reduce their taxes over the course of the year.