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Hewitt Offers Employees Tips to Maximize Benefit Options During Open Enrollment Season

Posted on: Tuesday, 2 October 2007, 09:01 CDT

As overall heath care costs continue to rise, U.S. employees can also expect to see continued -- and, in some cases, significant -- increases in their health care premiums. However, employees can offset some of those costs simply by taking a more active role during this year's open enrollment season, according to Hewitt Associates, a global human resources services company.

According to Hewitt research, health care costs are expected to rise 8.7 percent in 2008, up from 5.6 percent last year. Employees' share of those costs is also expected to rise: the average employee can expect to pay approximately $330 more in health care costs this year compared to last year -- or $3,597 total (premiums and out-of-pocket costs). While workers are beginning to take a more active role in selecting their benefits during open enrollment, the majority continue to default into the plans they selected in previous years, despite the increased cost burden to them. According to Hewitt, only 40 percent of employees actually made a proactive decision during open enrollment last year.

"Whether it's because the process is too time consuming, too confusing or both, the majority of employees continue to struggle with the 'inertia factor' during open enrollment and simply default into the same benefit plan selections as they had last year," said Sara Taylor, head of open enrollment at Hewitt Associates. "Taking a passive role in choosing their benefits can be a risky move for employees. The programs that were appropriate last year may not necessarily be the programs that will meet employees' needs this year. And since the costs of benefits can eat up a significant portion of an employee's paycheck each year, workers are doing themselves a disservice by not taking proactive steps to maximize the potential value of their benefits plans simply by making smarter decisions."

In order to maximize benefits and reduce the impact of increasing health care costs, Hewitt offers the following tips to employees this enrollment season:

Review your past benefits selections. Carefully review your benefits selections from last year and assess how you used those benefits. It's important to look at everything your employer offers -- including health, financial, and work/life benefits -- and evaluate the money you have allocated to invest in each one of them. Understanding all of your options will enable you to determine whether there are ways to reduce overall costs by choosing new health plans and/or eliminating benefits from which you did not realize value last year.

Take advantage of being healthy. Most employees don't know that they may be able to reduce their overall health care premium costs -- sometimes by hundreds or thousands of dollars -- simply by complying with and/or participating in certain wellness and condition management programs. Almost half (48 percent) of companies offer or plan to offer you incentives -- which may include credits toward health care premiums -- if you meet certain criteria or pledge to engage in health and/or wellness programs that promote healthy behaviors, such as smoking cessation or weight control programs, or by taking a health risk appraisal.

Don't pass up tax-free benefits. While the majority of companies offer health care spending accounts (96 percent) and dependent care spending accounts (97 percent), few employees actually take advantage of them. Only about one quarter (23 percent) of employees use a health spending account and just three percent make use of their dependent care account. These accounts can provide significant tax advantages since contributions are made by withdrawing before-tax income from your paycheck. Furthermore, the reimbursement from the account is tax-free.

Take note of the health plans your company offers. Companies are continuing to make changes to the types of benefit plans they offer employees, so it's important to take time to review your options. An increasing number of companies are moving away from local, fully insured HMO plans in favor of self-insured HMO programs, which generally cost less and could result in lower premiums for employees. In addition, these programs may offer more flexibility in the range of programs offered, potentially making them a more attractive -- and affordable -- option.

In addition, account-based plan designs, which offer a lower annual premium and can be useful vehicles for helping you save for future heath care expenses, are becoming more prevalent. According to Hewitt research, more than 20 percent of companies offer or plan to offer a high-deductible health plan (HDHP) with a health savings account (HSA) this year, and 22 percent offer or plan to offer HDHPs with a health reimbursement arrangement (HRA).

Use available tools to make informed decisions. Most companies provide resources and/or programs that help you compare and contrast various health care plans and coverage. An increasing number are also offering tools that provide you with more guidance on making the best choices for meeting your individual health and financial needs. These tools aggregate and analyze your health care claims from the past year, and then help determine the most appropriate plan for you this year. Additionally, more companies are offering quality data on providers, giving you the opportunity to see ratings and read reviews of various aspects of your benefits package before you sign up.

Think long term. While retirement may seem far away, it's important to commit to a long-term savings program and evaluate your contributions annually to see if you are on track to achieve your retirement goals. Think of open enrollment season as your yearly financial "check up." Take a look at your current strategy to see if there are new ways to maximize your savings. Are you taking advantage of your employer's 401(k) company match? Does your company offer you the opportunity to put your 401(k) plan on autopilot by opting to have your portfolio automatically rebalanced or your contributions increased by a certain percentage every year? These tools and features enable you to minimize the amount of time you spend on your retirement programs but can make a big difference in your nest egg over time.

About Hewitt Associates

With more than 65 years of experience, Hewitt Associates (NYSE: HEW) is the world's foremost provider of human resources outsourcing and consulting services. The company consults with more than 2,300 organizations and administers human resources, health care, payroll and retirement programs on behalf of more than 340 companies to millions of employees and retirees worldwide. Located in 35 countries, Hewitt employs approximately 24,000 associates. For more information, please visit www.hewitt.com.

Source: Business Wire

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