Health-Insurance Changes for 2011

Here's what to expect when your employer gives you choices during open-enrollment season this fall.

What differences can I expect to see in my health insurance for 2011 during my employer's open-enrollment season this fall?

Employers will be making some changes to their health insurance plans for 2011 because of health-care reform — such as offering coverage to children up to age 26 — and as a way to help control rising health care costs. A recent survey of large companies by the National Business Group on Health found that employers estimate their health-care-benefit costs will increase by an average of 8.9% in 2011, compared with an average increase of 7% this year. These employers are continuing to boost premiums and co-payments, but they're also beefing up programs that encourage employees to lower their medical expenses.

Higher Premiums and Co-Pays

Sixty-three percent of the employers surveyed plan to increase the percentage that employees contribute to the premium (on average, employees contribute 17% of the premium for individual coverage and 27% for family coverage). And 46% plan to raise out-of-pocket maximums. About 40% of employers also intend to increase in-network or out-of-network deductibles.
These large employers have already been boosting employees' share of the premiums and co-payments over the past few years, and they realize that increasing employee costs cannot be their only solution — especially because many workers have had stagnant wages and may have a spouse who lost a job, says Helen Darling, president of the National Business Group on Health.
If employers increase co-pays too much, the employees may not seek care they need, which could lead to greater medical expenses in the future. And the claims costs have a direct impact on these employers, who are self-insured and pay claims from their own money, using an insurance company only for administration (a common practice for many large companies). These employers are targeting some of their increases at areas that will help encourage employees to be more careful about costs — such as increasing cost sharing for non-emergency care at an emergency room.

The Solution
If you have a choice of several plans, factor your potential out-of-pocket costs into the equation rather than looking just at premiums. Evaluate the new rules for co-payments carefully when deciding which type of care to use throughout the year.

 
More High-Deductible Health Plans and Health Savings Accounts

Sixty-one percent of the employers surveyed said they plan to offer a consumer-directed health plan in 2011 (usually a high-deductible health plan combined with a health savings account), which helps lower health-care costs because it encourages employees to become better health care shoppers. In fact, 20% of the employers plan to make the consumer-directed health plan the only choice. Those that are offering several options are steering employees toward the high-deductible plans by reducing premiums and often contributing money to the employees' health savings accounts.

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The Solution
These extra incentives may make a high-deductible plan worthwhile, even if you aren't in perfect health. Also, most high-deductible plans now cover preventive care without cost sharing before you reach the deductible. Look carefully at the high-deductible plan option this year and consider adding some of your own money to an HSA (if you're eligible). Contributing to an HSA lowers your taxable income, and your money grows tax-deferred for the future and can be used tax-free for medical expenses in any year — even after you switch to a new job.

Better Deals for Primary-Care and Wellness Programs

Many employers intend to reduce or eliminate the co-pays for primary care and preventive care, which can help catch problems early and lower medical expenses in the long run. Employers have been experimenting with various forms of wellness benefits over the past few years, and most now give people bonuses for participating in wellness programs rather than penalizing them if they do not. "They like carrots more than sticks," says Darling. Forty-one percent of the employers are offering discounts for participation in wellness programs, and the average incentive to employees is $380; 22% of employers offered discounts on premiums for participating in tobacco-cessation programs.

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The Solution
Employers realized that they needed to provide workers with better incentives to sign up for wellness programs. So if participating in one seemed like a hassle in the past, it may be worth a second look this year. Also, get a list of free preventive-care services and make the most of them throughout the year.

Extra Charges for Brand-Name Drugs

Over the past few years, more employers have been charging varying levels of co-pays for different types of drugs. Sixty-three percent now have a three-tiered design for their prescription-drug coverage, charging the lowest co-pay for generic drugs, the middle rate for preferred brand-name drugs and the highest co-pay for other brand-name drugs.
People also have to jump through more hoops to get their drugs. Seventy-three percent of employers now require prior authorization before they will let you use certain drugs, and many are using step therapy, which requires doctors to try a lower-cost drug first before certain higher-cost drugs will be covered. Employers are also changing co-pays to encourage you to get your drugs from a cheaper source. For example, some will fully cover the cost of maintenance medications only if you use mail-order pharmacies. If you choose to get the medication at a local pharmacy instead, you pay the difference between the cost of mail order and the retail price.

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The Solution
If you take medications regularly, look carefully at how the drugs are covered and your potential out-of-pocket cost. Switching to generics, when possible, will always save you money, and the cost savings becomes even more pronounced if your employer charges a lower co-pay for the lowest-cost drug. Also reconsider where you buy your medications if your employer provides a higher level of coverage for mail-order pharmacies. And find out about any prior authorization or step-therapy requirements before using a new medication so you don't get hit with surprise charges if you don't follow the rules.

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Open enrollment cutoff for Medicare plans moves up

A new deadline for privately run versions of the government's Medicare program may trip up customers who typically wait until the holidays to settle on their health insurance coverage for the coming year.

This fall's open enrollment deadline for Medicare Advantage plans and Part D prescription drug coverage has been moved up nearly a month to Dec. 7. The new deadline aims to help prevent coverage problems arising from late-December enrollment decisions, but it also could pose a quandary for many beneficiaries.

Medicare Advantage plans cover more than 11 million people. They offer basic Medicare coverage topped with extras, such as vision or dental coverage or premiums lower than standard Medicare rates.

Most beneficiaries enroll after they turn 65. Then they have an open enrollment window every fall in which they can drop their coverage and switch to another plan. Here are some questions to consider this fall.

— What deadlines will change?

Beneficiaries will receive their annual notice telling them about any changes in their coverage for next year by Sept. 30, which is a month earlier than last year. Insurers then will start marketing their 2012 plans on Oct. 1.

This year's open enrollment runs from Oct. 15 to Dec. 7. That's a longer stretch than last year's window of Nov. 15 to Dec. 31.

But the health care overhaul calls for the earlier deadline to ensure that new coverage begins as planned on Jan. 1, according to a Senate Finance Committee aide. The new date provides more time for applications to be processed by the end of the year.

— Will the deadline changes affect many beneficiaries?

Medicare Advantage customers will have enough time to consider their options and enroll in another plan if they avoid waiting until the last minute, said Judith Stein, executive director of the Center for Medicare Advocacy, a Connecticut-based consumer group.

But last-minute stragglers are common. Plans can receive as much as a quarter of the applications for coverage they normally get during open enrollment in those last three weeks of December, according to Matt Burns spokesman of UnitedHealth Group Inc., the largest Medicare Advantage coverage provider with more than 2 million customers.

Many people take time to make their coverage decisions. Beneficiaries start seeing Medicare Advantage ads in the fall. Then they might talk to their families, stew on the decision, and wait for the holidays to pass, said Dr. Jan Berger, chief medical officer at Silverlink Communications Inc., which works with Medicare Advantage providers.

— What happens if you miss the deadline and make no changes?

This can get complicated.

If the plan is still offered for 2012, then a customer who doesn't make any changes remains enrolled. But details of that plan may change.

If the plan is discontinued, customers may be switched to another Medicare Advantage plan offered by the same insurer. They also could be dropped into regular Medicare, which does not provide prescription drug coverage.

Options do not completely dry up if a beneficiary misses the Dec. 7 deadline. From January 1 to February 14, Medicare Advantage customers can drop their plans and enroll in regular Medicare. During this time, they also can pick a Part D prescription drug plan to go along with that coverage, but they cannot jump to another Medicare Advantage plan.

Here's another wrinkle: Beneficiaries can enroll any time during the year in a Medicare Advantage plan that has prescription drug coverage if they receive a low-income subsidy or if they have access to a plan with a five-star quality rating. The catch: Only a few plans attained that rating for this year, said David Lipschutz, an attorney with the Center for Medicare Advocacy.

The government will announce a new list of five-star rated plans next month.

— Should Medicare Advantage customers review their coverage even if they don't plan to make changes?

Absolutely.

Plans can change how they cover expenses from year to year. Customers may find that prescription drugs that were covered last year aren't covered in the new year, or they may suddenly face a big bill for a costly treatment like chemotherapy. Any changes will be laid out in the annual notices consumers receive from their insurers.

"People really, really need to look carefully and not assume that because something worked last year it will work this year," Stein said.

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