Many employees are seeing the cost of their company's health insurance coverage increase this year, along with health insurance benefit cutbacks. Sixty percent of Americans (about 180 million people) are insured through employer-sponsored plans. That's down from 65 percent at the start of the decade. So what do you do when your health insurance costs go up or when your company makes you pay a bigger share? CNBC correspondent Bertha Coombs offers some insight.
How much more are we paying this year?
According to a Towers Perrin 2008 Healthcare Cost Survey, in dollar terms, employers are paying an average of $9,144 per employee for health insurance this year. That's up 6 percent from last year. On average, employees are being asked to cover about $2,064 of that premium. The way the numbers work out, we are paying 8 percent more than last year.
Why are we paying more?
We're being asked to pay a bigger share of the cost increases. Over the last five years, while employer costs have risen 40 percent, employee costs are up a whopping 60 percent, according to that same survey. And it's an even bigger bite for family coverage. While we pay about 20 percent of the cost for our own coverage, we're being asked to pay nearly a quarter of the premium to cover families.
While we're paying more, it seems like employers also cutting back on coverage?
In some cases, yes. We're seeing a trend in companies moving from a co-pay system to co-insurance. Many of us are charged a $25 co-pay for a doctor visit. If you've got co-insurance, instead you'd pay 20 percent of the doctor's bill for that visit. Co-insurance can make a big difference when it comes to drug coverage. Towers Perrin reports it's generally 20 percent of the cost of generics and an even bigger percentage for brand-name drugs.
So what can we do to save money this year?
How to save on medical costs
- Take care of your healthThe short answer: Make sure you're healthy. This year, it will pay to stick to New Year's resolutions to get into better shape because, even as they cut back on benefits, a lot of companies are picking up some of the costs to help you get healthy. Quit smoking, get your weight, cholesterol, blood pressure under control.
- Use preventive care optionsA lot of companies are finding preventive care ultimately saves them money, if they can keep you from developing a chronic condition like diabetes. Many companies pick up the tab for breast cancer and prostate screening, and other health screening and monitoring. Some are actually paying a bonus, or offering a discount on premiums for taking a health risk assessment, in order to find out whether you're at risk for diabetes and heart disease. Some employers even waive co-pays for generic heart-disease and diabetes medications. They'll also offer health coaching to help you get the best care. Some will subsidize smoking cessation and weight loss. Check to see if yours offers cash or lower premiums for undergoing health screenings.
- Stay within your network
When it comes to your primary doctor and any specialists you may need to see, stay within your network. That cuts down on your out-of-pocket costs. - Work with your doctor
Work with your doctor on what's covered within your plan, especially when it comes to medication and tests. If your doctor or specialist uses a lab that's not approved by your insurance, you'll pay the difference. To cut down on duplication, get your doctors to work together to cut down on duplicate tests, X-rays, files, etc. - Stay with your plan for surgeryGoing out of network is especially costly if you're having surgery. Even if your hospital and your surgeon are part of your network, make sure the anesthesiologist is also in your network. Get your doctors working together to cut down on duplicate tests, X-rays, files, etc.
- Negotiate fees with doctorsIf you need to see someone outside your network, try to negotiate the rate. Ask the price before you go, and tell them how much your insurance will cover. (Some of the experts I talked to say this can work.)
Ways to contain prescription costs
- Ask for samplesEspecially if it's a one-time occurrence. (When I scratched my cornea, the doctor just gave me sample drops to numb the pain, which I had to use for just a week.)
- Generic, generic, genericAt many companies, the co-pay for generics is about $10, but it's a $25 co-pay for brand drugs. The best price is going to be mail order on generics. If you take a statin for cholesterol or some other medication for a chronic condition, this is definitely the way to go. Some companies even waive the co-pays on these drugs.
- Cut down on refillsIf you have to use a brand-name drug, ask your doctor about splitting a double-dose pill. You'll pay just one co-pay for the same amount. (I've heard this from more than one expert. The caveat: This is not for a forgetful elderly patient, or someone who's disoriented.)
- Shop aroundWal-Mart and others offer $4 drugs on some popular generics. Local pharmacy prices can vary quite a bit. There are a couple of search engines that will tell you which drugstores in your area offer the best deal.
Most of us are already locked into insurance enrollment for the year, but are there things to consider for next year? If you switch jobs or have a life change like a new baby, or get married, you can actually change your elections.
Two things to think about:
- Split up family coverageIf Mom and Dad both work, it may not pay for them both to be on the same plan. It might pay for each of you to be covered under your own employer, and then put the kids on the plan with the best coverage. Or maybe even separate coverage for the kids between the parents, to maximize deductibles, FSAs, etc.
- Consider a Flexible Savings AccountConsider a Flexible Savings Account, or FSA. If you have a good a idea of your out-of-pocket costs, this can save you on taxes. (For a family in the 28 percent tax bracket, setting aside $4,000 in an FSA would net $1,100 in tax savings.) You can use your FSA to pay for co-pays and deductibles, but also things like contact lens solutions, glasses, over-the-counter medications and even supplements, if they're prescribed by a doctor. The disadvantage is you lose those funds if you don't use them. But starting this year, you have 14 months to use it up, rather than just the calendar year.