Thursday, November 14, 2024

Health Care Costs Surge After Pandemic: How Open Enrollment Can Make a Difference

Share

Navigating Health Insurance During Open Enrollment: What You Need to Know for 2024

As open enrollment season approaches, millions of Americans are faced with the critical task of selecting their health insurance plans for the upcoming year. With approximately 165 million individuals relying on employer-sponsored health insurance, understanding the nuances of these offerings is essential. Unfortunately, many employees spend only about 45 minutes a year evaluating their options, according to a report from Aon. This article aims to provide a comprehensive overview of what to consider during open enrollment, especially in light of rising costs and evolving benefits.

The Rising Costs of Health Care

The cost of health care has been on a steady upward trajectory, and recent trends indicate that this increase is reaching a post-pandemic high. According to WTW, a consulting firm, U.S. employers anticipate a 7.7% rise in health-care costs for 2025, up from 6.9% in 2024 and 6.5% in 2023. This surge in costs has prompted employers to rethink their health plan offerings, with 52% of companies planning to implement cost-reduction programs and many considering narrower networks of providers.

Currently, employers cover about 81% of health-care plan costs, but employees can expect to shoulder more of the burden. A report from WTW indicates that 34% of employers plan to pass some costs onto employees through higher premiums or increased co-pays. The average cost per employee is projected to rise by 5.8% in 2025, marking the third consecutive year of significant increases.

Evaluating Your Health-Care Expenses

When choosing a health insurance plan, employees are often presented with options that vary in monthly premiums and deductibles. A higher premium typically comes with a lower deductible, while a lower premium may result in higher out-of-pocket costs. Regina Ihrke, WTW’s health, equity, and wellbeing leader for North America, emphasizes the importance of considering your past health-care usage when making this decision.

Ask yourself: Are you a low-, medium-, or high-claims family? If you only visit the doctor once a year for a check-up, a high-deductible plan with lower monthly costs may be more suitable. Conversely, if you anticipate needing more frequent medical care, a plan with a higher premium and lower deductible might be the better choice.

Health Savings Accounts: A Valuable Resource

Many employers offer Health Savings Accounts (HSAs) alongside high-deductible health plans. HSAs allow employees to save money tax-free for medical expenses. For 2025, the IRS defines a high-deductible plan as one with a deductible of at least $1,650 for individual coverage or $3,300 for family coverage. The contribution limits for HSAs will increase to $4,300 for individuals and $8,550 for families.

HSAs can be a crucial financial tool for managing health-care costs, as funds can be rolled over year after year. Regina Ihrke advises employees to consider contributing to their HSAs to help cover future medical expenses.

Life and Disability Insurance: Protecting Your Future

Open enrollment is also an opportunity to review life and disability insurance options. Most employers provide basic life insurance policies that typically equal one year’s salary. Employees can often purchase supplemental life insurance for additional coverage.

Disability insurance comes in two forms: short-term and long-term. Short-term disability usually replaces 60% to 70% of your salary and is often funded by the employer, while long-term disability typically kicks in after a waiting period and replaces 40% to 60% of your income. It’s essential to assess whether your employer-provided coverage is sufficient to protect your family’s financial future.

Exploring Voluntary Benefits

In addition to standard health and life insurance, many employers offer voluntary benefits that can enhance overall well-being. These optional benefits may include mental health support, wellness programs, and financial planning services. With nearly 1 in 5 employees reporting deteriorating mental health, according to Gallagher, employers are increasingly focused on providing holistic support for their workforce.

Tom Kelly, a principal in Gallagher’s health and benefits practice, notes that today’s employees are seeking more comprehensive well-being resources. Taking advantage of these voluntary benefits can significantly improve your quality of life and financial security.

Conclusion: Make Informed Choices

As open enrollment approaches, it’s crucial to take the time to evaluate your health insurance options carefully. With rising costs and evolving benefits, making informed decisions can have a lasting impact on your financial well-being and health care access. By considering your past health-care usage, exploring HSAs, reviewing life and disability insurance, and taking advantage of voluntary benefits, you can navigate this complex landscape with confidence. Remember, the choices you make during this period can shape your health and financial future for years to come.

-Offer -

Read more

Local News