Paychecks only represent a portion of what workers earn from their jobs. For the average worker, nearly a third of their compensation comes in the form of various benefits, according to June 2016 data from the Bureau of Labor Statistics. Of that amount, insurance can account for anywhere from 7.6 percent to 12.1 percent of a person’s total compensation.
For insurance benefits, many employers offer a fall open enrollment period that allows workers to select the plans they want, sign up for voluntary coverage and opt into flexible spending accounts to pay for out-of-pocket health or child care expenses.
[Read: Open Enrollment: Deciding Between a PPO, HMO, EPO or POS Plan.]
Despite being in control of their insurance benefits, many workers aren’t inclined to compare plans. “One in 4 people would rather have their teeth cleaned than spend time on open enrollment,” says Rebecca Madsen, chief consumer officer for UnitedHealthcare. That number comes from the insurer’s 2016 Consumer Sentiment Survey.
However, those people might want to think twice about skimming over their options this year. Shifting more health care costs to employees is a benefits trend, and those who simply renew last year’s elections may find they end up paying more than expected.
Employee health insurance costs may be rising. At least a quarter of employers have implemented changes that shift a greater portion of health care costs to workers. According to the 2016 Aflac WorkForces Report, companies used the following cost-saving strategies last year:
— increased employee co-payments (26 percent)
— increased their employee’s share of the premium (25 percent)
— implemented a health care plan with a deductible of $1,000 or more (22 percent)
— reduced the number of health insurance plans they offer (19 percent)
— eliminated coverage for spouses and partners (12 percent)
These changes mean even employees who were happy with last year’s choices should do a review to ensure their costs haven’t changed. “A lot of time people think about the cost of the premiums, but they don’t look at other costs,” Madsen says.
[Read: 7 Ways to Keep Your Health Care Costs in Check.]
That may be because many workers don’t understand the terms associated with health insurance. UnitedHealthcare estimates only 7 percent of the U.S. population knows what all the following terms mean: premium, deductible, out-of-pocket maximum and co-insurance.
Voluntary coverage may become more important. As more employers turn to high-deductible plans as a way to control costs, workers may find themselves on the hook for significant medical bills. To help cover those costs and other expenses, employers offer voluntary insurance plans that provide cash that can pay off a deductible, among other things.
“For our millennial population, they’re using high-deductible plans, and we know they don’t have $1,000 [in the bank],” says Matthew Owenby, chief human resources officer for Aflac. “Voluntary plans help fill those gaps.”
Some voluntary plans, such as cancer insurance, critical illness insurance and accident insurance, provide benefits only in certain circumstances. However, other voluntary coverage options, such as hospital plans, disability insurance or medical bridge plans, offer assistance in a broader range of situations. “It’s really understanding where you are in your life,” Madsen says. Those with a high-deductible plan and a high-risk job or hobby may find supplemental coverage is a low-cost investment for their peace of mind. Others may decide differently.
Making the selection process more convenient. Joe Ellis, senior vice president at CBIZ Benefits & Insurance Services, says changes in open enrollment software programs may soon make it easier for workers to see how voluntary plans can work with their health insurance coverage.
“Some of the better software programs will actually have a claims feed,” he says. That allows the system to review a person’s previous health care claims and make a recommendation based on that information. “[It can say] here’s your medical plan and a couple options to fill in those gaps.”
Beyond making smart recommendations, open enrollment software is evolving to become more flexible and user-friendly. “Millennials expect Amazon and eBay type experiences for every purchase,” Owenby says. “We see them asking for a simpler, more engaging process.”
While millennials may be most comfortable using an app to review their open enrollment forms, Ellis says generation X employees typically prefer to be directed to a website. Meanwhile, baby boomers are looking for personal information and the opportunity to discuss their plan choices one-on-one. As a result, employers are faced with the challenge of working to meet the needs and expectations of a diverse workforce.
Many companies are still grappling with how best to do that, but Ellis sees a future for open enrollment in which workers have the ultimate flexibility to review options and make plan decisions. “Someone might be sitting on their couch on a Saturday watching football,” he says. “If they want to do open enrollment then, it should be that convenient.”
[See: 10 Retirement Benefits You Need to Have.]
Until that day, workers should pay close attention to changes in their 2016 insurance options and work with their human resources department for clarification on plans as needed. Checking the box to renew last year’s choices may be easy, but it could also be an expensive mistake.
More from U.S. News
How to Save for Retirement on Less Than $40,000 Per Year
How to Reduce Your Tax Bill by Saving for Retirement
10 Financial Perks of Getting Older
What’s New for Open Enrollment in 2016 originally appeared on usnews.com
