Five Ways Your Boss is Downsizing Your Health Insurance

By Barbara Marquand
Fox Business

With the average yearly health insurance premium projected to top $10,000 per worker this year, according to human resources consulting firm Aon Hewitt, employers are doing whatever they can to cut health care costs.

Here are five strategies your employer might use:

1. Offer high-deductible health insurance plans

Almost one-third, 32%, of employers with 500 or more employees offered a high-deductible plan in 2011, up from 23% in 2010, according to Mercer, a global human resource consulting company.

The appeal to employers is obvious. The average cost of coverage in a high-deductible plan with a health savings account is almost 20% lower than the cost of a preferred provider organization (PPO) plan, Mercer says.

Health savings accounts let you save pre-tax money for out-of-pocket health care costs. And unlike flexible spending accounts, unused money rolls over to the following year.

The plans are called “consumer-directed” health plans because they encourage people to shop wisely for health care. When you’re on the hook for a big deductible, you’re more likely to spend carefully than you would be if someone else paid the whole tab.

2. Steer you to cost-efficient health care providers

A growing number of employer-sponsored health plans pay more of the medical bill — which means you pay less out-of-pocket — when you go to providers in the network that earn high marks for cost-effectiveness and quality, says Bill Jesserer, a principal at Catalyze Consulting, a risk management consulting firm in Bethel Park, Pa.

This is part of value-based plan design, which aims to get people the best, most cost-efficient care.

“It’s focusing on changing behavior and getting people engaged in managing their health,” says Cyndy Nayer, president and CEO of the Center for Health Value Innovation in St. Louis and Estero, Fla.

Some employers use “benefits coaches” who help workers understand their health benefits and guide them to best and most cost-effective services, Nayer says. When your kid has an earache after regular office hours, for instance, a benefits coach might suggest you go to an urgent care center, where the child can be treated at far less cost and with a shorter wait than at a hospital emergency department.

3. Reward good health habits, penalize bad ones

Four out of five employers plan to offer financial incentives this year to employees who participate in company wellness or disease management programs, according to the 2011/2012 “Staying@Work” survey by Towers Watson and the National Business Group on Health.

Incentives may include gift cards, cash or a major discount on the employee portion of the premium.

Jesserer says some employers are shifting to rewards for achieving actual results, such as healthier blood pressure and cholesterol levels, or weight loss.

“Data is king,” he says. “As the group’s health improves, employers can use the data to fight the fight with the underwriter at renewal time and argue the group is a better risk.”

Many employers are using health coaches to help employees manage conditions, such as diabetes, or change their lifestyles to accomplish goals, Nayer says. Some health coaching programs focus on the whole family.

Also, some employers are looking to penalize those who don’t have healthy habits. The use of penalties among employers more than doubled from 2009 to 2011, rising from 8% to 19%. It could double again this year when 38% of companies plan to have penalties in place. Requiring smokers to pay a higher portion of the health insurance premium is among the most common penalties, according to the report.

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