It's time to select your employment benefits

DES MOINES, Iowa — It’s decision time again for workers as many companies offer employees the annual opportunity to change insurance choices and make other benefit selections.

Open enrollment season can be stressful because it requires decisions to be made that can’t be changed for another year unless you have a major life change like a marriage, divorce or a child.

For many, it’s simply easier to leave things the way they are.

Benefits consultant Hewitt Associates says its research shows more than 60 percent of workers will simply default to the choice they made the previous year. That might be unwise. If you don’t choose, your employer may do it for you in a way that saves it the most money but might not be best for you.

Many companies are beginning the practice of moving employees who don’t make choices into default health care plans, which likely carry high deductibles, said Sara Taylor, head of open enrollment at Hewitt. In a few cases, companies have dropped coverage for workers who never look at their plan.

“The thinking is, this is an important and costly benefit and if you aren’t going to pay attention to it and at least look at it, you obviously don’t need it that much,” she said.

Workers should put as much thought into benefits choices as they would into buying a big-screen TV, a car or any other big-ticket item.

“They need to do their research, comparison shop and then select the options that will not only enable them to maximize their benefits dollars, but also best meet their needs and the needs of their families,” she said.

Hewitt says employees’ total health care costs — including employee contribution and out-of-pocket costs — are projected to be $3,826 in 2009, up 8.9 percent from $3,513 in 2008. The increase is more than double the rate of inflation and expected salary increases, which average about 3.7 percent.

When you’re starting to evaluate your coverage, you may want to look at your life insurance coverage, whether to increase it and who you’ve listed as beneficiaries. Also take a look at dental, vision and disability insurance coverage.

If nothing else, you should at least look at your health care coverage and consider starting a health savings account or a flexible spending account. Such plans can save you money on your taxes and can help control rising health care costs, Taylor said.

The accounts are set up with money taken out of your pay before taxes, which means you’ll face a lower tax bill. The money in the account may be used for a range of health expenses such as outpatient consultations, diagnostic tests and co-payments. In some cases expenses not covered by the primary health care plan such as chiropractic care or dental care may be paid for out of the accounts.

What’s more, you should start saving for retirement in a 401(k) account if you don’t already and assess your contribution level if you do.

Here are seven tips to help you face the decisions that come with open enrollment:

1. Do your homework and seriously evaluate all benefit options and weigh them against your specific needs. Carefully look over your benefits selections from last year and assess what worked and what didn’t. Did you put enough money in your flexible spending account, or did you tap that pool of cash well before the year’s end? Were the doctors you saw covered under your plan? How much did you spend in copays and other out-of-pocket costs? Most employers provide access to past medical and dental claims that can help you estimate what your future costs might look like.
2. Think about any life changes that may affect the benefits you select this year. Are any of your dependents no longer eligible for coverage?
3. Use the tools available to you. Many employers offer health care cost estimators that allow employees, to comparison shop for health insurance by evaluating two or more health care plans at a time. Users can compare monthly premiums, co-payments, deductibles and coinsurance payments. However, just 9 percent of employees used those tools in 2007, according to Hewitt.
4. Read the fine print. More employers are changing the rules of the annual enrollment process, and it’s up to you to make sure you fully understand if and how those rules may affect you.
5. Assess your family’s needs. More companies are requiring employees to pay a bigger portion of the cost of coverage for their dependents, either by increasing payroll contributions for dependent medical coverage or by charging higher contributions for spouses or partners. You should assess whether your spouse or partner can get coverage under an employer plan. It may be more cost-effective for each of you to take coverage under your own employer health plan if that option is available.
6. Consider participation in health and wellness programs like smoking cessation, weight management or physical fitness. It could improve your health and cut back on the amount you spend by potentially hundreds of dollars a year.
7. Take advantage of tax-free benefits like flexible spending accounts and dependent care spending accounts.