Why the benefits of the open enrollment season could cost you more this year

Don’t be surprised if you spend more time this year choosing healthcare benefits during the open enrollment season.

Between rising inflation, policy changes, and employees wanting more health care services, many people won’t click exactly the same boxes as last year.

In the past year during open enrollment — generally in the October-November time frame — people spent an average of six extra minutes making the decision, according to Aon data. This is likely to remain flat or rise this year. A recent survey by Voya Financial found that due to inflationary pressures, 70% of working individuals plan to spend more time reviewing their benefits choices during open enrollment to help make the most of their interest dollars.

Rob Grobka, CEO of Health Solutions for Voya Financial, said many people are making benefits decisions based on what they can afford, and inflation could be a game changer. “It hits families’ wallets,” he said.

Here are five tips for navigating this year’s open enrollment season.

Expect to pay more for healthcare in 2022

Some companies see insurance companies raise health care premiums by 30% or 40%, according to Stacey Edgar, co-founder and CEO of Venteur, which helps employers choose health benefit offerings. She said some employers will absorb this extra cost, but others will pass it on to employees. This can either be at higher monthly installments, or through higher out-of-pocket costs.

Employees in 2022 contribute about $4,412 to health care coverage, up 2.6% from $4,302 in 2021, according to Aon. Much of this increase is due to increases in what employees pay out of their own pockets. Aon said employees in 2022 will pay $1,892 in petty cash, up 5.2% from $1,798 in 2021.

The pandemic and the job market play a bigger role

There are a lot of options and complications that cannot be bypassed during the open enrollment process. This is especially true now, as many companies have increased benefits offerings in response to the pandemic and to attract and retain top talent, amid the hiring crisis. It’s also important because as the cost of health care rises, even small changes in benefits can make a meaningful difference to an individual or family’s finances.

This is especially true if something changes regarding your health or the health of a family member, Edgar said. Be sure, for example, to pay special attention to changes in the cost of co-payments, emergency room visits, hospitalizations and prescribed medications, all of which can add up. This advice applies equally to people accessing a federal or state market for health care benefits, said Kristen Anderson, co-founder and CEO of Catch, a producer of personal payroll and benefits for the self-employed.

Consumers are advised to update the federal or state market application, beginning November 1, with projected income and household information. They must then compare their current plan with what is available for 2023 and select an appropriate plan within the required time frame. They must go through this process, even if they have selected the option to re-enroll and think they may want to keep the same plan for 2023, according to HealthCare.gov.

Watch out for gaps in health coverage

Typically, when employees prepare for open enrollment, they spend most of their time focusing on core workplace benefits: medicine, dentistry, and vision, according to Voya Financial. While these benefits are important, many workers often have gaps covered.

Voluntary benefits offered through an employer can provide additional protection. They include hospital indemnity insurance, critical illness coverage, and accident insurance. These coverages are relatively inexpensive, and generally cost less than $5 per week for employees, said Danny McCauley, senior vice president and customer experience leader for the Consumer Benefits Solutions team at Aon.

Employers may have added other benefits to their lineup in an effort to attract and retain high-quality employees. These include student loan repayment benefits and emergency savings support.

“Make sure you think about every benefit your employer offers,” McCauley said.

Do not overlook group life insurance provided by your employer

Life insurance sales soared in 2021, as the pandemic caused many people to think about their mortality rate. After record policy sales growth in 2021, policy sales fell 9% in the first six months of 2022, according to industry research firm Limra. Limra said this likely reflects cautionary spending cuts due to inflation and other factors.

However, group life insurance may be important, especially for people with serious medical conditions who may not qualify for individual life insurance or who cannot afford premiums on an individual policy. In many cases, group life does not require a medical exam, and the policy may be transferable if the employee changes companies. Spouses or children may also be eligible.

Use the self-help tools available

McCauley recommends that employees take advantage of employer-provided resources designed to help them choose benefits. This can include webinars, built-in support tools, and dedicated benefits professionals. There are also free resources on HealthCare.gov and state-operated marketplaces to help consumers with their health care coverage decisions.

“This year it’s more about what’s the right choice – not just a choice,” McCauley said.

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