Many employers are doing away with health benefits, and even those that still offer them are cutting back the options. If an employer does offer benefits, the options are likely limited to plans with high annual deductibles of at least $1,100 for individuals and much higher for families. Conventional plans typically have annual deductibles one-third as high.
To ease some of the strain of the high-deductible plan, employers may offset the deductible with a lower monthly premium than conventional insurance. They may also offer an opportunity for employees to put money in a tax-sheltered health savings account, and some will make contributions to those accounts.
These high-deductible plans were introduced in 2002, and this year more than 100 large companies and hundreds of smaller ones offered these plans as their only option to employees. Among those large companies are Nissan and Delta Airlines. One Nissan plan offers a deductible of $2,500 per person, with a maximum of $7,500 per family, and monthly premiums of $35 for a single worker and $100 for a family. Nissan also offers up to $1,600 for a worker’s health savings account, and annual physical checkups, well-child care and immunizations, and flu shots and cancer screenings are covered 100 percent.
Employees who have a choice between a high-deductible plan and a conventional plan should take into consideration their expected use of health care. High-deductible plans are more attractive to healthy single workers who do not expect many medical costs, or to families who know their medical costs will be much higher than the annual deductible. However, the monthly premiums, even at the lower amount, may not compensate for the deductible.
Companies offering only the high-deductible health care plans believe the plans encourage workers to participate in and manage their own health care with more concern; employees will focus on their health, get healthier, and think before spending money on expensive visits and tests. President Bush calls these plans “consumer-directed” and “consumer-driven” plans. However, while employers have seen savings from implementing these plans, there is still a concern about whether workers are wiser and healthier, or if they are not going to the doctor because of the out-of-pocket costs, says Jeffrey D. Munn, a benefits design expert at Hewitt Associates consulting firm.
President-elect Barack Obama may not advocate the plans like President Bush has; one anonymous advisor said the plans were not consistent with Obama’s position on health care. However, there may be more changes coming after the financial crisis late this year, forcing employees to pay even more out-of-pocket expenses.
Of the 12 million families with high-deductible plans, which equals 7.5 percent of people with employer-sponsored coverage, only about one-fourth of them have health savings accounts. Though most employers make contributions to their employees’ accounts, employees typically use most or all of that money each year. And one quarter of companies with high-deductible plans make no contribution at all.
Employees should get as much information as possible when deciding between health care plans, urges Peter V. Lee, executive director for health policy at the Pacific Business Group on Health.