Employees will see higher health care premiums

Open enrollment season is in full swing for many employees whose companies offer health care benefits, and costs are expected to continue to increase, according to a recent survey.

The average premium is expected to increase by 8.8 percent in 2011 -- the highest spike in five years -- based on an analysis by Hewitt Associates, a global human resources consulting and outsourcing company.

That compares with average increases of 6.9 percent in 2010 and 6 percent in 2009, according to the company. The survey attributed the increase to higher medical claims, an aging population and health care reform.

"Regardless of health care reform, health care costs are going up," said Rob Butler, the president of PayFlex, a Nebraska-based company that partners with employers to administer health and flexible savings accounts. "What's happening is more employers are going to a higher deductible. ... That's the way (employers) are curbing the health care costs."

For employees, the open enrollment period allows them to make changes to their health care policies. The only other time companies generally permit health care changes is during a "life change event," such as a marriage, birth or divorce.

The average amount employees will have to contribute toward their health care premiums is $2,209, or 22.5 percent of the total health care premium, according to the survey. That is an increase of 12.4 percent from 2010.

Susan Kirby said the rising costs aren't surprising to her. Her husband owns Kirby, Fahrion & Associates, Inc., and she said her family receives insurance through the company's group plan.

Deductibles and co-pays have risen steadily, she said, forcing her family, like many others, to think about costs.

"I think we definitely need some reforms," she said, noting a need to rein in costs of medical malpractice suits in particular.

Melissa Baker said she is happy her family now is insured through her husband's employer. The couple is expecting a second child around Christmas. When their 2-year-old daughter was born, they had private insurance, which resulted in thousands of dollars of medical costs, Baker said.

Any increases next year shouldn't dent the family's budget much, she said.

Butler said he is seeing more people put money into health savings accounts, which allow employees to put aside money for health costs before taxes are taken out of their paychecks. The biggest change in that arena is that people no longer can use pretax money to pay for over-the-counter medications.

"What's interesting though, is when you really look at the list of what people can do, it's not too bad," he said. "You can still get diabetic supplies, birth control, etc. What doesn't work are aspirin or Claritin. That is the one change."

He recommended people see whether they have fixed costs such as prescriptions or planned surgeries coming in the next year to determine how much to set aside in a health savings account.

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