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Your Money Matters: Michael Waldholz (Staff Reporter of The Wall Street Journal)
If you aren't already paying a larger portion of your health-care bills, you probably will be soon.
In an effort to break their rising health-insurance costs, a growing number of companies are for the first time requiring employees to pay a deductible typically $100 to $200 a year family member before receiving benefits. Some companies that already had deductibles are raising them to as much as $500 a person. And some employers are no longer paying 100% of hospital bills.
You may pay as much as $1,000 to $2,000 a year of your medical bills under the new plans, instead of several hundred dollars. Adding to the pain, recent tax changes have made deducting medical expenses more difficult.
What can you do if your employer wants to change your health insurance? Although looking for a new job may seem to be the only solution, many personnel managers and benefits consultants say you may be able to persuade your company to ease the additional cost burden if you have the right information. It won't be easy, and many employers won't budge. But, in exchange for requiring you to pay more of your doctor bills, employers can upgrade other aspects of the health plan that won't necessarily cost them extra and could save you plenty.
"I'd adamant with my employer," says Joseph H. Rossmann, a consultant with A.S. Hansen Inc., "If he wants me to pay more of my medical bills, he has a responsibility to set up programs to help me be a better buyer of medical services."Benefit managers say recent research shows that employees who pay a greater share of their health bills sharply reduce their use of company health-insurance plans. Although some public-health officials say higher costs may cause patients to postpone needed care, insurers and employers say there isn't any evidence that employees health suffers. Rather, they say, the new plans encourage employees to seek less expensive but equally effective treatment.
Exactly how much this actually reduces health care costs isn't known. But Hewett Associates Inc., a consulting firm, estimate a $100 deductible can save an employer 14%. A $200 deductible can mean a 21% savings, and a $300 deductible can save 25%, the firm says.
Much of this savings result from what H+James Norton, a principal partner with benefits consultants William M. Mercer-Meidinger Inc., calls a "blatant cost shift" from employer to employee. To soften the blow, many employers couple higher deductibles and other changes that cost employees more money with broader coverage and added benefits including fitness programs, or other Sweeteners.
Berol Corp., a Danbury, Conn., company that makes pencils and Pens, used to cover almost all medical bills after employees paid a $100 deductible for outpatient treatment. It now covers 80% of medical bills after employees pay a deductible of $175 per person or a maximum of $350 per family, But as an incentive to limit the use of the plan Berol also pays each employee $500 a year, less any benefit payment. For instance, a worker who has $350 in covered medical bills will pay the first $175; the insurance plan will cover 80% of the rest, or $140. At the end of the year, the employee will get $360-$500 minus the $140 benefit payment.
Moreover, Berol pays for service it didn't previously cover, including routine doctor visits, physicals, and all infant medical care. The company also invites area doctors and nurses to speak at seminars advising employees on how to diagnose common illness and on where to find less expensive, out-of-hospital services. Berol's medical insurance spending, which had been rising 18% a year, has been steady since the new plan began three years ago.
Employers are finding that higher deductibles are more effective in reducing costs when targeted at the most expensive types of care. William Byrd Press Inc, of Richmond, VA., requires employees to pay the first $100 of every hospital admission, an additional $20 for each hospital day outside intensive care 20% of the doctor's hospital bill. "We want our employees to have an incentive to ask their doctor's whether they really need to be hospitalized, and then, if they are admitted, to press their physicians to discharge them as quickly as possible," says Stephen Lane, the company's director of human resource management.
Some companies use other approaches, such as paying the full cost of laboratory tests needed for hospitalization if they are performed before a patient is admitted. Some pay 100% of certain operations, such as tonsillectomy, that is performed in a doctor's office or surgery center that doesn't require an overnight stay. Others waive the deductible for hospitalization if it is approved by the company's insurance carrier or other so-called pre-admission certification agency.
There are also special programs that can save money for your employer and you. Health-maintenance organization, for example, usually provide all care without any deductibles, often charging employers a premium at or below the cost of other coverage. No Law requires employers to offer HMO membership, but you can encourage an HMO in your area to make a presentation to your company. Remember, though, most HMO's keep costs down by using their own doctors; if you join one, you will usually have to give up using your physician.
Another program increasingly available throughout the country is the PPO or preferred-provider organization. This type of program, usually organized by insurance companies, promises employers lower health-costs by signing contracts with doctors and hospitals with records of being cost-conscious. As an incentive to use these less-costly professionals, your deductible will be eliminated or reduced. Unlikely another of your choice belongs to the PPO Your employer can find out if a PPO exists in your area by asking its present insurer or the local chamber of commerce.
Finally, if your employer reduces its coverage of a hospital stay from 100% to 80% of the costs, check whether there is a limit on the amount you can be required to pay in one year. Many companies limit employee payments to $1,000 to $2,000. Without such a limit, even a short hospital visit could cost thousands of dollars.
Originally published: Monday, February 25, 2019; most-recently modified: Thursday, May 02, 2019