How to Save Money and Get Healthier: Hewitt Offers Tips for Employees During Annual Benefits Enrollment
September 29 2008 - 9:00AM
Business Wire
The economic downturn and rising gas prices continue to tighten the
purse strings of many Americans, who are now looking for ways to do
more with less. As this year�s benefits enrollment season
approaches, employees will feel the pinch even more, facing health
care cost increases that continue to significantly outpace
inflation and pay raises. But according to Hewitt Associates, a
global human resources consulting and outsourcing company,
employees who take time to do their homework, weigh their choices
and make smart trade-off decisions will be in the best position to
make their benefits dollars stretch further this year, without
having to sacrifice the quality of those benefits. As in past
years, Hewitt�s research shows employees will have to put more of
their own dollars toward their benefits in 2009. Employees� total
health care costs, including employee contribution and
out-of-pocket costs, are projected to be $3,826, up 8 percent from
2008, and almost double the rate of inflation and expected salary
increases (3.7 percent). Despite the increased cost burden,
Hewitt�s research shows the majority of employees continue to take
a passive role when choosing their benefits, with more than 60
percent defaulting into the plans they selected the previous year.
�Health care costs are a significant expense for many Americans,
and with the high price of gasoline, the mortgage crisis and the
sluggish economy already pressing heavily on employees�
pocketbooks, finding ways to better manage these costs becomes even
more critical,� said Sara Taylor, annual enrollment leader at
Hewitt Associates. �What�s surprising is that most workers don�t
take the time to be savvy health care consumers; they either
default into their existing plans, opt for the cheapest plan,
thinking they will save money in the long run, or select the
richest plan to minimize their out-of-pocket costs, should they
need health care services. To truly manage costs, Americans need to
put as much deliberate thought into their benefits choices as they
would for any 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.� To ensure employees
get the biggest bang for their buck with their health care and
other benefits choices, Hewitt offers employees the following tips
this enrollment season: � -- Do your homework. Your benefits
choices not only impact your pocketbook, but also your and your
family's overall well-being, so it is important that you take the
time to seriously evaluate all of your benefits options and weigh
them against your specific needs. In some cases, you might find
several ways to cut costs and still receive the level of care that
you require. � 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 (FSA), or did you
tap that pool of cash well before the year's end? Were the doctors
you saw covered under your plan? Are they also covered under a more
cost-effective plan? Did you or a family member develop a new
medical condition that you need to factor into your health care
expenses? How much did you spend in co-pays and other out-of-pocket
costs? Most employers provide access to past medical and dental
claims that can help you calculate last year's costs and estimate
what your future costs might look like. � It's also important to
think about any life changes that may impact the benefits you
select this year. Are any of your dependents no longer eligible for
coverage? Did you or do you expect to add to your family? Asking
yourself these questions will help you more closely assess your
past needs, estimate your future needs and determine what
adjustments you may need to make in your benefits selections. � --
Use the tools available to you. To eliminate some of the
complexities of the benefits selection process, many employers
offer several online modeling and estimating tools that help
employees compare and make trade-off decisions among their benefits
options. Yet surprisingly, most employees do not take advantage of
those tools. According to Hewitt research, a vast majority of
companies (90 percent) offer health care cost estimators that allow
you to comparison shop for health insurance by evaluating two or
more health care plans at a time, with consideration for monthly
premiums, co-payments, deductibles and coinsurance payments.
However, just 9 percent of employees used those tools in 2007. � An
increasing number of employers are also providing decision-support
tools that enable you to see the benefits selections of others with
your similar circumstances and background. Taking advantage of
these tools can help ensure that you are making the best choices to
meet your needs. � -- 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. � In past years, employees were automatically defaulted
into the same plan in which they were enrolled the previous year.
Today, most workers believe this is still true, which can be a
risky--and often costly--assumption. As more employers look to
consolidate plans and/or change the designs of their current plans
in an effort to cut costs, the plan you chose last year might look
different than it does this year. In other cases, not making an
active decision during enrollment means you could get defaulted
into a health care plan that doesn't meet your needs--or even
worse--leaves you with no coverage at all. � Bottom line: Make sure
you understand your employer's requirements and take an active role
in choosing your benefits coverage to ensure you can meet all of
your health and financial requirements. � -- Assess your family's
needs. Hewitt research shows that more and more companies are
beginning to look at 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 dependent spouses/partners to encourage
them to take coverage under their own employers' plans. �
Therefore, it's important to consider your alternative health care
plan options when choosing your benefits this year. Can a working
spouse/partner get coverage under his/her employer plan? While it
may be more convenient to combine everyone under one plan, you may
find it more cost-effective for each of you to take coverage under
your own employer health plan if that option is available. � --
Embrace new health and wellness initiatives and programs. Most
companies want you to be healthy and productive at work, and they
are willing to put their money where their mouth is. According to
Hewitt research, 63 percent of employers provide incentives--most
often in the form of credits or lower deductibles--if you and/or
your family members pledge to comply or participate in certain
health and wellness programs such as those focused on smoking
cessation, weight management or physical fitness. In addition, 25
percent of large employers are strongly encouraging their employees
to complete a health risk questionnaire (HRQ) before they choose
their benefits for the coming year, and many are even offering
workers financial incentives to do so. Unfortunately, many
employees don't take advantage of these incentives simply because
they don't realize they are available. Don't let this happen to you
this year! These programs provide you and your family with the
opportunity to not only improve your health, but also to cut back
on the amount you spend by potentially hundreds of dollars each
year. � -- Take advantage of tax-free benefits. Virtually all
employers offer flexible spending accounts and dependent care
spending accounts. These accounts provide you with substantial tax
advantages since contributions are made before your paycheck is
taxed. For example, an average family of four earning a household
income of $50,233, and who annually contributes $5,000 into a
dependent care account and $3,000 into a flexible spending account,
could save as much as $1,800 annually in federal taxes by taking
advantage of these accounts. Unfortunately, most employees do not:
in 2008, only 23 percent put money in a flexible spending account
and just 3 percent contributed to a dependent care spending
account. � -- Think about your long-term finances. When you're
trying to make every dollar count, it's easy to put planning for
the future on the back burner. But it's important to think about
your long-term financial goals and make the necessary plans to
achieve them in retirement. Hewitt research shows that nearly half
(49 percent) of employees wait until their 30s to start saving for
retirement. By investing in your nest egg at an earlier age, you
can significantly increase your retirement savings, often by
hundreds of thousands of dollars. For example, a 25-year-old
earning an average of $45,000, who contributes 4 percent to his/her
401(k) plan, will have amassed $124,000 more in savings by age 65
than if he/she began saving at age 30. Employees who are already
actively saving in a 401(k) plan can also significantly increase
their savings, simply by contributing just 2 percent more per year.
� For instance, an employee who makes an average of $57,000 a year
and increases his/her annual 401(k) contribution from 2 percent to
4 percent--which takes just $95 more out of his/her paycheck each
month--will have accumulated an extra $81,000 by the time he/she
reaches retirement. What's more, that employee will tack on an
extra $40,500 by having contributed at a rate high enough to take
advantage of his/her employer's company match program. About Hewitt
Associates For more than 65 years, Hewitt Associates (NYSE: HEW)
has provided clients with best-in-class human resources consulting
and outsourcing services. Hewitt consults with more than 3,000
large and mid-size companies around the globe to develop and
implement HR business strategies covering retirement, financial and
health management; compensation and total rewards; and performance,
talent and change management. As a market leader in benefits
administration, Hewitt delivers health care and retirement programs
to millions of participants and retirees, on behalf of more than
300 organizations worldwide. In addition, more than 30 clients rely
on Hewitt to provide a broader range of human resources business
process outsourcing services to nearly a million client employees.
Located in 33 countries, Hewitt employs approximately 23,000
associates. For more information, please visit www.hewitt.com.
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