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Workplace open enrollment for health plans

Most Americans get health insurance through their employer and sign up for plans during open enrollment.

Workplace insurance is usually the most cost-effective health insurance solution for people with a job. That’s because companies pay more than half of a plan’s health care costs.

In recent years, premiums in employer-sponsored health plans have increased at a much lower rate annually than a decade ago. However, plan deductibles have skyrocketed in that time, which means more out-of-pocket costs.

Let’s take a look at workplace health insurance, including the types of plans, open enrollment, how much it costs and what to think about when choosing a plan.

 

Do employers have to provide health insurance?

Companies don’t have to provide health insurance for employees, but larger companies are fined if they don’t offer coverage. The Affordable Care Act requires employers with 50 or more full-time equivalent employees to give health insurance to full-time employees and pay at least 50 percent of the annual premiums. If they don’t, they pay a tax penalty.

Employees with fewer than 50 full-time equivalent employees aren’t subject to the employer mandate. Companies with fewer than 25 full-time equivalent employees may be eligible for a tax credit if they offer health insurance.

The Kaiser Family Foundation said in its 2018 Employer Health Survey that 43 percent of companies don’t offer health benefits to at least some of their employees. Most of the companies that don’t provide coverage are small.

Even if your job offers health insurance, it might not cover your spouse and family. A small portion of companies don’t provide spouse or family benefits.

Also, companies that do provide insurance to family members may offer compensation or other benefits if you decide to get your health coverage elsewhere. A business may offer that perk as a way to save money on health care costs.

 

When is open enrollment?

You sign up for or make changes to health insurance plans during open enrollment. There isn’t a standard open enrollment period for all businesses.

Instead, the individual business decides when to hold open enrollment. The period is commonly in the fall or winter, but it’s the company’s call.

These are often a month-long. Employees get to choose health insurance, as well as other benefits, including dental, life and accidental death and dismemberment plans.

You’re limited to change your health insurance during the open enrollment period unless you have a qualifying life event that starts a special enrollment period. These events include marriage, a birth, death of a spouse, job loss or your employer cuts back your hours.

Ask your employer about open enrollment and the possibilities of a special enrollment.

 

Different types of health insurance

There are four common types of health insurance: Preferred provider organization (PPO), high-deductible health plan (HDHP), health maintenance organization (HMO) and point of service (POS) plans.

PPOs are the most common with 49% of covered employees in those plans. Next up is HDHPs with 29 percent of employees, HMOs has 16 percent and POS plans are at 6 percent.

These plans differ by providers you can see, how much you pay in premiums and what you spend on out-of-pocket costs.

Let’s briefly go over each plan:

  • PPOs -- PPOs are the most common type of health plan. They’re known for their flexibility, low out-of-pocket costs and high premiums. PPOs are popular with people who want to see any doctor and don’t want the hassle of getting a primary care physician referral to see a specialist. PPOs allow you to get care outside of your network, but it’s more expensive.
  • HDHPs -- HDHPs have become a popular offering for employers. These plans have low premiums and high deductibles. That means less comes out of your paycheck, but you’ll pay more if you need health care services. HDHPs have deductibles of at least $1,350 for an individual and $2,700 for a family. You must pay that amount in health care costs (not counting copays) before your insurer starts paying for health care services. HDHPs with a Health Savings Account have annual out-of-pocket maximums of no more than $6,500 for single coverage and $13,300 for family coverage. HDHPs with a Health Reimbursement Arrangement have out-of-pocket maximums of no more than $7,350 for single coverage and $14,700 for family coverage. The average out-of-pocket maximums for both types of HDHP plan is more than $4,000.
  • HMOs -- Not as common as 20 years ago, HMOs remain a low-premium, low-deductible option for millions of Americans. HMOs have a restricted network of providers. If you get care beyond your network, you pay all of the costs. You also must obtain a referral from your primary care provider to see a specialist.
  • POS -- POS plans are the least common of the four major plans. It’s a combination of a PPO and HMO. The member decides whether to use an HMO or PPO service for each provider visit. You’re able to see physicians outside of your network at a higher fee, which is similar to a PPO. POS plans are more work for the member. You need to manage health care receipts and fill out forms when you get out-of-network care.

Not all employers provide you with multiple options. For instance, your job might only offer a high-deductible plan. If you’re given a choice, make sure you understand each plan and costs and figure out which one is best for your situation.

 

How much does workplace health insurance cost?

Employer-sponsored health insurance costs have stabilized in recent years. A decade ago, employer health plans saw double-digit percent increases some years. Now, the employer-sponsored health insurance premiums increase about 3 percent annually for single plans and 5 percent for family coverage.

Those percentages are often higher than wage growth, so you’re still paying a larger chunk of your salary on health insurance than you did last year.

Premiums and out-of-pocket costs vary by type of plan. Here are premium averages for each kind of plan:

Type of planEmployee premiumsEmployers' contributionsTotal costs
Single coverage
PPO$1,252$5,896$7,149
HDHP$1,074$5,386$6,459
HMO$1,141$5,728$6,869
POS$1,314$5,734$7,048
All single coverage average$1,186$5,711$6,896
Family coverage
PPO$5,916$14,408$20,324
HDHP$4,631$13,971$18,602
HMO$5,374$14,071$19,445
POS$7,571$11,645$19,216
All family coverage average$5,547$14,069$19,616
Source: Kaiser Family Foundation's 2018 Employer Health Benefits Survey

One significant reason why employee premiums aren’t increasing much each year is that health plans’ deductibles have skyrocketed in recent years.

The Kaiser Family Foundation said single coverage deductibles have increased 53 percent since 2013. That’s partly caused by a 50 percent increase in HDHP enrollment during that time.

You usually have to decide whether you want to pay more in premiums or out-of-pocket costs when picking a health plan. High-deductible plans have high out-of-pocket costs, but low premiums. PPOs have high premiums but lower deductibles.

Here’s a look at the average deductible costs by plan type:

Type of planAverage deductible
Single coverage
PPO$1,204
HDHP$2,349
HMO$870
POS$1,598
All single coverage average$1,573
Family coverage
PPO$3,000
HDHP$4,676
HMO$2,317
POS$3,497
All family coverage average$4,676
Source: Kaiser Family Foundation's 2018 Employer Health Benefits Survey

The higher the deductible, the more you can expect to pay out of pocket for health services. Keep that in mind when choosing a health plan.

 

Savings account for your health care

One way employers try to help employees pay for health costs is through savings accounts. Three types of savings accounts let you save money tax-free for health care.

Here’s information about each one:

  • Health savings accounts (HSAs) -- Health savings accounts are connected to HDHPs. The employer creates the HSA, but the employee owns it. You get to keep it when you leave your job. An employee can contribute up to $6,900 annually in these plans. Many businesses also contribute money to these accounts.
  • Health reimbursement arrangements (HRAs) -- Major differences between HRAs and HSAs are that an HRA belongs to the employer and only the employer can contribute to the account. So, if you leave your job, you can’t take your HRA. You lose whatever money is still in the account. That said, you can use the HRA if you lose your job and need COBRA insurance.
  • Flexible savings accounts (FSAs) -- FSAs aren’t connected to a specific plan like an HDHP. Employers often provide FSAs to all employees regardless of the health plan. You usually can’t carry over money into another year, so you need to spend all the savings each year. You can put as much as $2,650 per year in an FSA. Much like an HRA, you can use money in an FSA if you need COBRA insurance after losing your job.

 

Health initiatives often include perks

Many companies offer perks for staying healthy or taking part in health initiatives. Three examples are health risk assessments, biometric screenings and health workshops.

These are efforts to improve your health and contain health care costs. Healthier employees equal lower employer health costs.

Nearly two-thirds of large companies and 37 percent small companies offer health risk assessments to employees. These assessments ask employees about your medical history and your lifestyle. They can help you figure out problem areas and an insurer may offer assistance depending on the health issue.

Employers may also offer biometric screenings. These screenings collect information like body mass index, cholesterol and blood pressure. Also, companies may provide health promotion activities like gym discounts, yoga classes and stress-reduction activities.

Many companies provide these perks and offer gift cards, lower premiums or money to get employees to take part.

 

Choosing a workplace health plan

Your employer will likely give you two or three choices for a health plan. One of those options is probably an HDHP. Another is likely a PPO. That gives you a choice between two completely different type of plans.

Which plan is best for you depends on your health and what you want from a health plan. One person may prefer low premiums with an understanding of higher out-of-pocket costs. Another person may be fine paying higher premiums with the flexibility of seeing a wider range of doctors. Yet another might prefer low premiums and out-of-pocket costs and be willing to sacrifice a large provider network.

Make sure to check that your physicians are part of the plan’s network before signing up. You can also check with the insurance company and ask about any medication that you’re taking to see what costs to expect for those prescriptions in that plan.

No matter what workplace health insurance plan you choose, make sure you’re comfortable with it. If you have a choice between insurance companies, an excellent place to start is to check out Insure’s Best Insurance Companies.

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