YOUNG BUCKS - What to expect when you choose a health plan

(This is part of a five-story package on employee benefits andopen enrollment season.)

By Lauren Young

NEW YORK, Oct 9 (Reuters) - Make way for open enrollmentseason, the time of year when those wordy benefits packagesstuff your inboxes. Once again, workers face higher healthcarecosts, but what else can employees expect from insurance plans?Tracy Watts, a partner with benefits giant Mercer, explainswhat's new for employees in 2013, including the impact ofhealthcare reform.

Q. How much more should employees expect to pay inhealthcare premiums next year?

A. Premiums are going to go up 6 or 7 percent, on average,in 2013 - that's pretty consistent with the past five or sixyears.

The average annual cost of employer-sponsored coverage is$10,000 per employee. On average, most employers pay 80 percentof that cost. So if employers pay $8,000 of total premiums andemployees pay $2,000, that means cost will go up about $140annually, on average, for most people.

If you have two-person or family coverage, yourcontributions may go up even more.

Q. What other changes should employees expect?

A. For starters, more people will have the option to enrollin some type of consumer-directed plan.

On average, at least 32 percent of large companies arecurrently offering them, up from 2 percent in 2005.

Q. If you've never used one of those plans before, what doyou need to watch out for?

A. Typically, these plans will have higher deductibles thanyou've seen before in a traditional plan, known in the industryas a PPO (Preferred Provider Option.)

If you are considering one of these plans - we call themaccount-based plans - look beyond the deductible to see whatkind of account is attached to the program. Will your companyput money in the account for you, or will you be able to earnmoney to offset the deductible if you complete a healthassessment or participate in biometric screening?

Keep in mind that there are two kinds of accounts - healthreimbursement accounts (HRAs) and health savings accounts(HSAs). If your employer offers a reimbursement account, yourdeductible might not be as scary. However, if you leave yourjob, you can't take the money that's left in your account withyou. The employer keeps it.

What's cool about the HSA is that the money in your accountis your m oney, which you can carry over from one year to thenext. It gives you a lot of flexibility. You get a big taxadvantage since you accumulate money tax-free and use it on atax-advantaged basis. Plus, it's a great way to build up fundsfor retiree medical costs.

Q. How will the new healthcare law affect our coverage atwork?

A. While the main provisions of the new law won't go intoeffect until 2014, we've already seen companies expand coveragefor dependents. The new law expanded eligibility to age 26.

Enrollment in company-sponsored plans increased as a resultof this change, so employers will be protecting themselves withgreater price increases. We have seen the contributionrequirements for dependent coverage increase steadily since thelaw passed.

In March, you'll get information about new public exchanges,which will be open to people without insurance. One of therequirements of the law is that employers have to notify theiremployees in advance of the open enrollment period about theseexchanges. If your company provides benefits to you, you willnot be eligible for government-subsidized coverage in theexchange.

Also, there's going to be a limit on how much you can put inflexible spending account in 2013. There's a $2,500 cap peremployee - your employer got to set that cap before. Mercer'ssurvey data suggests the average contribution to a flexiblespending account is $1,700, and the participation rate is lessthan 22 percent at large companies, so it shouldn't have a hugeimpact on most people.

A lot of people were worried that the push for wellnessprograms would go away with the new healthcare law. In fact, thenew healthcare law requires plans to cover preventive coverageat 100 percent. In addition, the law expanded the level ofincentives (for health-related behaviors) that plan sponsors canoffer.

Q. Are prescription costs or co-pays going to change much? A. They go up a little bit every year.

Companies are pushing workers to use mail order prescriptionplans - it requires a degree of organization not all of us have.The vendors have gotten better at making it easier for people toorder online. Now many also send email reminders to refill yourprescriptions.

It is cost-advantageous to use the mail order option, so ifyou are somebody who has maintenance medication, investigate howyou might use it. There's no downside - you just have toremember to reorder in time for it to be mailed to you beforeyou run out!

Q. What's new with wellness plans?

A. The newest development are incentives to get you involvedin taking care of yourself. There's typically a progression forhow the incentives work.

For example, in year one, you are given an incentive tocomplete a health assessment. It might be through lower premiumsor money in an account. In year two, you are given an incentiveto do a biometric screening, which could include blood work tolook at cholesterol and lipid levels along with a blood pressurecheck. In year three, there are ranges, and if you are inhealthy range, you get an incentive, and if you don't meet it,you are offered an incentive to participate in a program thatwould qualify you for the incentive.

I have client that gave all employees an electronicpedometer called the Fit Bit to track activity levels. That sameclient just kicked off a competition for employees to measuretheir sleep patterns. The research on sleep health shows thathow much you sleep has as much of an impact on your healthstatus as what you eat and how you exercise.

We know medical insurance is the most highly valued benefitfor employees, even if they complain about it. Employers getthat. Employers remain committed to providing coverage toemployees because they see the link to productivity.

(For more data on how employer provided health benefits arechanging, see the Reuters graphic at ).

The YOUNG BUCKS column appears monthly and at additionaltimes as warranted. Lauren Young tweets at. Read more of her work atblogs.reuters.com/lauren-young

(Editing by Jilian Mincer, Linda Stern and Steve Orlofsky)

((Lauren.Young@thomsonreuters.com; 646 223 6166;Linda.Stern@thomsonreuters.com; 202 898-8347;Jilian.Mincer@thomsonreuters.com; 646 223-8704))