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A Publication of WTVP

Recently, Hewitt Associates released a national report on health insurance costs and trends that provides some very valuable information for both employers and employees.

Hewitt's study consisted of 300 major employers with at least 5,000 employees and a database of 2,200 health plans with 16.5 million enrollees. Company-paid premiums are projected to go up 12.6 percent, according to this annual study of health insurance costs, done in preparation for the 2004 open enrollment season. Workers are projected to pay an average of 22.3 percent of the cost of their coverage, up from 20.5 percent this year. Employee contributions have doubled in the last five years, while employers' health insurance costs have risen about 60 percent. Nationally, the average employee will pay about $1,565 in 2004.

What does this information mean for central Illinois? We may need to start thinking of alternative means to provide quality health care while controlling the spiraling costs. By working with an insurance professional, you can begin to understand the new concepts continuously being created by new legislation.

Some employers, particularly smaller companies that face annual rate increases of 20 to 30 percent or more, are making workers pay a larger share of the premium, and are beginning to switch away from traditional health insurance such as HMOs or preferred provider organizations (PPOs) to consumer directed health plans.

Such plans let employees or the company decide how much they want to spend on medical care, setting aside a defined amount of money to put toward medical costs. The money is put into a fund to pay for doctor visits and deductibles or co-payments for prescription medication. Dollars that go unused can be rolled over into the following year. If funds are exhausted in one year, workers typically pay the bills until their next allotment. Often, the employer maintains the contribution to the fund at the same level each year, which could result in the employee paying more if they spend all of the money in their account, insurance analysts say. Or, the company can keep money not used to reduce its premium in future years.

Critics say such plans are typically popular for younger and healthier groups of workers that are less likely to exhaust the money in their spending accounts. They also fear such plans will cause people to put off medical treatments to avoid spending money in their accounts.

Destiny Health has been a leader in these defined contribution plans. They're a provider that's helping keep renewals lower than the national average-namely by offering appropriate incentives for employees. This includes a wellness program that encourages healthy lifestyles, as well as rewards for carrying over a balance in the Personal Medical Fund. Some employers are trying to hold down costs by offering additional wellness programs to reduce demand for health care services, while increasing education about lower-cost generic drugs.

It's clear the shift of health care costs from companies to workers continues. In some cases, workers may actually be taking home less than they were before being given annual raises averaging between 3 and 4 percent, Hewitt figures show.

Options do exist in the marketplace that will benefit both employees and employers. Continue working with your insurance professional to assist you in the insurance options available today. IBI

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