About 165 million Americans receive their health insurance through their workplace, but many do not spend much time considering the benefits offered by their employer and the associated costs. A report from Aon revealed that employees, on average, only spend about 45 minutes per year deciding on the best benefit options for them.
Open enrollment season, which typically lasts until early December, provides an opportunity to carefully review the available options. One significant aspect to consider is the rising costs of healthcare, which have been steadily increasing over the years and have recently seen a noticeable jump.
According to WTW, a consulting firm, employers are experiencing post-pandemic high cost increases, projecting a 7.7% rise in health-care costs in 2025. As a result, employers are exploring new ways to adjust their plan offerings, with 52% planning to implement programs to reduce total costs and steer towards lower-cost providers and care sites.
Currently, employers cover approximately 81% of health-care plan costs on average, with employees paying the remainder. However, due to the escalating costs, some of the burden is expected to be shifted to employees. About 34% of employers plan to pass on some expenses to employees through higher premiums or increased co-pays on high-deductible health plans in the coming year.
The cost per employee is projected to increase by an average of 5.8% in 2025, marking the third consecutive year of health benefit cost increases above 5%. This is a significant change that will impact employees, as stated by Beth Umland, Mercer’s research director of health and benefits.
During open enrollment, employees are typically presented with various medical insurance plan options, including high-deductible plans with lower monthly costs and higher out-of-pocket expenses. It is essential to consider previous years’ experiences when selecting a plan that best suits individual or family needs.
In addition to health insurance plans, more than 50% of employers offer health savings accounts (HSAs) to assist with additional health-care costs. HSAs require an eligible high-deductible health plan, with the IRS setting contribution limits each year.
As costs rise, HSAs serve as a valuable tool for managing out-of-pocket expenses, allowing unused funds to roll over year to year. Employees are advised to contribute to their HSAs to cover future medical expenses effectively.
Apart from health insurance, employees may also be presented with options for disability and life insurance during open enrollment. These additional benefits, though optional, play a crucial role in providing financial protection and well-being support for employees and their families.
Employers are increasingly focusing on addressing the evolving needs of their workforce, including mental health support and holistic well-being initiatives. Wellness programs may include financial coaching, stress management classes, and other benefits like tuition assistance, student loan repayment programs, and childcare support.
These voluntary benefits are becoming an integral part of the overall value proposition for employees, enhancing their long-term well-being and satisfaction in the workplace.
