Smart Benefits: Be Prepared For Fall Open Enrollment Changes

Tuesday, September 03, 2013

Amy Gallagher, GoLocalWorcester Business/Health Expert

Open enrollment season is coming...are you prepared to make a smart decision?

The healthcare reform law requires employers to notify employees of available health exchange options by October 1. That means employees will face new health plan choices - and decisions - during open enrollment this year.

Education is Key

With new options comes the need for more education. And that doesn't just mean the health exchange option notice employers are required to provide, which is likely to confuse employees.

Since employees will get to choose between employer-sponsored plans or those offered by the exchanges for the first time, employers should make an extra effort with their communication plans for this fall's open enrollment. And employees should step up their participation in the process as well.

Employee questions...and answers

Employers should provide informative, detailed materials that will enable employees to evaluate their choices and make the best decisions. When reviewing open enrollment resources, employees should follow these five steps:

1. Review the benefits and costs of the employer-sponsored plan. Understand what the employee’s share of the cost is in dollars - an amount that's deducted pre-tax from your paycheck at whatever tax bracket you fall in. For example, an employee who pays $250 monthly of a $500 total monthly individual plan cost will have a deduction (assuming a 30% tax bracket) around $175 monthly.

2. Compare the employee costs above to an individual plan offered through a state-run exchange. Employees who are Rhode Island residents may visit www.HealthSourceRI.com and those who reside in Massachusetts can go to www.mahealthconnector.com for details. Keep in mind that employees who purchase an individual plan through the exchange must pay the full cost of the plan unless you qualify for tax credits to offset, or eliminate, the cost.

3. Determine tax credit by using an online tool and estimating family income for 2014 (before taxes), telling the age of the oldest adult in the family, and entering the total number of adults and children in the household. Generally, employees may be able to get a subsidy if they are single and make up to $45,960, or are a family of four and earn up to $94,200. The exact amount of the subsidy is determed by size of family and level of income, so the less someone makes, the more they will receive.

4. Employees who receive the subsidy should subtract the earned tax credits from the total cost of the exchange plan to determine their total premium cost. Then compare this amount to what you would pay for an employer-sponsored plan.

5. Last, all employees must understand that, starting January 1, 2014, they are mandated to be insured. Whether through an employer or exchange plan, it’s up to you to get coverage, or pay penalties at tax time.

Amy Gallagher has over 19 years of healthcare industry experience. As Vice President at Cornerstone Group, she advises large employers on long-term cost-containment strategies, consumer-driven solutions and results-driven wellness programs. Amy speaks regularly on a variety of healthcare-related topics, is a member of local organizations like the Rhode Island Business Group on Health, HRM-RI, SHRM, WELCOA, and the Rhode Island Business Healthcare Advisory Council, and participates in the Lieutenant Governor’s Health Benefits Exchange work group of the Health Care Reform Commission.