Employees and consumers will face higher health care costs in 2024, with an anticipated average increase of nearly 9% for employer-sponsored insurance, according to a recent survey by Mercer, a leading benefits consultant. Some employers expect double-digit increases as they grapple with rising labor costs for health care workers, inflated charges from medical providers, and growing demand for services and new medications.
As the open enrollment season approaches, employees must prepare for changes in their health coverage. Workers should expect to share some of the financial burden, which may manifest as increased premiums and out-of-pocket expenses. The extent of these changes will vary significantly based on the size and financial health of their employers.
Cynthia Cox, a health insurance expert at KFF, noted, “It’s not clear how much of that cost they will pass along to employees, rather than eat it.” Larger organizations might absorb more of the cost increases, while smaller firms may have limited options for mitigating expenses.
Understanding Health Care Plans During Open Enrollment
During the open enrollment period, typically lasting a few weeks in the fall, it is crucial for workers to compare the health plans their employers offer. Louise Norris, a health policy analyst at Healthinsurance.org, emphasized the importance of evaluating coverage: “Inertia is a powerful force. But it’s always a good idea to evaluate your coverage during open enrollment.”
Employees should verify that their preferred doctors and pharmacies remain in-network and check that their necessary medications are still included on the plan’s formulary. Norris warned, “Don’t assume anything will stay the same.”
Employers may present plans with lower monthly premiums but higher costs when seeking medical care. These plans often feature elevated deductibles—the amount an employee pays before insurance kicks in—and copayments, which are paid at the time of service. High-deductible plans may also come with employer contributions to a Health Savings Account (HSA), potentially around $1,000, which can be used for out-of-pocket expenses. Contributions to an HSA can be rolled over if the employee changes jobs, providing added financial flexibility.
It’s essential for employees to assess their family’s health needs before opting for a high-deductible plan. The minimum annual deductible for family coverage in an HSA-eligible plan is set at $3,400 for 2026, meaning individuals must cover the total cost of care—excluding preventive services—until they reach this threshold.
Cox cautioned against the potential pitfalls of choosing such plans, stating, “If you pick a high-deductible plan, make sure you have enough savings in the bank.” Employees should also calculate potential expenses in worst-case scenarios that could involve significant health issues. A lengthy hospitalization or a serious diagnosis, such as cancer, could lead to overwhelming medical bills, as many plans cover only 80% of costs after the deductible is met, with full coverage kicking in only after reaching the out-of-pocket maximum.
With health care costs projected to rise, evaluating health plan options during open enrollment is more critical than ever. Understanding the details of coverage can help employees make informed decisions that align with their financial and health needs in the coming year.
