As the workplace health insurance open enrollment season begins, experts advise against simply auto-renewing existing plans and urge employees to carefully compare premiums, deductibles, and prescription drug benefits. With medical costs projected to surge significantly next year, companies may increase employee burdens or reduce insurance benefits.
According to insurance firm Aon, corporate employee health insurance costs are projected to increase by 9.5% in 2027, exceeding an average of $19,000 per employee. This marks nearly double-digit increases for the fourth consecutive year.
Employee financial burdens have already grown substantially. This year, the average medical cost borne by a single employee reached $5,297, which combines $3,130 in payroll-deducted premium contributions and $2,167 in out-of-pocket medical expenses. This represents an increase of about 8% compared to last year.
The problem is that a significant number of workers fail to properly compare their insurance options.
A survey by financial services firm Voya showed that about half of Americans spent less than 20 minutes reviewing workplace benefits, and 91% chose the exact same plan every year.
How to Calculate Total Plan Costs
Experts emphasize that decisions should not be based solely on the monthly premium. To determine actual expenses, you must calculate the total cost of each plan by adding annual premiums to out-of-pocket costs such as deductibles, copays, and coinsurance. You should also compare the annual out-of-pocket maximum to prepare for high medical expense scenarios.
For healthy individuals, a High-Deductible Health Plan (HDHP) with relatively low premiums can be advantageous. HDHP enrollees can utilize a Health Savings Account (HSA) to set aside and invest pre-tax funds, and withdrawals for qualified medical expenses are tax-free.
Choosing Between High and Low Deductible Plans
Conversely, enrollees planning surgeries or managing chronic conditions that require specialist visits and high-cost prescription drugs may benefit more from plans with higher premiums but lower deductibles and out-of-pocket maximums.
Households taking prescription drugs must specifically verify drug coverage and out-of-pocket costs. Some plans may require enrollees to pay the full cost of new or brand-name medications out of pocket until the deductible is met.
Experts advise that the most expensive insurance is not necessarily the best. Instead, individuals should evaluate the total annual cost by combining premiums, deductibles, out-of-pocket maximums, prescription drugs, and medical provider networks.
