Health Insurance Costs to Rise Sharply in 2011

Health Indemnity Costs to Rise Sharply in 2011

A Coping Strategy for the Healthy

With open enrollment season just around the corner, this may be the year to consider a high deductible health indemnity plot that you can then pair with  a Health Savings Account. More firms are donation these plans; if you are in relatively excellent health, you can reduce your premium by opting for a high-deductible plot. For this year that means a family deductible of at least ,400, or ,200 for an individual policy.

Once you enroll in a qualifying high-deductible plot you’re then eligible to contribute to your own HSA. You get a tax break on contributions into the HSA and withdrawals used to pay for medical expenses are not taxed. The maximum family role to an HSA this year is ,150. (,050 for individuals.) The maximums for 2011 have yet to be announced; they probably won’t budge given the low general rate of inflation.

You can also let the money sit in the HSA and grow; unlike a flexible costs account there is no “use it or lose it provision.” Your balance can be used for future medical expenses decades from now. Or once you turn 65 you are free to use your HSA balance for anything. though you will owe returns tax on your withdrawals. Just like with a Habitual IRA.
Well, there’s one area everywhere deflation will certainly not be at play in 2011: health indemnity.  A survey of large businesses reports that employers expect their health care indemnity costs to rise by an average of 8.9 percent in 2011. And to help  cover those rising health indemnity costs, more than six out of 10 employers also expect to raise their employees’ share of the premium cost. Given that the average salary raise for 2011 is expected to be in the vicinity of 3 percent, it’s likely many Americans are going to see any bump in their compensation eaten up by having to pay more for health indemnity.

As Derek Thompson laid out in a post last week at The Atlantic we may need to get used to that sad fact. Thompson highlighted this 2009 chart from the President’s Council of Economic Advisers:
Yes, the chart was ginned up pre-health care reform, but the final legislation pretty much punted on health care cost containment, so there’s no reason to expect the trajectories in the chart will change anytime soon.

Paying More for the Less Coverage

According to the Inhabitant Business Group on Health survey, paying more of your overall premium is just one  extra cost you may face in 2011; out-pocket maximums and larger in-network deductibles are the next two “most well loved” options employers will enlist to share the pain of rising indemnity coverage.

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