Health care costs rising, but expenses can be controlled

— -- Let's see a show of hands. Who got a 9% raise this year?

Once you stop laughing, consider this: The average employee's health care costs, including premiums and out-of-pocket expenses, will increase 8.9% in 2009, according to Hewitt Associates. That's well above the rate of inflation and average salary increases.

For that reason, it's more important than ever to scrutinize your employer's health care options during open enrollment season. Don't assume the plan you used last year is still the best choice, because the terms may have changed, says Randall Abbott, senior health care consultant at Watson Wyatt, an employee benefits consulting firm. When comparing plan options, Abbott says, "I can't emphasize enough the need to really look under the hood."

Unfortunately, some health insurance plans have more parts than a car engine, so this is not a task you should tackle the day before your enrollment deadline. As you consider your options, here are tips on controlling costs:

•Understand the difference between co-insurance and co-payments. Many employees are accustomed to making co-payments of $5 to $25 for everything from prescription drugs to doctor's visits. But increasingly, employers are replacing co-payments with co-insurance in an effort to control costs, particularly for prescription drugs, Abbott says.

Under a typical co-insurance model, Abbott says, a plan may cover 90% of the cost for a generic drug, 75% for a brand-name drug that's on the plan's preferred list and only 50% of the cost of a non-preferred brand-name drug.

Co-insurance is designed to reduce the cost of prescription drugs by encouraging workers to use generic drugs or the lowest-cost brand-name drugs. Some plans have adopted a hybrid formula that charges a flat co-payment for generic drugs and co-insurance for brand-name drugs, Abbott says.

If you're accustomed to paying $10 or $15 every time you fill a prescription, a switch to co-insurance could raise your out-of-pocket costs, Abbott says. You can save money by using generic drugs whenever possible.

•Sign up for mail-order prescriptions. Unless you have a crush on your pharmacist, there's really no reason to go to the drugstore every 30 days to pick up your blood-pressure pills. Most plans offer mail-order delivery of prescription drugs, and these programs can save you a lot of money, says Karen Frost, a health and welfare practice leader at Hewitt. Because you'll receive a larger supply — typically 90 days — you'll save money on co-payments, she says. You may receive a discount on the price of the drugs, too.

•Contribute to a health care flexible spending account or health savings account. Most employers offer flex accounts, which let you use pretax dollars to pay out-of-pocket medical and dental costs. These accounts can help reduce the cost of co-payments, co-insurance and deductibles, but less than a quarter of workers contributed to an FSA in 2008, according to Hewitt.

Flex accounts are funded by deductions from your paycheck, and you must decide when you enroll in your plan how much you want to contribute during the year.

At most companies, you forfeit any money you haven't used by the end of the year. This undoubtedly accounts for the low participation rate.

Here's something else to consider: If you leave your job, either by choice or because of a layoff, you can't take what's left in your flex account with you. This often comes as a shock to workers who have been laid off and could really use that money.

Most companies will, however, let former employees submit claims for out-of-pocket expenses to their flex accounts, as long as those expenses were incurred while they were still employed, Abbott says. You can't be reimbursed for money spent after you leave your job, he says.

The use-it-or-lose-it rule doesn't apply to health savings accounts. Like flex accounts, these accounts allow you to put aside pretax dollars to pay for unreimbursed medical and dental expenses. But unlike flex accounts, you can roll over unused funds for future years and take the account with you if you leave your job, Frost says.

However, to qualify for a health savings account, you must enroll in a high-deductible health plan. For 2009, the minimum deductible for an individual high-deductible plan is $1,150; for a family, it's $2,300.

About a third of large employers plan to offer health savings accounts linked to high-deductible plans in 2009, according to Watson Wyatt.

Sandra Block covers personal finance for USA TODAY. Her Your Money column appears Tuesdays. Click here for an index of Your Money columns. E-mail her at: