Major Changes in Health Plans Will Impact Employees this Benefits Enrollment Season; Hewitt Shares Tips To Help Consumers Get Greatest Value for Benefits Dollars.

Business Editors

LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Sept. 17, 2003

As health care costs continue to rise by double digits, consumers can expect to see major changes in health plans and benefits coverage when they enroll in their plans this season. To help them prepare for these changes and to understand their benefits' coverage, Hewitt Associates, a global HR outsourcing and consulting firm (NYSE: HEW) which will manage enrollment for more than 5 million employees and retirees this year, offers the following tips:

Don't wait until the last minute to enroll.

Once your enrollment period opens, take action right away. By taking time to consider your enrollment choices and needs, you will be better able to get the most out of your benefit plans. Review your choices each year, so that you're aware of any changes made to your current plans.

Take advantage of new online tools.

Enrollment doesn't have to be overwhelming, especially if you use the new decision support tools employers are making available. They can help you consider coverage options, available providers, provider quality, and estimate potential out-of-pocket costs. And if you enroll via the Internet, you'll have the benefit of speed, convenience and flexibility when comparing health plans.

Evaluate your health plan choices.

Even if you're happy with your current plan, don't assume that it's still the best choice for you in the coming year, or that coverage options haven't changed. Use the tools and information currently available to evaluate whether your current health plan still fits your health care and financial needs.

Involve your family in coverage decisions.

Check your benefits plan for any changes to coverage of family members. Some employers are revising coverage for employees whose family members receive health care benefits from another employer.

Reap the tax advantages of spending accounts.

Consider enrolling in a health care or dependent care spending account. By contributing a portion of your before-tax income to a spending account during annual enrollment, you'll pay predictable health care and dependent day care expenses tax free throughout the year. (See the attached fact sheets for additional information on health care and dependent care spending accounts).

Assess your insurance needs.

Most employers automatically provide life insurance benefits to their employees. The enrollment period is a good time to assess whether your circumstances call for additional life insurance, either through your employer's plan or another carrier.

Maximize participation in your 401(k) plan.

The earlier you start contributing to your 401(k), the better off you'll be. If you haven't already started contributing, start now! Remember, your employer may "match" your savings with additional dollars. Also, make sure that your investment portfolio in the 401(k) plan is appropriate for your risk tolerance and age, and in line with your retirement goals.

"Major changes in health plans can be expected this year," said Wendy Rhodes, HR outsourcing communication practice leader at Hewitt Associates. "That's why thinking through your choices is more important than ever. Use this annual enrollment period to reassess your options and ensure that you're making fully-informed decisions. And, take advantage of the new online tools and other resources employers have available so you can make the best decisions for your situation."

Hewitt Associates (www.hewitt.com) is a global human resources outsourcing and consulting firm. It provides services from offices in 38 countries.

Health Care Flexible Spending Accounts Fact

How Do They Work?

-- In these voluntary plans, money is deducted from your paycheck

on a pre-tax basis for out-of-pocket health care expenses. The

amount that you decide to contribute for the entire year is

deposited into the account at the beginning of the year, and

you must submit receipts for reimbursement. The spending

account dollars must be used in the year you contribute them

or they will be forfeited.

Who Should Enroll?

-- You can enroll on behalf of your family if you expect to incur

out-of-pocket health care expenses during the year.

What's Covered?

-- Because rules vary from plan to plan, it's best to check with

your employer about covered expenses. The IRS recently

announced that expenses for over-the-counter medications such

as allergy medicine, antacids, and cold medicines can be

reimbursed from the health care account.

What's Not Covered?

-- Insurance premiums, cosmetic procedures, health club dues,

vitamins and counseling, for instance.

Contribution Limits

-- There's no federally mandated maximum contribution, however,

most companies limit your contributions to approximately

$3,000 per year.

Calculating Your Contribution

-- Gather receipts, insurance forms, credit card statements and

cancelled checks from the previous year to determine how much

you spent out-of-pocket this past year. Add in the cost of any

major one-time expenses for next year and you should have a

good estimate of what your projected total expenses might be.

Requesting Reimbursement

-- Once the plan year starts, you can only submit claims incurred

on or after the date that you begin participating. Many

employers are making debit cards available to allow cash free

transactions for certain health care services.

Making Changes

-- Check your employer's plan rules to determine the policy on

midyear election changes.

Using What's Leftover

-- If there's money left in your spending account by year- end,

use the balance of the funds or else you'll lose the money you

set aside. For example, you could make wellness appointments

for yourself and all dependents covered under the plan.

Schedule appointments with specialists like physical

therapists, allergists and orthodontists. Get new glasses,

prescription sunglasses or contacts, since most vision plans

cover glasses or contacts only every other year. Consider

covered elective surgery, a weight loss program prescribed by

a physician or other procedure. Refill regular prescriptions.

Dependent Care Flexible Spending Accounts Fact Sheet

How Do They Work?

You may put away money on a pre-tax basis to cover dependent day care expenses. Before the year begins, decide how much you want to contribute to the spending account for the year. Remember that if you don't use all of the funds, you'll have to forfeit them.

Who Should Enroll?

Consider enrolling if you and your spouse both work (or attend school full time) or you're a single working parent and have dependent children under age 13, disabled children, or if you're caring for an elder dependent. Generally, families with incomes over $15,000 benefit more from the dependent care spending account than the dependent care tax credit. However, because situations vary, consult your tax advisor before enrolling.

What's Covered?

Dependent day care expenses, which enable both parents in a household or single parents to work, are covered. Expenses must be for dependents who are under age 13, disabled or elderly dependents requiring adult day care.

What's Not Covered?

Expenses for babysitting, overnight camp, and round-the-clock nursing home care. Also, expenses for care paid to your own child under age 19.

Contribution Limits

Your household may contribute up to a total of $5,000 pre-tax, regardless of the number of children, with some limits:

-- Contributions are limited to the income of the lower paid

spouse if his or her income doesn't exceed $5,000. Married

couples filing joint tax returns can contribute up to $5,000.

-- Married couples filing separate tax returns can each

contribute up to $2,500.

-- If you or your spouse earn more than $85,000 per year, your

contribution limits may be reduced. Consider having the

lesser-paid spouse enroll in his or her employer's dependent

care spending account in order to maximize your contribution

limit.

Determining Your Contribution

Multiply your weekly cost of day care by the number of weeks of day care you'll need per year to determine your yearly contribution amount.

Requesting Reimbursement

You can only submit claims incurred on or after the date that you begin participating. Generally, you can submit claims for reimbursement at any time during the year including a 60-90 day grace period after the plan year is over.

Making Changes

Once you've decided how much to contribute, you can't change your contributions during the year unless you have a qualified change in status such as the birth of another child, divorce or death. However, if the cost of day care changes or your child reaches 14, you are able to adjust your contributions.