The average cost of employer-sponsored health insurance for a family has increased 47% over the last decade. This year, a family’s premium prices will average $22,221. Workers contribute an average of $5,969 to the cost of coverage, and employers will cover the rest. Premiums have risen recently because the average deductible has increased.
Costs of employer-sponsored health insurance
While individual health insurance costs continue to rise, employer-sponsored health insurance is still more affordable than personal coverage. Employer-sponsored health insurance premiums rose about four percent from a decade ago to nearly four percent in 2013. However, many workers have also increased costs due to higher deductibles, co-payments, and other costs.
Health care costs are directly related to the cost of employer-sponsored health insurance. According to the U.S. Bureau of Labor Statistics, the average annual cost per employee for health benefits rose from 5 percent of GDP in 1960 to 18 percent in 2011. This increase in health care costs is directly related to higher premiums and increased co-payments. Employer-sponsored health insurance costs are often the most significant component of an employer’s health care costs. In addition, rising costs may lower wages or cut hours at the workplace. Ultimately, the quality of care may also decrease.
Increases in premiums
The new health care law, passed in 2010, has impacted employer-sponsored health insurance in two significant ways: by raising costs and reducing benefits. Employer-sponsored plans are the primary source of insurance for many Americans, and in 2015, nearly half of the population was covered by such a plan. While premium increases are not yet widespread, they are expected to continue to rise over time. Despite this trend, it’s important to remember that premiums for employer-sponsored plans have been growing at historically low rates since 2011.
The average family plan premium has increased by 55% since 2010, more than twice as fast as wage growth. Today, the average family premium is over $20,000. Moreover, premium increases have been accompanied by significant increases in the number of people enrolled in high-deductible health plans. In 2015, nearly one-fourth of workers were in a high-deductible plan, while the average family premium only increased half a percentage point.
Rise in coinsurance
The average cost of employer-sponsored health insurance increased 5.0 percent from 2008 to 2018, a higher rate than any year since 2008. While the increase was more modest than the 3.4 percent increase in 2008, large employer plans saw an almost 60 percent increase in cost-sharing in the last decade. In that same period, the average premium for group plans increased by 65 percent, and family premiums rose by 21 percent. Employers reported higher premium costs in both 2018 and 2019, though some employers have cut back on their coverage.
The trend towards higher coinsurance is a concern for many employers. While premiums increased by a third in the past decade, health spending for the average American family has grown faster than wages. Large employer health plans often have high deductibles and coinsurance, making them a significant source of financial stress for many families. However, employers who offer their plans aren’t likely to cut costs.
Changes to wellness programs
The EEOC says that the primary purpose of employer-sponsored wellness programs is to shift health care costs from the employer to the employee. In other words, these programs do not address the health care spending problem but attempt to reduce it. While employers should focus on cost-cutting measures, they should also consider the benefits of wellness programs. Moreover, these programs may be beneficial in helping them calculate future health care costs.
The Affordable Care Act codified 2006 regulations on workplace wellness programs. As a result, wellness program incentives can be as high as 30% of the cost of self-only coverage. However, employers should make sure they use a group health plan that is the least expensive for their employees. However, the incentive amount may vary significantly between employers. Thus, checking with the EEOC for the latest guidelines regarding wellness program incentives is essential.