Survey: Employer health plan costs up slightly, workers paying far more out-of-pocket

Employees' average deductible was $1,478

Employers' health insurance costs increased modestly this year, but workers are shouldering a larger share of the bill, according to a Kaiser Family Foundation (KFF)/Health Research & Education Trust survey released Wednesday.

The annual survey, conducted between January and May, yielded responses from 1,933 small and large employers.

Cost findings

According to the survey, average premiums for employer-sponsored family health plans increased by 3.4 percent in 2016, reaching $18,142 for the year, or $1,512 per month. In comparison, premiums for employer-sponsored family plans increased by about 4 percent in 2015, costing about $17,545 per year.

Preparing for high-deductible health plan patients

Meanwhile, average premiums for employer-sponsored individual health plans reached an average of $536 per month, or $6,435 annually, in 2016. The increase was not statistically significant when compared with premiums for such health plans in 2015, according to the survey.

KFF CEO Drew Altman said the tempered growth largely is the result of employers shifting more of the cost burden onto workers through health plans that increase employees' out-of-pocket costs.

For instance, the survey found that employees are paying for a larger share of their premiums. According to the survey, workers paid for 30 percent of their premiums, or $5,277 annually, for family health plans this year and 18 percent, or $1,129 annually, of the premiums for individual plans.

In addition, the survey found the survey found deductibles for employer-sponsored individual health plans have increased by 63 percent since 2011, while workers' salaries have increased by 11 percent.

According to the survey, about 80 percent of workers this year had deductibles for their individual health plans, and the average deductible was $1,478—about 50 percent higher than the average deductible five years ago. Individuals working at smaller companies faced higher average deductibles, at $2,100.

To help lessen the burden, some employers contribute to health savings accounts (HSAs) that workers can use to pay for out-of-pocket costs health care costs. The survey found that about 29 percent of employees were enrolled in high-deductible plans that can be paired with HSAs in 2016, up from 24 percent who were enrolled in such coverage last year.

Other findings

According to the survey, some employers could be shifting health care costs onto workers in an effort to prepare for the Affordable Care Act's so-called "Cadillac tax" slated to take effect in 2020. Under the law, employers that offer health plans with annual premiums of more than $10,200 for individuals or $27,500 for families will pay a 40 percent excise tax on the portion of the premiums that exceeds those thresholds.

Twelve percent of survey respondents said their companies have taken steps to avoid the tax's effects by:

  • Dropping costly health plans;
  • Offering plans with narrower provider networks; or
  • Shifting more health care costs to employees.

What HR leaders need to know about the Cadillac Tax

Still, the share of employers offering some form of health coverage has remained mostly level from 2015 to 2016, at 56 percent this year. According to the survey, 90 percent of companies with at least 50 workers offered health plans for 2016. However, the share of employers with 10 to 49 employees that offered health benefits fell from 76 percent in 2012 to 66 percent in 2016.

The survey also found little evidence that employers are shifting workers to part-time status as a way to avoid offering them health benefits. Just 2 percent of employers said they were doing so, while 7 percent said they were shifting part-time workers to full time so they would qualify for employer-sponsored health coverage.

Comments

Altman said, "We see historic moderation in premiums and health spending and costs," but "it doesn't feel that way to average people." He added, "Your typical employer is using everything in the toolkit to control their premiums," and shifting more costs onto workers is "a step they can take to keep their costs down."

Altman said, "We're in a period of a slow revolution to skimpier, less comprehensive coverage that's been happening gradually with no national debate" (Hancock/Luthra, Kaiser Health News, 9/14; Kaiser Family Foundation survey, 9/14; Abelson, New York Times, 9/14; Wilde Mathews, Wall Street Journal, 9/14; Johnson, "Wonkblog," Washington Post, 9/14; Herman, Modern Healthcare, 9/14; O'Donnell, USA Today, 9/14; Ferris, The Hill, 9/14; Japsen, Forbes, 9/14; Kodjak, "Shots," NPR, 9/14).

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