By Pension and Benefits Editorial Staff
Annual family premiums for employer-sponsored health insurance rose 5 percent to average $20,576 this year, according to the 2019 benchmark KFF Employer Health Benefits Survey. Workers’ wages rose 3.4 percent and inflation rose 2 percent over the same period. On average, workers this year are contributing $6,015 toward the cost of family coverage, with employers paying the rest.
Despite the nation’s strong economy and low unemployment, what employers and workers pay toward premiums continues to rise more quickly than workers’ wages and inflation over time. Since 2009, average family premiums have increased 54 percent and workers’ contribution have increased 71 percent, several times more quickly than wages (26%) and inflation (20%).
Deductibles. Currently 82 percent of covered workers have a deductible in their plan, similar to last year and up from 63 percent a decade ago. The average single deductible now stands at $1,655 for workers who have one, similar to last year’s $1,573 average but up sharply from the $826 average of a decade ago. These two trends result in a 162% total increase in the burden of deductibles across all covered workers over the past decade.
More than a quarter (28%) of all covered workers, including nearly half (45%) of those at small employers with fewer than 200 employees, are now in plans with a deductible of at least $2,000, almost four times the share who faced such deductibles in 2009. One in eight (13%) now face deductibles of at least $3,000.
“The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are,” KFF President and CEO Drew Altman said. “Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums.”
Low-wage employees heavily impacted. As the debate over Medicare-for-all in the Democratic presidential primary puts the spotlight on the role of employer-sponsored health benefits, the survey finds that workers at firms with many low-wage employees face some of the biggest challenges affording employer coverage for their families. Among firms offering coverage, employers with many lower-wage workers (earning $25,000 or less a year) offer health benefits to a smaller share of their workforce and require workers to pay a higher share of premiums than other employers. Specifically:
- Among firms that offer health benefits, two-thirds (66%) of workers at lower-wage firms are eligible for health benefits, significantly less than the share (81%) eligible at other firms.
- Family premiums at firms with many lower-wage workers average $17,633, 15 percent less than the average at other firms. At the same time, workers covered by lower-wage firms have an annual family contribution of $7,047. Workers at other firms contribute an average of $5,968 annually.
- One result is that fewer workers at lower-wage firms take up their employer’s health benefits when offered. The net effect is that one in three (33%) workers at lower-wage firms offering health benefits are covered by their employer’s health benefits, well below the 63% share at other offering firms.
Little impact from individual mandate repeal. The survey also gauges employers’ experiences and views related to several provisions of the Affordable Care Act (ACA).
In 2017, Congress eliminated the ACA’s tax penalty for people who do not have health insurance effective for this tax year, raising questions about whether it would lead workers to drop their coverage. The survey finds 9 percent of offering firms with at least 50 workers say the elimination of the individual mandate penalty led to fewer workers and dependents enrolling this year.
The ACA also included a tax on high-cost health plans, sometimes called the “Cadillac tax,” that was originally set to take effect in 2018, though Congress delayed the tax until 2022, and the House recently voted to repeal it all together. The survey finds only 16 percent of offering employers with at least 50 workers say they expect the tax to take effect in 2022. One-third of those firms say the upcoming tax was either “very” or “somewhat” important in making their health benefit decisions for the current year.
Additional findings. Other survey findings include:
- Offer rate holds steady. The survey finds 57 percent of employers offer health benefits, the same as last year and similar to a decade ago (59%). The larger an employer is, the more likely it is to offer health benefits, with about half (47%) of the smallest firms (3-9 workers) and nearly all (99%) large firms (200 or more workers) offering coverage. Small employers who don’t offer health benefits most often cite cost as the primary reason.
- Provider networks. The vast majority (83%) of offering employers say they are satisfied with the choice of providers available through their insurance plans. Few (5%) say they offer a plan with a narrow provider network, which can help the plan negotiate lower payment rates but also reduces enrollee choices.
- Spousal coverage. While most large employers offering health benefits cover spouses, 11 percent do not allow spouses to enroll if they have coverage from another source. Among those that do allow such enrollment, 10 percent require spouses to pay more through a larger premium contribution or higher cost sharing.
- Response to the opioid epidemic. Many large employers (at least 200 workers) report taking specific steps over the past five years in response to the nation’s opioid crisis. These include creating or revising an employee assistance program (40%); providing health information to workers (38%); limiting or otherwise modifying coverage for prescription opioids (24%); and asking their insurer or pharmacy benefit manager to increase monitoring of opioid use (21%).
- Dental and vision coverage. Among offering firms, 60 percent (including 92% of large firms) also offer separate dental insurance, while 46 percent (including 83% of large firms) also offer separate vision insurance. Employers sometimes contribute toward the cost of these benefits, but employees sometimes are required to pay the full cost themselves.
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