Employer Health Insurance Premiums Continue to Rise

A Kaiser Family Foundation survey conducted between January and May 2010 finds that premiums for employer-based healthcare continue to increase due to the economy; company size also affects certain health benefits. The average annual premiums for employer-based insurance are $5049 for single coverage and $13,770 for family coverage. Those rates are up from 2009, with a 5% increase for single coverage and a 3% increase for family coverage. Family coverage premiums have increased by 114% since 2000, according to the research. In small firms, defined as 3 to 199 workers, the average family coverage premiums are lower than for workers in large companies ($13,250 vs $14,038).

The amount that covered workers contribute to the total premium rose in 2010 after staying at a fairly steady rate in the past decade. Covered workers now, on average, contribute 19% of the total premium for single coverage and 30% for family coverage (up from 17% and 27% in 2009, respectively). Fifty-one percent of workers with family coverage pay >25% of the total premium, and only 5% make no contributions. The average annual worker’s contributions are $889 for single coverage and $3997 for family coverage.

Workers in both small firms and large firms (≥200 workers) contribute about the same amount for single coverage; however, employees in small firms contribute significantly more for family coverage ($4665 vs $3652). The majority of workers (58%) are enrolled in preferred provider organizations (PPOs), followed by 19% in health maintenance organizations (HMOs), 13% in high-deductible health plans with a savings option (HDHP/SO), 8% in point-of-service (POS) plans, and 1% in conventional plans.

The average annual deductible for single coverage is $675 for PPOs, $601 for HMOs, $1048 for POS plans, and $1903 for HDHP/SOs. Firms with a smaller number of employees have higher deductibles for single coverage than larger firms. Covered workers in small firms are more likely than covered workers in larger firms to be in plans with deductibles of at least $1000 (46% vs 17%). Workers enrolled in HMOs, PPOs, and POS plans are more likely to face copayments (about 73% of covered workers), whereas workers in HDHP/SOs are more likely to have coinsurance requirements (17% of covered employees).

Copayment averages have increased slightly in the past year, with an average $22 copayment for primary care and $31 for specialty physicians (up from $20 and $28 in 2009, respectively). Eighty-two percent of workers with single coverage report having an out-of-pocket maximum in their health plan. For single coverage, 31% of people are in plans with an annual out-of-pocket maximum of at least $3000. A significantly higher percentage of firms report offering health benefits this year (69% in 2010 vs 60% in 2009). Kaiser speculates that the reason for this is because nonoffering firms were more likely to fail in the past year, and the attrition of nonoffering firms led to a higher offer rate among surviving firms.

Not all workers are eligible for coverage, even in firms that offer health insurance. An average of 79% of workers in firms that offer coverage are eligible for health benefits. Of those who are eligible for coverage, 80% enroll. Twenty-eight percent of large companies offer retiree health benefits for employees, whereas only 3% of small firms offer retiree health benefits. Of the companies that offer health benefits, 74% also offer wellness programs, including the following programs: weight-loss program, gym membership discounts or onsite exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, Web-based resources for healthy living, or a wellness newsletter. Large firms are more likely to offer health risk assessments to employees (55% vs 10%).

Large firms are also more likely than small firms to offer financial incentives for workers who complete these health risk assessments (36% vs 19%). Disease management programs are also more widely available in large firms than small firms (67% vs 30%). The 2008 Mental Health Parity and Addiction Equity Act led 31% of firms with at least 50 workers to make changes in their mental health benefits. Larger firms were more likely than smaller ones to make these changes (43% vs 26%). The researchers note that this survey finds the continuation of premium growth over the years, with workers seeing their share of premiums for single and family coverage increase for the first time in years. The researchers suggest this trend will continue due to the slow economic recovery and persistent high unemployment rates.