over healthcare reform continues while employers around the country are wrapping
up decisions about 2010 employee coverage. Cost increases have moderated but
when combined with reduced profits or growth in other expenses the large bills will
be tough to cover. Cost sharing with employees is one of the most common ways
employers seek to control expenditures.
How high can premiums go?
recently released 2009 survey of Employer Health Benefits by the Kaiser Family
Foundation and the Health Research & Educational Trust reported the annual
average health insurance premium for employer-sponsored family coverage as
$13,375. This can be considered a moderation in a trend since the figure
represents a 5% increase over last year. The bigger picture is much cloudier;
the average premium has ballooned a whopping 131% since 1999. The average
annual premium for single coverage rose a statistically insignificant amount
over 2008. It stands at $4,824 an increase of 119% since 1999.
How much of the premium do employees
If you have
ever seen a premium bill, or followed any reporting of these costs, you are
unlikely to be shocked by these numbers. There is a pretty wide range in
premiums of between 80% and 120% of these averages based upon type of plan,
size of employer and geographic factors. While employee contributions also
range it’s helpful to start with the average of 17% of the total premium for
single coverage and 27% for family coverage. 18% of surveyed employers pay the entire cost
of the premium for single coverage while very few, 6%, generously pay the total
premium for family coverage.
Get All the Information
Kaiser/HRET data will be helpful in comparing the employee contribution level
that you will set for 2010. The Bureau
of Labor Statistics compiles information divided regionally and by type of
industry in its annual summary of Employee Benefits in the United States
industry organizations can also be good sources for benchmarking. When you
match your employee contribution rates to applicable data don’t forget how
other out of pocket costs add into the equation in making a decision about
contributions for your employee population.
Give Employees the Big Picture
advantage of this wealth of information as part of your benefits open enrollment communications. Use percentages, actual costs and premium increase
rates to explain changes in the employee share of the financial burden.
Healthcare costs may be headline news but many employees have no idea that the
$293 average they pay each month for family health coverage only buys a plan
because their employer foots the bill for the remaining $821. With a workforce
of only 10 covered employees at these levels employers are paying more than
$100,000 a year for family health benefits. It doesn’t take sophisticated math
and spreadsheets to give employees a big picture they may have never seen.