Health insurance represents a top three expenditure for the majority of businesses that offer the coverage. As such, it’s helpful to be able to put your business’s programs and costs in perspective. One of the best and most comprehensive reports on the state of employer-sponsored benefit programs is the Kaiser Family Foundations Employer Health Benefit Survey. Released annually, it represents a survey of over 2,000 firms and covers just about every aspect of employer-sponsored coverage. While the actual report is 200+ pages (a real page-turner!), I have pulled out some of the more relevant and interesting findings.
Health Insurance Cost
The average monthly premiums for employer-sponsored health insurance are $557 for single coverage and $1,563 for family coverage. When broken out by size of firm, smaller employers (3-199) actually fared better, with premiums roughly 10% lower than their large employer counterparts. This is likely related to the richness of the benefits, as small employers are more likely to have higher deductibles.
On average, employers contributed 82% of the premium for single coverage and 69% of the premium for family coverage. However, small employers tend to pay more towards the cost of single coverage (84%) and less of the family coverage (61%) than their large counterparts. This translates into employees in small businesses paying $86 and $1,030 monthly for single and family coverage, respectively. The significantly higher employee costs for family coverage is largely driven by the fact that nearly half (45%) of small employers provide their employees a fixed dollar amount for their health insurance coverage, regardless of whether they elect single or family coverage, thus shifting the entirety of the additional family cost to the employee.
Type of coverage
The vast majority of businesses (81%) offer a single medical plan option, though this practice is far more common in small employers than it is with large (83% vs 45%). While PPO plans remain the most prevalent, the offering of High Deductible Health Plans (such as HSA-qualified plans) has grown significantly. They are now offered in about a quarter of all businesses’ benefit program and represent 30% of total enrollment.
Among employees enrolled in a plan with a general annual deductible, the average deductible amount for single coverage is $1,505, up by roughly 2% from 2016. However, there are large disparity by size of firm, with employees at smaller employers facing an average deductible of $2,120 versus $1,276 in the large counterparts.
Employee Cost Sharing
Given the out-of-pocket exposure inherent in high deductible health plans, many employers have opted to help out their employees by providing some type of funding to be used to cover their deductible. But the type of funding arrangement determines the amount of funding. Because Health Reimbursement Arrangements (HRAs) are structured in such a way that the employer only spends what is actually used, employers are far more generous with their funding, contributing an average of $1,351 for single coverage and $2,444 for family. Contributions to Health Savings Accounts, on the other hand, represent a guaranteed liability to the employer, which translates into lower average funding amounts of $608 and $1,086 annually.
Despite the increasing deductibles, employees still face other types of cost sharing when they use services, such as copayments or coinsurance for office visits and hospitalizations. The type of cost sharing is largely dependent on the category of service. For example, employees are far more likely to pay a copay for a physician office visit (71%) or emergency room visit (58%) . Whereas coinsurance is far more likely to apply to hospital admissions (64%) and outpatient surgeries (64%).
Out-of-pocket maximums represent the most that a covered person would have to pay for medical services in an given plan year, and include deductibles, copays and coinsurance. Larger firms have the advantage in this area too, averaging $3,613 for the single coverage, out-of-pocket maximum. This is 16% lower than the average for small firms ($4,333).
Many of these statistics can be further drilled down, by size, region and in some cases even industry. By understanding the current state of employer-sponsored health insurance, businesses can make conscious choices as to the relative competitiveness of their benefits program. The full report can be viewed at https://www.kff.org/health-costs/report/2017-employer-health-benefits-survey/.