Annual premiums for employer-sponsored family health coverage reached $15,745 this year, up 4% from last year, with workers on average paying $4,316 toward the cost of their coverage, according to the nonprofit Kaiser Family Foundation’s 2012 Employer Health Benefits Survey.
This year’s premium increase is moderate by historical standards, but outpaced the growth in workers’ wages (1.7%) and general inflation (2.3%). Since 2002, premiums have increased 97%, three times faster than wages (33%) and inflation (28%).
“In terms of employee insurance costs, this year’s 4% increase qualifies as a good year, but it still takes a growing bite out of middle-class workers’ wages, which have been flat or falling in real terms,” said Kaiser President and CEO Drew Altman.
A recent HR Specialist online poll found that our readers expect premiums to rise faster next year. Almost three-quarters of respondents said they thought premiums would go up at least 6% in their next plan year, with 30% expecting the price hikes to top 10%.
Kaiser’s research also points to higher premiums next year. Employers that had information about upcoming insurance changes for 2013 told Kaiser they were planning on average premium hikes of 7%.
Kaiser’s 14th annual survey polled more than 2,000 small and large employers to gain a detailed picture of trends in employer-sponsored health insurance costs and coverage.
The survey found that 61% of employers offer health insurance benefits, the same as last year.
Premiums for individual health coverage increased 3% in 2012 to reach $5,615 annually. Workers on average pay $951 for individual coverage.
The survey found significant differences in the benefits and worker contributions toward family premiums between firms with many low-wage workers (defined as those with at least 35% of workers earning $24,000 or less a year) and firms with many high-wage workers (where at least 35% of workers earn $55,000 or more a year).
Workers at low-wage firms on average pay $1,000 more each year for family coverage than workers at high-wage firms—$4,977 versus $3,968.
That’s despite the fact that the firms with many lower-wage workers on average pay smaller total premiums for family coverage than high-wage firms. Total premium costs—the employer and employee shares combined—were $14,694 at low-wage firms, and $16,427 at high-wage firms.
Workers at low-wage firms face higher deductibles than those at high-wage firms. Forty-four percent of workers at low-wage firms face annual deductibles of $1,000 or more, compared with 29% of those working at high-wage firms. Overall, 34% of covered employees have deductibles of $1,000 or more, and 14% have annual deductibles of at least $2,000.
Effects of health care reform
The survey found that 2.9 million young adults are currently covered by employer plans this year as a result of a provision in the Affordable Care Act (ACA) health care reform law. The ACA allows young adults up to age 26 who lack their own health insurance coverage to be covered as dependents on their parents’ plans. That’s up from the 2.3 million in the 2011 survey.
Forty-eight percent of covered workers are in “grandfathered” plans as defined under the ACA, down from 56% last year. Grandfathered plans are exempted from some health reform requirements, including covering preventive benefits with no cost-sharing and having an external appeals process. To retain this status, employers must not make significant changes to their plans to reduce benefits or increase employee costs.
More than half (54%) of employers that offer health benefits reported that they had shopped around for new coverage. Of that group, 18% had switched carriers, and 27% changed the type of plans they offer.
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