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Employer-sponsored health plan costs rose 2.6% in 2017

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in Compensation and Benefits,Human Resources

Employer-sponsored health plans extended their run of low annual cost increases in 2017. The Mercer National Survey of Employer-Sponsored Health Plans 2017, the nation’s largest of its kind, reports that average total health benefit cost per employee rose by 2.6% in 2017.

That follows a similar increase of 2.4% in 2016. Cost growth has averaged just 3.3% annually over the past five years, compared to 6.2% over the prior five-year period.

Notably, the survey revealed that low-cost growth was achieved without significant new migration of employees into high-deductible plans.

Moderate growth notwithstanding, health coverage represents an enormous employer expense. Total health benefits cost averaged $12,229 per employee, or 14% of total payroll, in 2017.

Even among smaller employers (those with 10-499 employees), where benefits are typically less generous, health benefit cost averaged $11,527 per employee.

High cost affects employees as well as employers: In 2017, employees paid an average of 24% of the total cost of coverage through payroll deductions.

Prescription drug costs push up overall health benefit cost. Drug benefit cost is rising by about 8% annually among large employers.

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