Employer-Sponsored Family Health Premiums Rise 3 Percent in 2014
Average Annual Family Premiums Stand at $16,834, With Workers Contributing $4,823
Workers Now Face Deductibles Averaging $1,217, Up 47 Percent Since 2009
Menlo Park, Calif. – Average annual premiums for employer-sponsored family health coverage reached $16,834 this year, up 3 percent from last year, continuing a recent trend of modest increases, according to the Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2014 Employer Health Benefits Survey released today. Workers on average pay $4,823 annually toward the cost of family coverage this year.
This year’s increase continues a recent trend of moderate premium growth. Premiums increased more slowly over the past five years than the preceding five years (26 percent vs. 34 percent) and well below the annual double-digit increases recorded in the late 1990s and early 2000s. This year’s increase also is similar to the year-to-year rise in worker’s wages (2.3 percent) and general inflation (2 percent).
Annual premiums for worker-only coverage stand at $6,025 this year. Workers on average contribute $1,081 toward the cost of worker-only coverage this year.
“The relatively slow growth in premiums this year is good news for employers and workers, though many workers now pay more when they get sick as deductibles continue to rise and skin-in-the-game insurance gradually becomes the norm,” Foundation President and CEO Drew Altman, Ph.D., said.
“These findings are positive and reflect a general slowing in health care costs overall,” said Maulik Joshi, Dr.P.H., president of HRET and senior vice president for research at the American Hospital Association. “As we work to improve health care, making sure it remains affordable to Americans is critically important to ensure greatest access by all.”
The 16th annual Kaiser/HRET survey of more than 2,000 small and large employers provides a detailed picture of the status and trends in employer-sponsored health insurance costs and coverage. In addition to the full report and summary of findings being released today, the journal Health Affairs is publishing a Web First article with select findings.
Deductibles and Cost Sharing
This year, 80 percent of all covered workers face a general annual deductible, with the average deductible reaching $1,217. Workers typically must pay this deductible before most services are covered by their health plan. Since 2009, the average deductible has risen 47 percent from $826.
This year, 41 percent of all covered workers face an annual deductible of at least $1,000, including 18 percent who face a deductible of at least $2,000. Covered workers at small firms (three to 199 employees) are even more likely to face large deductibles, with 61 percent facing at least $1,000 deductibles and a third (34 percent) facing at least $2,000 deductibles.
“The deductibles for workers have crept higher over time, topping $1,200 on average this year,” said study lead author Gary Claxton, a Foundation vice president and director of the Health Care Marketplace Project. “Today, four in 10 covered workers face at least a $1,000 deductible, nearly double the share from just five years ago.”
The survey also finds little change in other forms of cost sharing, including co-payments for in-network physician visits (an average of $24 for primary care and $36 for specialists) and for prescription drugs ($11 for generics, $31 for preferred brands, $53 for non-preferred brands and $83 for specialty drugs).
Wellness Programs, Biometric Screenings and Financial Incentives
As in the past, nearly all large employers (98 percent) and most smaller ones (73 percent) that offer health benefits also offer at least one wellness program, which can take many forms and target a wide range of conditions.
Among those that offer wellness programs, 36 percent of large and 18 percent of small employers provide a financial incentive for workers to participate, such as a lower premium or deductible, a larger contribution to a tax-preferred savings account, or a gift card, cash or merchandise.
Among large firms (at least 200 workers) offering health benefits, half (51 percent) offer some kind of biometric screenings to measure workers’ health risks. Just 1 percent of these firms require workers to complete the screening to enroll in the company’s health benefits, and 8 percent reward or penalize workers financially based on biometric outcomes (i.e. meeting a target body mass index or managing cholesterol levels).
Implications of the Affordable Care Act for Employer Coverage
Starting next year, employers with at least 100 full-time equivalent workers could face penalties if they do not offer health benefits and their workers obtain subsidized coverage through the new health insurance exchanges. The survey finds the vast majority (94 percent) of employers with at least 100 workers already offer health benefits to at least some of their workers. In 2016, employers with at least 50 workers will be subject to these penalties.
Among employers with fewer than 50 workers, 52 percent offer health benefits. Since most employers nationally are small, this group drives the overall offer rate for employers, which stands at 55 percent this year, similar to the 57 percent recorded last year.
Firms that do not offer health benefits to their workers most often cite cost-related reasons, though one in 10 cite the coverage available to workers through the ACA insurance exchanges as a factor.
The survey also examines several other ways in which employers may be affected by, or responding to, provisions of the Affordable Care Act:
- Fewer in grandfathered plans. The survey also finds that 26 percent of covered workers are in “grandfathered” plans as defined by the ACA, down from 36 percent last year and 48 percent two years ago. The shift means a rising share of workers will benefit from specific reforms affecting the employer market, such as covering preventive benefits without cost sharing and offering an external appeals process. Grandfathered plans are exempt from these provisions. Plans lose their grandfathered status if they make significant changes to reduce benefits or raise workers’ costs.
- Shorter waiting periods. Starting in January for non-grandfathered plans, the ACA set 90 days as the new limit for the waiting period before new hires become eligible for health benefits. The survey finds 23 percent of large firms and 10 percent of small firms reduced their waiting period during the past year. The average length of waiting periods for covered workers decreased from 2.3 months in 2013 to 2.1 months in 2014.
- Rethinking retiree health benefits. The ACA’s new health insurance marketplaces are encouraging employers that offer retiree health benefits to consider new options for this coverage. One in four (25 percent) of large firms that offer retiree health benefits say they are considering changes because of the ACA’s new public health insurance marketplaces.
The Foundation also released a new interactive graphic that allows users to chart the survey’s premium trends since 1999 for different types of firms.
The annual survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust. The survey was conducted between January and May of 2014 and included 3,139 randomly selected, non-federal public and private firms with three or more employees (2,052 of which responded to the full survey 1,087 of which responded to a single question about offering coverage). A research team at Kaiser, HRET and NORC at the University of Chicago, led by Kaiser’s Gary Claxton, designed, conducted and analyzed the survey. For more information on the survey methodology, please visit the Survey Design and Methods Section at https://www.kff.org/EHBS.
Founded in 1944, the Health Research & Educational Trust (HRET) is a private, not-for-profit organization involved in research, education, and demonstration programs addressing health management and policy issues. An affiliate of the American Hospital Association (AHA), HRET collaborates with health care, government, academic, business, and community organizations across the United States to conduct research and disseminate findings that shape the future of health care. For more information about HRET, visit http://www.hret.org.
Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and Health Policy Briefs published twice monthly at http://www.healthaffairs.org. The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.