Health insurance is on my mind right now because my company is reviewing its policy options. Our premiums are about to rise, and like most small businesses, we’re watching every penny, so we’re trying to figure out where to cut back.
A new study from The Kaiser Family Foundation and the Health Research & Educational Trust shows that we’re not alone. Health insurance premiums have gone up for just about every company—which is nothing new. But what is notable is that employees are shouldering a bigger share of these cost increases than ever before.
“Premiums increased just 5 percent for single coverage and 3 percent for family coverage between 2009 and 2010,” the study reports. “At the same time, workers saw their share of the premiums for single and family coverage grow for the first time in several years.”
“In 2010, covered workers contributed a greater share of the total premium, a notable change from the steady share workers have paid on average over the last decade,” the report continues. “Covered workers on average contribute 19 percent of the total premium for single coverage (up from 17 percent in 2009) and 30 percent for family coverage (up from 27 percent in 2009).”
When you look back further in time, the change is even more dramatic. Between 2000 and 2010, premiums increased an average of 114 percent—but the amount employees contributed increased an average of 147 percent.
Bigger premium contributions aren’t the only change adding to employees’ costs. More companies are enrolling in health insurance plans with higher deductibles. The percentage of workers in a high-deductible health plan with a savings option (HDHP/SO) rose significantly from 8% in 2009 to 13% in 2010.
The report also highlighted some significant differences between large and small firms (small firms were defined as those with 3 to 199 employees, large as having 200 or more workers). Almost half (46 percent) of employees in small firms had a deductible of at least $1,000 for single coverage, compared to 27 percent in large firms. And workers in small firms were more likely to pay 50 percent or more of their premium costs (8 percent, compared to just 1 percent of workers at large firms).
I certainly don’t blame businesses for putting a higher percentage of the burden on employees. Employers responded that in order to keep pace in the economic downturn, they had either increased cost sharing, reduced coverage or increased the amount workers pay (such as copays and deductibles). Those are the same options my partners and I are debating right now.
But one interesting fact stood out to me. Sixty-eight percent of small companies offered insurance—a sizable jump over last year’s figure. The bulk of that jump came from a 13 percent increase in the number of companies with 3 to 9 employees offering insurance. Noting it’s unlikely that that many small companies really added insurance in the middle of an economic downturn, the report’s authors theorize, “A possible explanation is that non-offering firms were more likely to fail during the past year, and the attrition of non-offering firms led to a higher offer rate among surviving firms.”
To me, that points to the importance of health insurance as a benefit for today’s employees. Poll after poll shows the health insurance benefits offered are an important consideration when looking for a new job and an equally vital incentive to keep current staffers. When the economy picks up (and it eventually will) it will get increasingly difficult for you to attract new and retain your current staff if you’re not offering a competitive health coverage policy.
I agree. Offering health insurance is a great way to get and retain better employees.
George D: Health Insurance Advisor
Here are some options you may want to look at for you Company benefits and this will help in retaining your ‘top talent’.
Work with an insurance broker. They are not tied down to one insurance company and they will be able to ‘shop the market place’ for you and find the right benefits and pricing.
Also with that, we (brokers) should look at different way to add benefits and reduce cost for ever clients, this is how we earn our keep.
Lowering cost would be raising deductibles or a higher emergence room fee, but with that making sure there are added benefits to your employees such as a reimbursement benefit to pay the employee back if they were to use the deductible or ER (which is always at a lower cost than a low deductible).
Example: Moving to a $2000 deductible for a $500 will lower your companies premium by 25%. Now for the higher deductible bringing in a reimbursement company for the employees with a ‘Cafeteria Plan’ for pre tax dollars and the employee is getting more benefits with a lower cost also.
*NOTE: Bringing in a ‘Cafeteria plan’ will usually save you 20% on workman’s comp also.
Thank you for taking the time to read this.
Wellescent Health Forums
The move by employers to push more costs onto employees really shows the problems associated with the employer mandate for health coverage. Even though it is a form of compensation, there is more discretion for it to be changed resulting in an erosion in benefits for employees. In contrast, giving employees the ability to choose a health insurer in a system with a large number of insured individuals while providing some form of compensation to the employee allows them to switch insurers as needed to best manage the costs that they encounter.