Average Family Premiums Now Top $20,000, Employers Say

Average annual deductible is $1,655, double the average of a decade ago

Stephen Miller, CEBS By Stephen Miller, CEBS September 27, 2019
updated November 1, 2019

Annual family premiums for employer-sponsored health coverage rose 5 percent to an average of $20,576 this year, the 2019 Kaiser Family Foundation (KFF) Employer Health Benefits Survey found. However, workers' wages rose just 3.4 percent, and inflation rose 2 percent over the same period.

On average, workers this year are contributing $6,015 toward the cost of family coverage, with employers paying on average $14,561, according to the survey, conducted from January through July. KFF received responses from more than 2,000 U.S. employers with three or more employees.

Since 2009, average family premiums have increased 54 percent, and workers' contributions have increased 71 percent.

Premiums and Deductibles Rose Faster than Worker's Wages Over the Past DecadeKFF-2019cp2.jpg

              Source: Kaiser Family Foundation.

The survey also showed that for single-coverage plans:

  • The average self-only plan deductible now stands at $1,655, similar to last year's $1,573 average but up sharply from the $826 average of a decade ago.
  • More than a quarter (28 percent) of all covered workers with self-only plans now have a deductible of at least $2,000, including nearly half (45 percent) of those at small employers with fewer than 200 employees, That's almost four times the number of those who faced such deductibles in 2009.
  • 1 in 8 (13 percent) with self-only coverage now face deductibles of at least $3,000.

The single biggest issue in health care for most Americans is that their health costs are growing much faster than their wages are," said KFF President and CEO Drew Altman. "Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums."

Family premiums average $17,633 at businesses where at least 35 percent of the workers earn $25,000 or less a year. At these lower-paying companies, family premiums are 15 percent less than the average at other firms, the survey showed, indicating that these plans are likely to have higher-than-average deductibles. At the same time, workers covered by companies that pay low wages have an annual family contribution of $7,047—considerably above that of workers at employers that pay more. Those workers contribute an average of $5,968 annually.low-wage workers premiums.jpg

One result is that fewer workers at lower-paying companies take up their employer's health benefits when offered—just 33 percent of these workers are covered by their employer's health benefits, well below the 63 percent at other companies.

"Employer-sponsored coverage doesn't come cheap for employers or workers, and many who work at low-wage firms or small businesses likely find it too costly to cover their families," said Gary Claxton, a KFF senior vice president and director of the Health Care Marketplace Project and the lead author of the study.

Higher cost-sharing "is endangering patients’ health as millions, including those with serious illnesses, skip care," a separate poll of 1,407 U.S. adults with union- or employer-sponsored coverage, by the Los Angeles Times in partnership with KFF, found earlier this year. "The shift in costs has also driven growing numbers of Americans with health coverage to charities and crowd-funding sites like GoFundMe in order to defray costs," the paper reported.

Employers can help to offset rising health plan costs by contributing to employees' health savings accounts (HSAs) or health reimbursement arrangements (HRAs).  Among the differences, HSAs can be funded by employer or employee contributions and are used in tandem with high-deductible health plans, while HRAs are solely employer-funded and can be used with all types of plans.

[SHRM members-only toolkit: Managing Health Care Costs]

Coverage Trends

Among other KFF survey findings:

  • Offer rates. 57 percent of employers offer health benefits, the same as last year and similar to a decade ago (59 percent).
  • Provider networks. 83 percent of offering employers say they are satisfied with the choice of providers available through their insurance plans. Few (5 percent) say they offer a plan with a narrow provider network, which can help the plan negotiate lower payment rates but also reduces enrollee choices.
  • Spousal coverage. While most large employers that offer health benefits cover spouses, 11 percent do not allow spouses to enroll if they have coverage from another source. Among those that do allow spousal enrollment, 10 percent require spouses to pay more through a larger premium contribution or higher cost-sharing.
  • Opioid epidemic responses. Many large employers (those with at least 200 workers) report taking specific steps over the past five years in response to the nation's opioid crisis, such as creating or revising an employee assistance program (40 percent), providing health information to workers (38 percent), limiting or otherwise modifying coverage for prescription opioids (24 percent), and asking their insurer or pharmacy benefit manager to increase monitoring of opioid use (21 percent).
  • Dental and vision coverage. Among firms offering health coverage, 60 percent (including 92 percent of large firms) also offer separate dental insurance, while 46 percent (including 83 percent of large firms) offer separate vision insurance. Employers sometimes contribute toward the cost of these benefits, but employees sometimes are required to pay the full cost themselves.

Health Costs Could Rise 6 Percent in 2020

While the KFF survey asked about 2019 premiums, other studies have focused on expected premium increases for 2020, SHRM Online recently reported:

  • The National Business Group on Health (NBGH), an association of large employers, reported that large U.S. companies predict that their health care costs for 2020 will rise a median of 6 percent if they don't make any cost management adjustments and 5 percent if they adopt cost management initiatives, such as alternative network models, or renegotiate their contracts. Large companies estimate that their total cost of health care, including premiums and out-of-pocket costs for employees and dependents, will rise to $15,375 per employee in 2020, up from $14,642 per employee this year.
  • Consultancy PwC also projects a 6 percent medical cost increase in 2020, a slight uptick over the past two years' increases, with revised estimated cost growth for 2018 and 2019 coming in at 5.7 percent for both years. After figuring in health plan changes, such as increased employee cost-sharing and network and benefit changes, PwC projects a net growth rate of 5 percent in 2020, which dovetails with the NBGH forecast. Employers are taking a more active role in managing health care costs, PwC reported, such as by "negotiating contract prices themselves, setting up provider networks and even building a parallel health system to take care of employees at more manageable costs."

Has Cost Shifting Reached Its Limit?

Growing concerns about health care affordability are affecting employers' decisions about plan design, medical plan choices and ways to empower employees to lower their health plan spending, according to HR consultancy Mercer.

"Cost growth right now has been stable at around 3 percent for about eight years, but before then, we were seeing very high cost increases of 6 percent or higher, double digits some years," said Beth Umland, who leads research for Mercer, in a video posted on the consultancy's website.

One of the ways that employers responded was by shifting more costs to employees, which "created some affordability issues for employees over the years, as deductibles rose and employers put in high-deductible health plans," Umland said. But in 2019, "we're seeing that employers are really very aware of the affordability issues, and in fact this year there was very little evidence of cost shifting," she noted, citing Mercer's National Survey of Employer-Sponsored Health Plans, conducted during the summer of 2019 with responses from nearly 2,600 employers.

In 2019, the average preferred provider organization (PPO) plan deductible rose by 1 percent, or just $10, Mercer found. "I think employers are really feeling that maybe they've gone as far as they can go with cost shifting and are looking for other tactics to restrain costs," Umland said.

Variations in Premium Growth

The 3 percent premium growth that Mercer reported "is just an average. When you look at employers' actual experience, there's a lot of variation," Umland added. The survey found that:

  • 31 percent of employers saw flat cost growth or even a cost decrease between 2018 and 2019.
  • On the other hand, 20 percent saw double-digit increases.

"So, there's a lot of variability behind that 3 percent average," Umland noted.



Hire the best HR talent or advance your own career.

Are you a department of one?

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.



HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.