Surge in Employees’ Share of Health Costs

Employees paid more out -of-pocket costs, saw family benefits reduced

By Stephen Miller, CEBS October 28, 2014

While U.S. employers have seen modest health plan cost increases in recent years—average annual cost per employee was $9,302 in 2013 versus $9,504 in 2014—employers continue to shift more of the financial burden to employees through out-of-pocket cost increases and reductions in family benefits, according to the 2014 UBA Health Plan Survey.

In 2014, the average employer cost paid toward plan premiums was $6,276 per covered individual, and the average employee contribution was $3,228, according to the survey.

Based on responses from 9,950 employers sponsoring 16,967 health plans nationwide, the survey has results applicable to the small to midsize market that makes up the majority of American businesses, unlike surveys that focus exclusively on large employers. The annual survey is sponsored by United Benefit Advisors (UBA), an employee benefits advisory organization. Preliminary findings were released in October 2014.

UBA found that in 2014:

Average in-network deductibles for single coverage remained fairly level at $1,901.

(By way of comparison, a recent National Business Group on Health survey of large U.S. employers pegged the typical employee-only in-network deductible at $1,000 averaged across all plans types and at $1,500 for consumer-directed health plans.)

Out-of-pocket maximums increased more than 6 percent.

Dollarwise, the median single out-of-pocket maximum increased $500 to $3,500, and the median family out-of-pocket maximum increased $1,000 to $8,000.


The increase in median out-of-pocket maximums was more than double the increase in average out-of-pocket maximums for both single and family coverage, which both went up, on average, less than $250.

"If you were to look only at the average out-of-pocket costs and deductibles, you'd be missing a big part of the story," commented Carol Taylor, chairwoman of the UBA Client Compliance Solutions Committee and a benefits advisor with D & S Agency, a Virginia-based insurance firm. "The median numbers show a significant increase because the lower end of the scale is dropping off, so we're getting used to a new norm in higher out-of-pocket costs," Taylor said in a statement accompanying the survey results.

Deductibles and Co-insurance

The survey also revealed that:

The percentage of plans with no deductible in-network decreased from 21 percent for an individual in 2013 to 20 percent in 2014, and from 22.5 percent for a family in 2013 to 20.8 percent in 2014.

The number of plans with no out-of-network deductible decreased from 8 percent for individuals in 2013 to 6.9 percent in 2014, and from 9.8 percent for a family in 2013 to 8.1 percent in 2014.

Plans with 100 percent co-insurance (wherein all medical expenses are covered by the insurer after the deductible is paid) are also disappearing rapidly, having decreased by 14.8 percent since 2012. In 2014, 36.2 percent of plans offered 100 percent co-insurance for individuals and only 1.3 percent covered families at this level.

Regional Differences

As in the past, a big difference remains in the U.S. between an employer's cost to insure an employee in the Northeast versus the West. For example, in 2014:

The average annual cost per employee in the Northeast was $10,931, which is 13 percent higher than the West at $9,513 per employee.

The North Central region came in second-highest at $10,130, and the Central region paid the least at $8,088 per employee.

Employers in the South paid $8,254 per employee.

Health Care Reform’s Effect

Based on current renewal rates from insurance carriers, in states that did not allow renewal of pre-Affordable Care Act (ACA) plans—those not in compliance with expanded coverage mandates—many small employers are facing rate increases of between 30 percent to 160 percent, UBA found. Given that a number of states allowed pre-ACA plans to renew, the full impact of the ACA on group plan rates is still largely unknown.

"We're seeing little change in premium rates and employee benefit plans, and that's because many employers renewed twice in 2013 to delay the effects [of the ACA]," said Taylor.

In the category of employers with 50 or fewer employees, in 2012 there were 507 employers with a Dec. 1 renewal date. In December 2013, that number was over five times higher at 2,598 employers, the survey found. "This is going to have a ripple effect for years to come in the small group market," Taylor noted.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

Related SHRM Articles:

Health Premiums Claim Bigger Bite of Workers' Income, SHRM Online Benefits, December 2014

Larger Increases in Health Premiums Expected, SHRM Online Benefits, November 2014

Coverage for Spouses and Dependents Scaled Back, SHRM Online Benefits, November 2014

Drug Plan Cost Rise Outpaces Health Benefits, SHRM Online Benefits, October 2014

Modest Premium Growth, Steep Deductible Hikes, SHRM Online Benefits, September 2014

Additional Enrollees May Drive Up Costs, SHRM Online Benefits, September 2014

Employers Get Aggressive to Control Health Costs, SHRM Online Benefits, September 2014

Employers Adjust Health Benefits for 2015, SHRM Online Benefits, August 2014

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