Get access to the exclusive HR Resources you need to succeed in 2018.
Sign up for free email newsletters and get more SHRM content delivered to your inbox.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 14 cities across the U.S. this fall.
Gain the skills you need to rise to the next level in your career. Jon us at SHRM's Leadership Development Forum, October 2-3 in Boston.
Health care forecast sees more cost shifting ahead
In 2014 average health care premium increases at large U.S. companies are projected to return to the 6 percent to 7 percent range, up from the 2013 premium-rate rise of 3.3 percent, which was the lowest increase in more than a decade, according to an analysis by consultancy Aon Hewitt. The premium increase excludes newfees under the Affordable Care Act that employers will also be subject to.
The analysis revealed that:
These projections mean that, over the past decade, workers’ share of health care costs (including premium contributions and out-of-pocket costs) will have increased almost 150 percent—from $2,011 in 2004 to $4,969 in 2014.
Employee Out-of-Pocket Cost
Employee Premium Contributions
Total Employee Costs
Source: Aon Hewitt
The analysis also showed that 47 percent of large employers have increased participants’ deductibles and/or co-pays in the past year, and another 43 percent are considering doing so in the next three to five years.
Increases by Plan Type
On average, companies will see 2014 cost increases of 7.5 percent for health maintenance organization (HMO) plans, 6.5 percent for preferred provider organization (PPO) plans and 6.5 percent for point-of-service (POS) plans, according to the forecast, which is based on health-care-costs data from 516 large U.S. employers representing 12.8 million participants.
Plan costs are shown on a per-employee basis. They include employees' premium contributions but not their out-of-pocket costs (i.e., co-payments, co-insurance).
Percentage Increase Nationally
Cost per Employee
Costs are shown on a per-employee basis and include employee premium contributions but not their co-pays.
Increases by Major Metropolitan Area
In 2013 the analysis showed that major U.S. markets that experienced rate increases higher than the national average were Los Angeles (6.9 percent); Orange County, Calif. (6.9 percent); Washington, D.C. (5.3 percent); and San Francisco/Oakland/San Jose (4.8 percent).
Conversely, New York City (1.6 percent), Milwaukee (2.1 percent) and Atlanta (2.4 percent) experienced lower-than-average rate increases in 2013. Of note, Minneapolis saw a drop in rate increases at -0.1 percent.
Health care remains a top priority for U.S. employers, and most are taking steps to prepare for increasing costs, the analysis found. For instance, employers are:
Managing Dependent Eligibility and Subsidies
Employers are also reassessing the way they offer health coverage for dependents, the analysis found. Specifically, they are:
Findings from United Benefit Advisors’ 2013 Health Plan Survey of 11,000 U.S. employers of all sizes, also released in October, revealed the following trends:
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles:
Why the Cost Curve Is Bending, SHRM Online Benefits, November 2013
Employees’ Health Costs to Approach $5,000 in 2014, SHRM Online Benefits, October 2013
Employees Open to Private Exchanges, Centers of Excellence, SHRM Online Benefits, October 2013
Employers Hold the Line on Health Benefit Costs, SHRM Online Benefits, October 2013
Consumer-Driven Plans Gain in Popularity, SHRM Online Benefits, October 2013
Time for Defined Contribution Health Benefits?, SHRM Online Benefits, September 2013
SHRM Online Benefits page
SHRM OnlineHealth Care Reform Resource Page
SHRM Online Wellness Programs Resource Page
Compensation & Benefits e-NewsletterTo subscribe to SHRM's weekly Compensation & Benefits e-newsletter, click the link above. To see all of the SHRM e-newsletters, click below.Signup Now
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 10,000 companies