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Health care makes up 7.6% of companies’ annual budgets, SHRM finds
Health care cost increases are eating up more of U.S. companies' annual budgets even as employees pay more for their health care benefits, according to new research findings by the Society for Human Resource Management (SHRM) and others.
The average cost of health care benefits makes up 7.6 percent of a company's annual operating budget and equates to an average of $8,669 per covered employee in 2015, according to SHRM's 2016 Health Care Benchmarking Report, released on Aug. 30. (These figures represents total plan costs without regard to how premiums are divided up between the employer and employees.)
The average cost per covered employee has increased by nearly $500 over three years; total premiums were, at the median, $8,171 per employee in the previous fiscal year, according to the report. The researchers analyzed data collected from a sampling of 2,124 SHRM members from February to April 2016, reflecting the previous 12 months.
"More and more employers are having to push the increasing cost of health care onto employees," said Evren Esen, director of workforce analytics at SHRM. "High-deductible health plans such as
health savings accounts [HSAs] and health reimbursement arrangements [HRAs] are one way that employers are attempting to counter the high costs."
Currently, 48 percent of organizations offer HSAs, and 23 percent offer HRAs, the researchers found.
Health Plan Benchmarks
Below are additional findings from the report:
Health Care Coverage
Deductibles, Premiums and Co-pays
Across all plans, the average annual in-network deductible for employee-only coverage is $1,554, the total monthly premium for employee-only coverage is $461 and the total monthly premium for family coverage is $1,292.
Average health care premiums for all plan types:
Source: SHRM Customized Health Care Benchmarking Report.
Looking at deductibles for nonpreventative care, flat-dollar co-payments due at the time of service, and the co-insurance percentage that employees pay for services, the survey found the following:
Average deductibles and co-pays for all plan types:
Source: SHRM Customized HealthCare Benchmarking Report.
Consumer-Directed Health Plans
On average, employers contribute:
Prescription Drug Coverage
The average employee co-pay is:
Ninety-two percent of companies offer generic prescriptions, while 95 percent offer a 90-day mail-order prescription service.
Higher Costs for Lower Coverage
The median in-network deductible on an employer-sponsored preferred-provider organization (PPO) health plan increased 50 percent, from $1,000 to $1,500 in 2016, according to preliminary results from the
2016 Health Plan Survey from United Benefit Advisors (UBA), a nationwide network of employee benefits brokerage and advisory firms.
The findings, based on responses from 11,524 employers surveyed earlier this year about their 2016 health plans, show that:
UBA shared with
SHRM Online 2016 annual health plan cost figures, which will be included in
its forthcoming report, for preferred-provider organization (PPO) plans, health maintenance organization (HMO) plans, point of service (POS) plans, consumer-directed health plans (CDHPs) and exclusive provider organization (EPO) plans.
2016 Annual Premiums: Total cost per employee:
Source: 2016 UBA Health Plan Survey.
The survey also showed that families are bearing the brunt of the cost of health insurance. For an employee electing single coverage, the employer covers 71 percent of the monthly premium, but only 54 percent of a family premium.
Family: Total Cost
Regionally, average monthly family premiums were highest in the Northeast at $1,394, or 12.8 percent higher than the national average, while average family premiums in the Central region were the lowest at $1,109, or 11.4 percent below hte national average.
By raising the deductible $500, employers could avoid a premium increase of roughly 3 percent to 6 percent, UBA found.
"Overall, employer costs remained consistent because they are passing more and more of their increases on to employees—a trend we expect to see more of in the future," said Les McPhearson, CEO of UBA, in an online post. "Employers simply cannot continue to absorb unsustainable increases in health care costs. Unfortunately, neither can employees."
Some Forgo Care
Low-earning employees who switch to high-deductible HSA plans are more likely than their higher-paid colleagues to avoid certain types of health care—even though that care may be covered outside the deductible as preventative services, according to new research by the nonprofit Employee Benefit Research Institute (EBRI) in Washington, D.C.
EBRI analysis, published in August, looked at health claims of one large Midwestern employer by workers' income levels, and found that:
But these effects were most evident during an employee's first year under the HSA-eligible plan and then appeared to taper off.
"Since the increase in emergency department visits and inpatient admissions disappear over time, some plan sponsors and insurers may decide not to modify the designs of their plans as a result of these findings," said Paul Fronstin, director of EBRI's health research and education program and co-author of the report.
If plan sponsors are concerned about the impact of HSA plans on lower-income workers, "they can consider modifications to alleviate any negative impact on this group," Fronstin noted. For example, "employers could provide higher HSA contributions to lower-income workers," he said. "This would reduce the typically flat-dollar gap between the health plan deductible and employer contributions to the HSA, so that lower-income workers would have additional funds to pay for health care services."
Related SHRM Article:
Employers Project Health Premium Hike of 6% in 2017,
SHRM Online Benefits, August 2016
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