Modest Premium Growth, Steep Deductible Hikes

For group plans, family premiums up 3% in 2014; deductibles up 47% since 2009

By Stephen Miller, CEBS Sep 12, 2014
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Despite a slowdown in the rate of growth for group health plan premiums, significantly higher deductibles have shifted a greater share of health costs to employees, new research confirms.

In the U.S., average annual premiums for employer-sponsored family coverage reached $16,834 in 2014, up 3 percent from the prior year and continuing a recent trend of modest increases, according to the Kaiser Family Foundation/Health Research & Educational Trust 2014 Employer Health Benefits Survey. The premium share paid by employees for family coverage averaged $4,823 annually.

 

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Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits


Annual premiums for worker-only coverage stood at $6,025 in 2014. Workers on average contributed $1,081 toward this cost.

“The relatively slow growth in premiums this year is good news for employers and workers, though many workers now pay more when they get sick as deductibles continue to rise,” said Drew Altman, president and CEO of the nonprofit Kaiser Family Foundation, during a Sept. 10 web briefing.



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Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits

The 16th annual Kaiser/HRET survey drew responses from more than 2,000 small and large employers across the U.S.

(Large U.S. employers expect, on average, a 4 percent rate increase in 2015 after plan design changes and a 5.2 percent rate increase without plan adjustments; see the SHRM Online article Employers Get Aggressive to Control Health Costs.)

Deductibles and Cost-Sharing

In 2014, 80 percent of all covered workers faced a general annual deductible, with the average deductible reaching $1,217 for single coverage. Since 2009, the average deductible has risen 47 percent from $826.

Among other findings, the survey revealed:

41 percent of all covered workers faced an annual deductible of at least $1,000 for single coverage, including 18 percent who have a deductible of at least $2,000.

Covered workers at small firms (3 to 199 employees) were even more likely to see large deductibles: 61 percent have at least $1,000 deductibles for single coverage and a third (34 percent) have at least $2,000 deductibles.

Average General Annual Deductible Among Covered Workers Enrolled in a Plan with a Deductible for Single Coverage, by Firm Size, 2006-2014

 

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Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits


“The deductibles for workers have crept higher over time, topping $1,200 on average this year,” said study lead author Gary Claxton, director of the Kaiser Family Foundation’s Health Care Marketplace Project.

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Average general annual health plan deductibles are for in-network services.

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits

The survey found little change in other forms of cost-sharing, including:

Co-payments for in-network physician visits (an average of $24 for primary care and $36 for specialists).

Co-payments for prescription drugs ($11 for generics, $31 for preferred brands, $53 for nonpreferred brands and $83 for specialty drugs).

Wellness Programs

As in the past, nearly all large employers (98 percent) and most smaller ones (73 percent) that provided health benefits also offered at least one wellness program.

Among those that did so, 36 percent of large and 18 percent of small employers provide a financial incentive for workers to participate, such as a lower premium or deductible, a larger contribution to a health savings account, or a gift card, cash or merchandise.

But among those with an incentive for participating in wellness programs, only 12 percent of small firms and 33 percent of large firms believed that incentives were “very effective” at encouraging employees to participate. In lieu of or in addition to incentives for participating, 12 percent of large firms have incentives for completing wellness programs.

Biometric Screenings

Fifty-one percent of large firms (200 or more workers) and 26 percent of smaller firms providing health benefits offered biometric screenings to employees, measuring risk factors such as body weight, cholesterol and blood pressure.

Among large firms, 8 percent rewarded or penalized workers financially based on biometric outcomes (such as meeting a target body mass index or managing cholesterol levels).

ACA Coverage Implications

Starting in 2015, employers with at least 100 full-time equivalent workers could face penalties if they do not offer health benefits and their workers obtain subsidized coverage through the Affordable Care Act’s (ACA) public exchanges. In 2016, employers with at least 50 workers will be subject to these penalties.

Among the ways in which employers may be affected by the ACA, the survey highlighted the following:

Fewer in grandfathered plans. Plans lose their grandfathered status if they make significant changes that reduce benefits or raise workers’ costs. In 2014, 26 percent of covered workers were in grandfathered plans, down from 36 percent in 2013 and 48 percent two years ago. The shift means a rising share of employers are subject to mandates that include requiring coverage of preventive benefits without cost-sharing, and a requirement to provide employees with an external appeals process for denied claims.

Shorter waiting periods. Starting in January 2014 for nongrandfathered plans, the ACA set 90 days as the new limit for the waiting period before new hires become eligible for health benefits. The survey found that 23 percent of large firms and 10 percent of small firms reduced their waiting period this year, and that the average length of waiting periods for covered workers fell from 2.3 months in 2013 to 2.1 months in 2014.

Rethinking retiree health benefits. One in four large firms that offered retiree health benefits said they were considering changes, such as giving retirees a subsidy to buy coverage through one of the ACA’s public exchanges. In addition, 4 percent of large employers currently offer their retiree benefits through a private exchange.

The survey was conducted between January and May of 2014 and included 3,139 randomly selected, nonfederal public and private firms with three or more employees.

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

Related Articles:

Health Benefits in 2014: Stability in Premiums and Coverage for Employer-Sponsored Plans, Health Affairs, 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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