Average Annual Workplace Family Health Premiums Rise Modest 3% to $18,142 in 2016; More Workers Enroll in High-Deductible Plans with Savings Option Over Past Two Years
Average Deductible Rises 12% to $1,478 Annually for Covered Workers Who Have Them; At Small Firms, Average Deductibles Now Top $2,000
Few Employers Report Changing Workers’ Hours Due to ACA’s Employer Requirements; Those That Do Are More Likely to Shift Workers to Full-Time Status
Bethesda, MD – Annual family premiums for employer-sponsored health insurance rose an average of 3 percent to $18,412 this year, a modest increase at a time when workers’ wages (2.5%) and inflation (1.1%) also grew modestly, according to the benchmark Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2016 Employer Health Benefits Survey released today. Workers on average contribute $5,277 annually toward their family premiums.
The 18th annual Kaiser/HRET survey of more than 1,900 small and large employers provides a detailed picture of the status and trends in employer-sponsored health insurance, costs and coverage. In addition to the full report and summary of findings released today, the journal Health Affairs is publishing a Web First with select findings, and the Foundation is releasing an updated interactive graphic that charts the survey's premium trends for different groups, including by firm size, region and industry.
This year’s low family premium increase is similar to last year’s (4%) and reflects a significant slowdown over the past 15 years. Since 2011, average family premiums have increased 20 percent, more slowly than the previous five years (31% increase from 2006 and 2011) and more slowly than the five years before that (63% from 2001 to 2006).
”We’re seeing premiums rising at historically slow rates, which helps workers and employers alike, but it’s made possible in part by the more rapid rise in the deductibles workers must pay,” KFF President and CEO Drew Altman said.
The recent trend in part reflects covered workers moving into high-deductible plans compatible with Health Savings Accounts (HSAs) or tied to Health Reimbursement Arrangements (HRAs). These plans have lower average premiums than other plan types.
In 2016, 29 percent of all workers were in such plans, up from 20 percent in 2014, while a shrinking share of workers (48% in 2016, down from 58% in 2014) are enrolled in Preferred Provider Organization (PPO) plans, which have higher-than-average premiums. These shifts effectively reduced the average premium increase by half a percentage point in each of the past two years, the analysis shows.
Again, partly as a result of this trend, the survey finds average deductibles continuing to rise for covered workers. In 2016, 83 percent of covered workers face a deductible for single coverage, which averages $1,478. That’s up $159 or 12 percent from 2015, and $486 or 49 percent since 2011. The average deductible for workers who face one is higher for workers in small firms (three to 199 employees) than in large firms ($2,069 vs. $1,238).
For the first time, the survey also finds half (51%) of all covered workers face deductibles of at least $1,000 annually for single coverage. This includes two thirds (65%) of workers at small firms (three-199 workers), who typically face higher deductibles than workers at large firms (200 or more workers).
In some cases, employers make contributions to tax-preferred HSAs or HRAs, which workers can use to pay part or all of their deductible expenses, thereby reducing their effective deductible. Counting employer contributions this way would reduce the share of covered workers with deductibles of at least $1,000 to 38 percent.
“The importance of this study is its ability to inform decision makers from all sectors as new or emerging strategies for health care coverage are being constructed. This is especially helpful for consumers as they understand health plan structures and what it means for them,” said Dr. Ken Anderson, HRET’s chief operating officer.
This year, the Affordable Care Act provision requiring employers with at least 50 full-time equivalent employers to offer health benefits to full-time workers or pay a penalty took full effect. The survey finds 93 percent of firms with at least 50 employees offer health benefits to at least some employees, and vast majority say their coverage meets the ACA’s requirements for value and affordability.
The survey also finds little evidence that businesses are reducing workers’ hours to avoid the law’s requirements to offer coverage. In fact, more employers with 50 or more full-time equivalent workers who offer coverage say they shifted or plan to shift workers’ hours from part-time to full-time status to make them eligible for health benefits (7%) than say they shifted or plan to shift workers from full-time to part-time status to make them ineligible (2%).
Overall 56 percent of employers offer health benefits to at least some of their workers this year, statistically unchanged from 57 percent last year. Offer rates vary by firm size, with less than half (46%) of the smallest firms (three to nine workers) offering coverage and essentially all employers with at least 1,000 workers doing so. Since 2011, the share of firms with 10 to 49 workers who offer coverage has fallen from 74 percent to 66 percent.
This year’s survey finds that most employers who provide health benefits offer coverage to workers’ spouses. (Exhibit below from Health Affairs study.)