Annual premiums for employer-sponsored family health coverage reached $15,745 in 2012, up 4% from last year, with workers on average paying $4,316 toward the cost of their coverage, according to the Kaiser Family Foundation (KFF) 2012 Employer Health Benefits Survey released Sept. 11, 2012. Premiums for worker-only health coverage increased 3% in 2012 to reach $5,615 annually. Workers on average pay $951 toward this coverage.
Here's the KFF analysis of the survey results:
This year’s premium increase is moderate by historical standards, but outpaced the growth in workers’ wages (1.7%) and general inflation (2.3%). Since 2002, premiums have increased 97%, three times as fast as wages (33%) and inflation (28%).
“In terms of employee insurance costs, this year’s 4% increase qualifies as a good year, but it still takes a growing bite out of middle-class workers’ wages, which have been flat or falling in real terms,” Kaiser President and CEO Drew Altman, Ph.D. said.
“Premium growth is at historic lows, which greatly benefits workers. Continuing to ensure that Americans have coverage options that are affordable is vitally important for our nation’s health,” said Maulik Joshi, Dr.P.H., president of KFF's Health Research and Educational Trust (HRET) and senior vice president for research at the American Hospital Association.
The 14th annual Kaiser/HRET survey of more than 2,000 small and large employers provides a detailed picture of trends in employer-sponsored health insurance costs and coverage.
The survey reveals significant differences in the benefits and worker contributions toward family premiums between firms with many lower-wage workers (at least 35% of workers earn $24,000 or less a year) and firms with many higher-wage workers (at least 35% of their workers earn $55,000 or more a year).
Workers at lower-wage firms on average pay $1,000 more each year out of their paychecks for family coverage than workers at higher-wage firms ($4,977 and $3,968, respectively). This occurs even though the firms with many lower-wage workers on average pay less in total premiums for family coverage than firms with many higher-wage workers ($14,694 and $16,427, respectively).
In addition, workers at lower-wage firms are also more likely to face high deductibles than those at higher-wage firms. Specifically, 44% of covered workers at firms with many low-wage workers face an annual deductible of $1,000 or more, compared with 29 percent of those at firms with many high-wage workers. Across all employers, a third of covered workers (34%) face a deductible of that size, including 14% with deductibles of at least $2,000 annually.
Health Reform and Employers
The survey estimates that 2.9 million young adults are currently covered by employer plans this year as a result of a provision in the 2010 Affordable Care Act that allows young adults up to age 26 without employer coverage of their own to be covered as dependents on their parents’ plan. That’s up from the 2.3 million in the 2011 survey. Young adults historically have been more likely to be uninsured than any other age group.
The survey also finds that 48% of covered workers are in “grandfathered” plans as defined under health reform, down from 56% last year. Grandfathered plans are exempted from some health reform requirements, including covering preventive benefits with no cost sharing and having an external appeals process. To retain this status, employers must not make significant changes to their plans to reduce benefits or increase employee costs.
Employer Expectations for 2013
In addition to the comprehensive survey conducted in the spring, employers were asked in August whether they had information about the change in premiums (or total cost for self-funded plans) for their current health plan with the largest enrollment. The average increase reported by employers who had received information for their current plan is 7%.
These early reports may not match what employers and workers ultimately end up paying next year, as firms can raise deductibles or otherwise change the health benefits and plans they offer to lower premiums. This year, for example, more than half (54%) of employers who offer health benefits reported that they had shopped around for new coverage. Of that group, significant shares switched carriers (18%) or changed the type of plans they offer (27%).
Other findings from the study include:
Offer rate. This year, 61% of firms offer health benefits to their workers – statistically unchanged from last year.
Cost-sharing for office visits, emergency care and drugs. Covered workers facing co-payments for in-network physician office visits on average pay $23 for primary care and $33 for specialty care. For emergency-room visits, average co-pays are $118. For drug plans with three or more tiers, average co-pays are $10 for generic drugs, $29 for preferred brand-name drugs, $51 for non-preferred brand-name drugs, and $79 for specialty drugs.
Domestic partner benefits. In 2012, 31% of employers offer health benefits to same-sex domestic partners, up from 21% three years earlier. This year 37% of firms offer such benefits to unmarried opposite-sex partners, up from 31% in 2009.
Flexible Spending Accounts and Pre-Tax Premiums. Large employers are more likely than small ones to allow workers to pay their share of premiums with pre-tax income (91%, compared to 41%) and to contribute pre-tax dollars to Flexible Spending Accounts (76%, compared to 17%).
Now in its 14th year, the survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust. The survey included 3,326 randomly selected, non-federal public and private firms with three or more employees.