The average cost for a family health insurance plan available through an employer in 2023 is just under $24,000, a 7% jump, according to an annual employer health benefits survey by KFF released Wednesday.

As The Wall Street Journal put it, “Inflation came for your health care this year. Next year is looking to be just as bad.”

Last year, the premiums increased just 1%, per the report, which noted that insurance costs for individuals also rose 7% to just under $8,500.

Premium costs for employees are expected to go up in coming weeks as employers have open enrollment periods where employees can choose or change their plans. According to the survey, one-fourth of employers said they would pass at least part of the higher cost onto employees.

“We’ve had this period of super-high inflation and now premiums are catching up,” Matthew Rae, associate director of KFF’s health care marketplace project, told USA Today.

Rae said the rate increases are nowhere near the double-digit increases seen a decade ago. He added that companies pay the lion’s share of the insurance cost and “use those benefits to attract and keep employees,” according to the article.

“If you’re trying to recruit people, it’s just not the time to cut benefits and pass on huge costs,” Rae said.

“More than half of employers said they are aware that their workers are concerned about the affordability of cost-sharing requirements, KFF found. Employers are likely concerned, too, and don’t want to lower their coverage offerings amid the ongoing tight labor market conditions,” per the Miami Herald.

But the bite for workers can be significant. CNN reported that “employees are shelling out an average of $6,575 for their share of the premium, up almost $500, or close to 8%, from last year,” while their companies foot the rest of the bill.

Pacing wages, inflation?

KFF said the increases are similar to the increase in wages and to inflation since 2022. That’s not like the early 2000s, when insurance rates jumped drastically. Back then, as CNN reported, “ inflation and wage growth were relatively muted.”

According to the Miami Herald, “While the increases are steep, they are pretty much in line with the 5.2% growth in wages and 5.8% growth in inflation over the past year, the report said. In the past five years, these three measurements have stayed about equal, with premiums rising 22%, wages growing 27% and inflation climbing 21%.”

Smaller business, bigger bite

Those who work for small companies tend to pay more for health insurance than those at companies with 200 or more workers. The report said on average workers at smaller companies contribute $2,445 more to the cost of a family health insurance plan than do workers at larger companies.

As Steve Van Loon, director of operations at KDC Mailing & Bindery in Tempe, Arizona, told CNN, the company had to not only ask employees to pay a slightly larger share of the health benefits but also hiked its prices for customers a little, too. It has only offered health benefits since 2019.

“Our profit margins do not allow us to absorb these costs,” he told CNN. “We would be out of business.”

The survey and its findings

Each year the foundation conducts the survey to track employer health insurance trends, which impact more than 150 million Americans. The survey included more than 2,133 companies, both big and small.

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Among other findings, the survey shows that “most covered workers contribute to the cost of the premium for their coverage. On average, covered workers contribute 17% of the premium for single coverage and 29% of the premium for family coverage, similar to the percentages contributed in 2022.”

At smaller companies, workers contribute an average of 38% of the cost for family coverage.

KFF said the average annual deductible for a single worker whose plan has a deductible is just over $1,700.

Preferred provider organizations, where services must be provided by “in-network” individuals and entities, are the most common plan, enrolling 47% of covered workers. That’s compared to 29% in a high-deductible plan with a savings option, 13% in a health maintenance organization and 1% in a conventional indemnity plan. That enrollment distribution has changed little in recent years among covered workers.

While the vast majority of companies with 200 or more employees offer health benefits to at least some workers, just over half (53%) of small businesses offer health benefits. And not everyone in those that offer health benefits are eligible. Waiting periods or part-time or temporary work status may keep some out; others may choose not to enroll. The report said that at firms offering coverage, an average of 79% are eligible and among those, three-fourths do enroll. “Ultimately, 59% of workers at firms that offer health benefits are enrolled in coverage,” KFF said in a news release.

Reducing costs, health risks

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The report also notes ways that companies try to boost employee wellness, which is likely to keep premiums a bit lower and employees healthier. Some of the efforts sponsored by employers include:

  • Health risk assessments. Six in 10 larger companies use incentives or penalties to get employees to participate.
  • Biometric screenings. Fifteen percent of small companies and 42% of larger ones let workers complete biometric screening. More than two-thirds of large firms use incentives or penalties to encourage it.
  • Health and wellness promotion programs. These let workers identify and tackle health risks. The report says 62% of small and 80% of large companies offer at least one: smoking cessation, weight management and behavioral or lifestyle coaching.
  • Disease management programs. The survey said more than a third of small companies and just under two-thirds of big ones have programs tackling chronic illnesses with education and treatment options.

Is abortion covered?

For the first time, the survey asked about abortion coverage, and found nearly a third of larger firms cover most legal abortions in their plans, according to Bloomberg Law.

Eighteen percent said legally provided abortions are covered only in limited situations like rape, incest or health or life endangerment of the pregnant enrollee, KFF said. Ten percent do not cover abortion under any circumstance. And 40% responded “don’t know.”

The report noted that 7% of large firms offering health benefits say they already provide or will provide financial assistance for travel for enrollees in states where abortion is not available. That was much more common among firms with 5,000 or more employees.

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