Employer-Sponsored Family Health Premiums Up 4%

This article published with permission from The Burrill Report.

Annual premiums for employer-sponsored family health coverage reached $16,351 in 2013, a 4% increase from a year ago, according to a new report. The relatively modest increase well outpaced the growth in workers’ wages and general inflation during the same period.

Workers, on average, pay $4,565 toward the cost of their coverage, according to The Kaiser Family Foundation/Health Research & Educational Trust 2013 Employer Health Benefits Survey. Findings of the annual survey of 2,000 large and small employers were published in Health Affairs.

Since 2003, premiums have increased 80%, nearly three times as fast as wages and inflation.

“We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” says Kaiser Family Foundation President and Chief Executive Officer Drew Altman.

The 15th annual Kaiser/HRET survey comes ahead of the implementation of many of the provisions of the Patient Protection and Affordable Care Act, the Obama Administration’s landmark healthcare reform legislation. The law includes provisions that allow broader use of financial incentives to encourage workers to improve their health status and outcomes. Though some provisions affecting large employers, such as the requirement to offer coverage to all full-time employees, have been delayed until 2015, many changes are set to take effect in 2014.

These changes include new federal rules for employee wellness programs that allow employers to use larger financial incentives to employees who participate in wellness programs or meet defined health outcomes. Nearly all large employers (with at least 200 workers) offer at least one wellness program, which can take many forms and target a wide range of conditions. More than a third of large employers who offer wellness programs offer some kind of financial incentive for workers to participate, such as lower premiums or a lower deductible, receiving a larger contribution to a tax-preferred savings account, or gift cards, cash or other direct financial incentives.

Among large firms offering health benefits, the survey found more than half offers some kind of biometric screenings to measure workers’ health risks. Of these, 11% reward or penalize workers financially based on whether they achieve specific biometric outcomes.

“This will be an important issue to watch next year, as employers will have more flexibility and could ask workers to pay more because of their lifestyles and health conditions,” says Kaiser Family Foundation Vice President Gary Claxton, the study’s lead investigator and director of the foundation’s Health Care Marketplace Project.