Family premiums in employer plans will likely rise 7% after a year of no growth

Family premiums for employer plans will likely rise an average of about 7% this year, with a new KFF analysis predicting the premiums will average $23,968 and employees will contribute $6.575 toward that premium on average – a $500 increase year-over-year.

On average, covered workers contributed 17% of the cost of single coverage and 29% of the cost of family coverage.

When compared to employers’ perceptions of the number of primary care providers in their networks, a smaller share of employers believed their provider networks had a sufficient number of mental health and substance abuse providers to provide timely access to services.

One-quarter of employers indicated their employees had a “high” level of concern with the level of cost sharing required by their plans. And when asked about abortion coverage in the wake of the Supreme Court Dobbs decision, almost a third of large employers reported that their largest plan covered abortion in most or all circumstances.

WHAT’S THE IMPACT?

Both single and family premiums increased faster this year than last year – 2% vs. 7% and 1% vs. 7%, respectively.

For comparison, the inflation rate over the past year was 5.8%, and wage growth was 5.2%. During the past five years, the average premium for family coverage has risen 22% – an increase in line with inflation (21%) and wage growth (27%).

The average single premium was higher for covered workers in small firms ($8,722) than for those in large firms ($8,321), whereas the average family premium was similar for covered workers in small and large firms. Average premiums for both single and family coverage were higher for covered workers in PPOs and lower for covered workers in HDHP/SOs, compared with the overall average for all firms.

Average premiums for single coverage were lower for workers at for-profit private employers and higher for workers at nonprofit private employers, and average premiums for both single and family coverage were higher in firms with many older workers, defined as firms in which at least 35% of workers are age 50 or older.

Average premiums were similar for covered workers enrolled in self-funded plans and those enrolled in fully insured plans ($8,331 and $8,624 for single coverage, and $24,085 and $23,751 for family coverage, respectively). During the past year, the average premium grew at a similar rate.

Covered workers were asked to contribute 17% of the premium for single coverage and 29% of the premium for family coverage in 2023. But there was significant variation around these averages in both small and large firms. Thirty percent of covered workers at small firms were enrolled in plans with no premium contribution for single coverage, compared with only 6% of covered workers at large firms.

By contrast, 32% of covered workers at small firms were enrolled in plans with a worker contribution rate of 50% or more for family coverage, compared with only 8% of covered workers at large firms. Overall, covered workers in small firms faced a higher average contribution rate for family coverage than their counterparts in large firms (38% vs. 25%).

The average worker premium contribution was $1,401 for single coverage and $6,575 for family coverage, which is similar to worker contribution amounts in 2022. The average contribution amount for family coverage was higher for covered workers in small firms ($8,334) than for those in large firms ($5,889), whereas the average contribution amounts for single coverage were similar in small and large firms.

About 37% of covered workers were employed at a firm where at least some employees were unionized. On average, covered workers at firms with union workers contributed 15% of the cost of single coverage and 21% of family coverage, compared with contributions of 19% and 34%, respectively, at firms without union workers.

THE LARGER TREND

A  2022 Mercer poll showed employers were expecting a large hike in health benefits costs this year. 

Typically, health benefit cost growth runs higher than general inflation. According to Sunit Patel, chief health actuary at Mercer, 2022 was an anomaly because employer health plan sponsors hadn’t yet felt the full impact of inflation.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com