Large premium hikes for families and individuals likely after small increases this year
“Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” says Drew Altman, president and CEO of KFF.
Employer-sponsored health insurance premiums for families and individuals increased only modestly this year compared with 2021 – but that likely will change in 2023.
“Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” says Drew Altman, president and CEO of KFF. “Given the tight labor market and rising wages, it will be tough for employers to shift costs onto workers when costs spike.”
The latest KFF Employer Health Benefits Survey finds that annual family premiums for employer-sponsored health insurance average $22,463 this year, similar to last year ($22,221). On average, workers this year are contributing $6,106 toward the cost of family premiums, with employers paying the rest. Among workers who face an annual deductible for single coverage, the average this year stands at $1,763, similar to last year ($1,669) but up 61% since 2012 ($1,097).
The change in premiums this year is unusual in that it is less than the increase in inflation (8%) or workers’ wages (6.7%) during the same period. Even with this year’s minimal change, average premiums for family coverage have risen 43% since 2012, more than the shift in inflation (25%) and a little more than wages (38%) over the same period.
Employer costs for this year largely were set last year, before inflation became a major economic concern and after the COVID-19 pandemic led to a temporary slowdown in the use of health care services.
The report reveals ongoing disparities in the burden of health care costs on workers at smaller and large employers. Workers at small firms (with less than 200 workers) on average pay $7,556 out of their paychecks annually for family coverage, nearly $2,000 more than workers at larger firms ($5,580). For single coverage, workers at small and large firms contribute similar amounts toward their coverage, though small-firm workers face much larger deductibles on average ($2,543 vs. $1,493).
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Among the other key findings:
- Offer rate. Nearly all large employers offer health benefits to at least some of their workers, although smaller firms increasingly are less likely to offer health benefits as they get smaller.
- Spousal coverage restrictions. Although most employers allow a worker’s spouse to enroll in coverage even if they are offered other coverage, 16% do not and another 14% place restrictions on the spouses’ enrollment.
- Helping employees buy non-group coverage. Eleven percent of firms that offer health benefits to at least some workers, 7% of those who don’t offer funds for some employers to purchase non-group coverage, such as that offered on Affordable Care Act marketplaces.
- Coverage for insulin and statins. Most covered workers are in plans that cover the cost of at least some insulin products (70%) and statins for treating high cholesterol (71%) before they meet their general annual deductible.