Archive for August 22nd, 2013

Increase in Health Insurance Takes Bigger Bite from Paychecks

Thursday, August 22nd, 2013

I don’t think this comes as a surprise to anyone, but research confirms that health care costs are growing faster than wages.  The Kaiser Family Foundation and the Health Research & Education Trust found that employees pay 6% more for their health insurance than last year, which is three times higher than their increase in wages.  And that’s just the average.  I’m sure there are many people paying an even greater amount for their health insurance, not to mention those whose wages haven’t been increasing at all.  This is not to say that companies are being unfair however, because they are paying quite a lot more to cover their employees’ health care as well.  Compared to one decade ago, family health insurance premiums have increased by 89%.  Workers are paying $4,565 each year for their employer-sponsored health insurance, while individuals are paying around $1,000.  This information comes from CNN Money’s Tami Luhby in the article “Health insurance premiums rise faster than wages.”

Those amounts though are little in comparison to what the employers are paying.  Families are covering 28% of the total health care cost and individuals are paying only 17% of the cost.  The increase in total health care costs was around 4%, taking into account both the family or individual and employer share.  But overall wages only increased by 1.8% on average, so the health care increases take a bigger bite out of paychecks.  This study has been conducted yearly since 1999 and this year actually saw the second smallest increase in health care costs.  A slower economy is the biggest reason, but that is good news for employers and employees alike.  Employers have been trying to put more of their costs onto employees for awhile now though.  The amount of yearly deductibles as well as the number of companies making employees pay a deductible has been steadily increasing.

Something else that has become popular is offering wellness programs or discounts for employees who take steps to remain healthy.  More large companies implement these types of plans, but small companies do as well.  Companies with 50 or more workers will be required to offer health insurance plans starting next year.  But 93% of these companies are already offering health insurance to their employees.  When it comes to small employers, just over half of them are offering health insurance plans to workers.  Families at small companies pay a lot more than those at large companies for their health insurance, but the individuals at small companies actually pay less.  Individual health insurance exchanges popping up under the new health care law shouldn’t do much to change employer health insurance, unless the policies become more affordable to workers than remaining in their employer sponsored plans.