Health Insurance Navigator

By Lisa Zamosky

The annual premiums for employer-sponsored health insurance rose moderately this year, with just a 4% increase for family health insurance, considerably lower than last year’s 9% jump. Single coverage is up 3% this year.

That was the headline of the most recent Kaiser Family Foundation/Health Research & Educational Trust (HRET) 2012 Employer Health Benefits Survey released on Tuesday of this week.

The total cost of employer-sponsored family health coverage is now $15,745 annually, of which workers pay an average of $4,316. Single coverage comes with a cost of $5,615 annually, for which employees pay $951.

Although this year’s cost increase is quite low as compared with years past, rising health care prices of any kind are becoming harder for consumers to bear. Kaiser has conducted this survey each year since 1999, and during that time, employees have seen their share of health insurance costs rise by a whopping 180% while their earnings grew by just 47%.

“In terms of employee insurance costs, this year’s 4% increase qualifies as a good year, but it still takes a growing bite out of middle-class workers’ wages, which have been flat or falling in real terms,” said Kaiser’s president and CEO Drew Altman, Ph.D. about the survey’s findings.

As I discussed in this earlier post, employers expect an increase in insurance premiums of about 7% for 2013.

Low-Wage Earners Hit Harder by Costs

One trend that stands out in the survey results is how in many cases, employees working for companies that pay lower wages are on the hook for more of their insurance costs than those working for firms paying higher salaries:

• At lower-wage companies, with 35% of workers being paid $24,000 or less a year, employees pay an average of $1,000 more for family coverage than employees working for companies paying higher-wages ($55,000 or more annually).
• Overall, 34% of people covered by employer-sponsored health insurance have a deductible of at least $1,000 for single coverage (up from 31% in 2011); just 10% of workers had a deductible that high in 2006).
• Yet, 44% of low-wage company employees have to pay $1,000 in annual deductibles as compared with just 29% at companies with higher salaries.
• 91% of large companies (which tend to pay higher wages) let employees pay a share of their premiums with pre-tax income through a Flexible Spending Account (FSA) as compared with just 41% of small companies.

Perhaps not surprisingly, those at the lower end of the pay scale choose less often to participate in their employer’s health plan — 84% of workers in higher-wage companies participate in their employers’ plan as compared with 71% working for lower paying firms.

Employer sponsored health benefits are still the number one source of insurance coverage in this country, with 149 million people getting their coverage at work.

This year, 61% of companies made health benefits available to their workers, roughly the same as in 2011. And because of health reform, 2.9 million young adults are estimated to have gained coverage due to the provision that allows kids to stay on their parent’s plan up to the age of 26.

What health insurance trends have you seen at work? Share your comments below.