Premiums for Affordable Care Act (ACA) marketplace coverage continue to sky rocket, with the average cost of a benchmark plan in the individual market place rising 20% this year. There is very different news for employer-sponsored plans. According to the nonprofit Kaiser Family Foundation, in 2016 annual family premiums rose on average a modest 3% to $18,142 per year, of which workers paid on average $5,277, just barely outpacing the average increase in workers’ wages (2.5%) and inflation (1.1%).
Based on its 2016 annual survey of employers, the Kaiser Family Foundation reported that the low increase is part of an ongoing trend: family premiums have increased less than 5% in each of the last six years, for a total increase of 20% since 2011. In contrast, family premiums increased by 31% between 2006 and 2011 and by 63% between 2001 and 2006.
So why the historically low rates? Higher employee deductibles may be part of the answer. Covered employees continue to move into high deductible plans with Health Savings Account (HSAs) or linked to Health Reimbursement Arrangements (HRAs), which have lower average premiums that traditional group health plans. In 2016, 29% of covered employees where enrolled in high deductible plans compared with 20% in 2014. Preferred provider organization plans (PPOs), which have higher than average premiums, saw the opposite trend: 48% of covered workers were enrolled in such plans, down from 58% in 2014.
The survey also looked at the impact of the ACA on employer coverage. This year, ACA shared responsibility provisions took full effect, with the result that applicable large employers (ALEs) — employers with 50 or more full-time employees (including full-time equivalents) — must offer group health plan coverage that meets the ACA’s value and affordability standards to their full-time employees (and dependents) in order to avoid penalties. The survey found that 93% of ALEs offered health benefits to at least some of their employees and that the great majority of those ALEs offered coverage that met the ACA’s value and affordability requirements.
Other topics in the survey include:
• Trends in spousal coverage. A growing percentage of firms are using limitations and incentives to require or encourage spouses to enroll in other employer coverage available to them.
• Single coverage premiums. Premiums for single coverage averaged $6,435 annually, with employees bearing on average $1,129 of that cost.
• Health risk assessments. 59% of large employers that offer health benefits also offer employee health risk assessments, which ask employees questions about lifestyle, health status and medical history. 54% of the large employers that use health risk assessments provide financial incentives to encourage employee participation — including reduced premiums or cost sharing, contributions to an HSA, or cash.
• Biometric screenings. 53% of large firms offer biometric screenings, which are physical exams that measure health indicators such as weight, blood pressure and cholesterol. 59% of these firms offer financial incentives to employees who participate in the screening. A smaller percentage (14%) tie incentives to attaining specific health outcomes, such as weight loss or reduced cholesterol levels.