Employers Continue to Shift Health Benefit Costs to Employees

September 15, 2009 (PLANSPONSOR.com) - Premiums for employer-sponsored health insurance rose to $13,375 annually for family coverage this year - with employees on average paying $3,515 and employers paying $9,860, according to the 2009 Employer Health Benefits Survey released by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET).

Family premiums rose about 5% this year, while workers’ wages went up 3.1% during the same period. Since 1999, the survey report said, premiums have gone up a total of 131%, far more rapidly than workers’ wages (up 38% since 1999) or inflation (up 28% since 1999).

The survey found that 60% of firms offer health benefits to their workers this year. However, fewer than half (46%) of the smallest employers (three to nine workers) offer health benefits.

Among those firms offering benefits, 21% report they reduced the scope of health benefits or increased cost sharing due to the economic downturn, and 15% report they increased the worker’s share of the premium. In addition, in 2009, 22% of covered workers must pay at least a $1,000 annual deductible for single coverage, up from 18% last year and 10% in 2006.

Among covered workers at large firms, 13% now face deductibles at or above $1,000, while at small firms (three to 199 workers), 40% face deductibles at or above $1,000 – including 16% with deductibles at or greater than $2,000.

The survey indicates copayments are increasing as well. Among covered workers with a copayment for in-network physician office visits, the average copayment is $20 for primary care and $28 for specialty physicians – up slightly from the 2008 averages.

When asked about their plans for next year, 21% of firms offering health benefits say they are “very likely” to raise workers’ premium contribution next year, and 16% say they are “very likely” to raise deductibles. Just 4% say they are “very likely” to restrict eligibility for coverage, and 2% say they are “very likely” to drop health coverage altogether.

Preferred Provider Organizations continue to dominate the employer market, enrolling six in 10 covered workers. Health Maintenance Organizations cover 20% of workers, and 10% of employees are in Point-of-Service plans. Eight percent are in consumer-directed plans, which are high-deductible plans that also include a tax-preferred savings options such as a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA).

More than half (58%) of employers surveyed said that offer health benefits provide at least one of the following wellness programs: weight loss efforts, gym membership discounts or on-site exercise facilities, smoking cessation program, personal health coaching, classes in nutrition or healthy living, Web-based resources for healthy living, or a wellness newsletter.

Also among firms offering health coverage, 16% give their employees the option of completing a health risk assessment to help employees identify potential health risks. Within this group, 11% offer financial incentives such as lowering the worker's share of premiums or offering merchandise, gift cards, travel, or cash to their workers. Large firms are more likely than small firms both to offer assessments and to offer financial incentives.

Among very large firms (at least 1,000 workers), 20% report that they have an onsite health clinic for employees at one or more locations. Of those firms with an onsite health clinic, 79% reported that employees can receive treatment for non-work related illness at the clinic.

Other findings from the survey include:

  • The vast majority of covered workers face a three- or four-tier system to determine their cost-sharing for drugs. For workers in such plans, the average copayments this year are $10 for first-tier drugs, $27 for second-tier drugs, and $46 for third-tier drugs. Copayments for fourth-tier drugs, which may include costly biological agents and lifestyle drugs, averaged $85.
  • This year, 29% of large firms (200 or more workers) that offer health coverage also offer retiree health benefits, similar to the 31% that did so last year.

The survey was conducted between January and May of 2009, and included 3,188 randomly selected, non-federal public and private firms with three or more employees (2,054 of which responded to the full survey and 1,134 of which responded to a single question about offering coverage).

Full results can be downloaded from www.kff.org/insurance/7936/index.cfm .