Survey: Employer Group Medical Costs Continue to Rise

May 31, 2006 ( - The spring Employee Benefits Market Survey by The Council of Insurance Agents & Brokers found that all sizes of employers continued to experience rising costs for group medical coverage on account renewals during the past six months.

In a news release, the council said benefits brokers reported that 60% of small accounts (50 or fewer employees), 80% of medium accounts (51 to 500 employees) and 70% of large accounts (more than 500 employees) experienced increases of 10 to 15% for their group medical renewals. In addition, 17% of small accounts and 8% of medium accounts up for renewal had rate increases of between 16 and 20%, the survey showed.

Brokers and agents responding to the survey said most employers continued to shift costs to employees to try to keep their group medical premiums under control, according to the release. Higher deductibles and co-pays, higher out-of-pocket maximums and prescription drug coverage were areas looked at most often for savings, the brokers reported. In an open-ended question asking about marketplace trends in group medical, respondents reported that some employers were changing to co-insurance with deductibles, rather than copays, for higher priced medical procedures.

The high-deductible health plan (HDHP) coupled with a Health Savings Account (HSA), is increasingly being added as a coverage option, the Council discovered. Sixty-eight percent of the respondents said they had sold a HDHP/HSA plan for either 2006 or 2007. Roughly one-third of employers who contribute to employee HSAs offer between $250 and $499, the survey showed, with 18% offering $500 to $749 and 17% contributing $750 to $1,000. The survey found that small, medium and large accounts implemented the HDHP/HSA option at roughly the same rate.

The news release with study result charts is here .