Employers are being squeezed between rising healthcare costs and the need to keep employees healthy, happy and engaged. The 2021 Employer Health Benefits Survey from KFF shows how employers of different sizes have adjusted their benefits strategies. This health insurance update highlights the insights employers don’t want to miss.
How Much Are Costs Rising and Who’s Paying?
Health insurance costs have increased faster than inflation. In 2021, the average premium for single coverage was $7,739. This is 4% higher than the average premium in 2020 and 20% higher than the average premium in 2016. The average premium for family coverage was $22,221. This is also 4% higher than the average premium in 2020, and it’s 22% higher than the average premium in 2016. In comparison, inflation has only increased 11% over the last five years.
The employer shoulders most of this cost. Workers contribute an average of 17% ($1,299 annually) of the premium for single coverage and 28% ($5,969 annually) of the premium for family coverage. However, there is a significant difference between worker contributions in small companies versus worker contributions in large companies. In small firms, 34% of covered workers pay less than $500 for single coverage, while in large firms, 12% pay less than $500 for single coverage.
Also, 85% of covered workers have an annual deductible. This has gone up since 2011, when only 74% of covered workers had a deductible. The average out of pocket maximum was $4,272 in 2021.
How Many Employers Offer Insurance?
Overall, 59% of firms of all sizes of health insurance, and 96% of firms that offer coverage offer both single and family coverage. As could be expected, larger firms are more likely than smaller firms to offer health insurance. Only 58% of small firms (3 to 199 workers) offer health insurance, while 99% of large firms (200 or more workers) do.
These benefits are mostly offered to full-time workers. Among large firms offering health insurance, only 36% extend the offer to part-time employees. At firms that offer health insurance, only 81% of workers are eligible to enroll, and 71% of eligible workers enroll in coverage.
Cost is a major barrier. Among small firms not offering coverage, 30% cited cost as the most important reason.
What Types of Plans Are Employers Offering?
Employers that offer health insurance often provide only one option, and this is especially true among smaller employers. Among plans of all sizes, 75% offer only one plan option, and PPOs are the most common plan type.
High-deductible health plans have become a more popular option over the last decade. Among large firms, 58% offered an HDHP with savings options, and 20% of small firsts offered one. In 2021, 28% of covered workers were enrolled in an HDHP/SO, up from 17% in 2011.
Only 27% of large firms that offer benefits offer retiree health benefits. However, public employers and employers with union workers are more likely to offer retiree benefits.
Wellness programs are common; 58% of small firms and 83% of large firms offer at least one program to help with smoking cessation, weight loss or lifestyle/behavior coaching. To adjust to the needs of workers during the pandemic, 15% of small firms and 21% of large firms added a digital element to their program.
Telemedicine has also become common, and there was a 10% increase in employers offering telemedicine during the pandemic. In 2021, 95% of companies with at least 50 workers offered some telemedicine services, up from 85% in 2020.
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