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Employee annual premiums rise to $20,000 for family health coverage

The 5% increase in employer-sponsored insurance is coming at a time when 2020 premiums in the ACA and Medicare Advantage markets are at low levels.

Annual premiums for employer sponsored family health coverage rose by 5% last year, a new survey from the Kaiser Family Foundation has found.

The average annual premium increased to $20,576 this year, with workers on average paying $6,015 of the cost, according to KFF's 2019 Employer Health Benefits Survey. The average deductible among covered workers in a plan with a general annual deductible is $1,655 for single coverage, the survey showed.

WHY THIS MATTERS

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The 5% increase in the employer-based market is coming at a time when  2020 premium increases in the Affordable Care Act market and premiums for Medicare Advantage plans are predicted to be lower than in previous years.

The Centers for Medicare and Medicaid Services recently reported that Medicare Advantage beneficiaries will see their lowest premiums in 13 years. On average MA premiums are expected to decline 23% from 2018.

As of August, ACA premium rate increases were projected to increase by less than 1% for 2020.

The 5% increase for employees in the commercial market is an increase being passed on by their employers who expect a 5% increase in the cost of health benefits in 2020, according to a survey from the National Business Group on Health.

A number of health conditions are impacting employers' healthcare costs, the survey said, with the top two conditions cited being musculoskeletal issues and cancer.

HEALTH BENEFITS REPORT RESULTS

KFF found workers' wage increases of 3.4% did not keep up with the hike in the average annual premium rate. Inflation rose 2%.  

Lower-wage firms tended to offer less in benefits to workers than those that paid their employees higher wages, according to the survey. Employers with workers earning $25,000 or less a year offered benefits to a smaller share of their workforce than larger-wage firms, and required workers to pay a higher share of premiums than other employers.

While 99% of what the survey considered larger firms offered health benefits to at least some of their workers, 56% of smaller firms did so, the survey found.

It also found that two-thirds of workers at lower-wage firms had health benefits, which was less than the 81% eligible for benefits at other firms. Fewer workers at lower-wage firms also take up their employer's health benefits - 33% on average having benefits compared to the 63% at other firms, according to the survey.

Family premiums at lower-wage firms were on average 15% less than other firms, the average family premium being $17,633. However, the average worker at a lower-wage firm paid more, giving $7,047 in their contribution while those at higher-wage firms paid an average of $5,968.

THE LARGER TREND

The survey, in its 21st year, included 2,012 interviews with nonfederal public and private firms.

About 153 million Americans rely on employer-sponsored coverage, according to KFF.

KFF compared the survey results to those from 2009 to show how much premiums have risen, as well as how much worker contribution has gone up.

Since 2009, the average family premiums have increased 54%, and workers' contribution has increased 71%. At the same time, according to the survey, wages rose only 26% and inflation 20%.

The average single deductible also climbed $829 in the last decade, a 50% increase, the survey showed.

The number of workers that have deductibles in their plans rose 63% since 2009, and 28% have plans with deductibles of at least $2,000, according to the survey. That is four times the number who had plans with deductibles that high in 2009, according to KFF. 

The average premium varies across industries. Premiums in manufacturing and retail are relatively lower compared to those offered to state and local government workers, according to the study. Workers at for-profit firms had lower average annual premiums than workers at public firms and not-for-profit firms.

ON THE RECORD

"The single biggest issue in healthcare for most Americans is that their health costs are growing much faster than their wages are," KFF President and CEO Drew Altman said. "Costs are prohibitive when workers making $25,000 a year have to shell out $7,000 a year just for their share of family premiums."
 

Max Sullivan is a freelance writer and reporter who, in addition to writing about healthcare, has covered business stories, municipal government, education and crime. Twitter: @maxsullivanlive maxesullivan@gmail.com