Job-Based Health Coverage Is About to Get More Expensive
Many workers may face higher health care costs during the next employer enrollment period. Health insurance premiums are expected to rise sharply for the fourth year in a row. Employees may also pay more when they visit doctors, fill prescriptions, or receive other medical care.
The increases could place more pressure on families already struggling with high living costs. Employers are expected to see their health care expenses rise by about 9.5%. Many companies may change their benefit plans to soften the increase, but workers are still likely to feel much of the impact.
Why Health Care Costs Keep Rising
Health care costs stayed fairly stable for several years. That trend has changed as Americans use more medical services and expensive treatments become more common.
Several factors are driving the higher costs:
- More people are seeking medical care.
- Cancer treatments and other specialty services remain expensive.
- Demand for popular weight-loss medicines continues to grow.
- Employers have fewer easy ways left to reduce spending.
Companies have already used many common cost-control methods. As expenses continue to climb, some employers may need to make tougher decisions about premiums, deductibles, copays, and covered services.
Workers Are Paying More Than Their Raises
Employees recently paid an average of nearly $7,500 for family health coverage. That represented a premium increase of about 9%. During the same period, average worker pay increased by only about 3.7%.
That gap means health insurance is taking up a larger share of household income. Even workers who receive raises may have less money left after paying for coverage and medical care.
Small Businesses Face Difficult Choices
A small packaging company in Louisiana recently saw its monthly worker premium rise from $200 to $300. Only six employees were enrolled in the company plan. The business was able to keep out-of-pocket costs steady, but another large increase could force it to reconsider its benefits.
The company began offering health coverage to help attract and keep workers. Its leaders want to provide strong insurance at an affordable price, but that goal may become harder to maintain as health care expenses rise.
If costs increase again, employees may help decide how to handle them. Choices could include higher monthly premiums or larger copays when workers receive care.
Giving workers a voice may help companies make difficult changes. Employees use the coverage, so they may have different views about whether it is better to pay more each month or pay more when visiting a doctor.
Some Workers May Face Higher Deductibles
A member-based social club connected to a large public university is also reviewing its health plan. The organization has about 30 workers covered by the plan.
One option would increase employee premiums by nearly 13% while keeping the deductible at $1,000. Another option would raise the deductible to $1,500 and limit the premium increase to about 7%.
The workers already faced a premium increase of about 9% and a deductible that doubled during the current plan period. The changes followed the shutdown of the group’s longtime insurance provider.
A lower deductible may make the organization more attractive to job seekers. A higher deductible, however, could reduce costs for both the employer and its workers. Employers must weigh the value of strong benefits against the need to keep the plan affordable.
Weight-Loss Drug Coverage Is Changing
Workers will need to review their benefit choices carefully. Health plans may create preferred doctor networks that offer lower copays. Prescription costs may also change, even when the medication itself stays the same.
One major change involves GLP-1 medicines used for weight loss. Fewer employers are covering these drugs because they have become a major source of rising health care costs.
Coverage dropped to about 60% of employer plans, down from 72% in the previous survey period. No clear increase was seen in the number of employers beginning to cover the medicines for weight loss.
People still have other ways to obtain these drugs. Drug makers and other providers offer cash-pay options that do not use traditional insurance coverage. Prices can range from about $149 to $699, depending on the medicine and dosage.
Employers Consider Direct Payment Options
Some companies are exploring ways to help workers buy weight-loss medicines directly from manufacturers, pharmacies, or other health care partners. Employers may also consider using health reimbursement arrangements to help pay part of the cost.
These options could give employees access to treatment while allowing companies to avoid some of the expense tied to regular insurance coverage. However, the details may vary widely from one employer to another.
Employees should check several parts of their plan before choosing coverage:
- Monthly premium amounts
- Deductibles and copays
- Preferred doctors and hospitals
- Prescription drug costs
- Rules for weight-loss medicines
- Maximum yearly out-of-pocket spending
Higher premiums and reduced benefits could make the next enrollment period especially difficult. Workers who take time to compare their choices may be able to find the plan that best fits their health needs and household budget.